"Mitigating Risks and Ensuring Justice: The Case for Insuring Tanzania's Government-Owned Transport Infrastructure"

Insuring government-owned assets like the new Standard Gauge Railway (SGR), passenger ships, and ferries in Tanzania is crucial for several reasons:

1. Protection Against Financial Loss

• High Asset Value: The SGR, passenger ships, and ferries represent significant investments in infrastructure. Any damage or loss could result in substantial financial burdens on the government. Insurance ensures that in the event of an accident, funds are available to cover repairs, replacements, or compensation, reducing the financial impact on the national budget.
• Revenue Protection: These assets generate income through transportation services. If they are out of service due to accidents, there would be a loss of revenue. Insurance can provide compensation for this loss, ensuring continuity in income streams.

2. Compensation for Victims

• Humanitarian Responsibility: Accidents involving public transportation can lead to loss of life, injuries, and suffering for the victims and their families. Insurance helps to ensure that adequate compensation is provided to victims and their families, fulfilling the government's moral and humanitarian obligations.
• Past Incidents: Historical accidents such as the MV Bukoba disaster in 1996, where over 800 people lost their lives, and the MV Nyerere ferry sinking in 2018, which resulted in over 200 deaths, highlighted the need for proper insurance. In both cases, the victims and their families faced significant hardships in securing compensation. Proper insurance coverage would have facilitated quicker and fairer settlements.

3. Risk Management

• Accident History: Tanzania has a history of transportation-related accidents, including train derailments and shipwrecks. The lack of insurance or inadequate insurance coverage in the past has often led to delays in compensation and financial distress for the government and affected individuals. By insuring these assets, the government can better manage and mitigate these risks.
• Preparedness for Emergencies: Insurance ensures that the government is prepared to respond effectively in the event of a disaster. The coverage can include emergency response costs, such as evacuation and medical care for survivors, which are crucial in the aftermath of an accident.

4. Economic Stability

• Public Confidence: Insuring these assets can boost public confidence in using government-provided transportation services. When the public knows that the government has taken measures to protect their interests in the event of an accident, it enhances trust and encourages the use of these services, which is vital for economic stability and growth.
• Investor Confidence: Insurance also signals to investors and international partners that the government is committed to safeguarding its infrastructure investments. This can attract further investment and support economic development.

5. Legal and Ethical Obligations

• Compliance with International Standards: Many international regulations and best practices require adequate insurance coverage for public transportation assets. Insuring the SGR and marine vessels aligns Tanzania with these standards, enhancing its reputation and standing in the global community.
• Ensuring Justice: Without insurance, victims and their families might struggle to obtain fair compensation. Insurance ensures a legal framework for compensation, ensuring justice is served.

Other Countries case studies:

Why Tanzania should insure its public transport assets, with a nod to some global examples that got it right:

1. United Kingdom: The Rail Accident Investigation Branch (RAIB) and Insurance

• Background: The UK has a robust system for rail accident investigation and insurance coverage. The Rail Accident Investigation Branch (RAIB) investigates rail accidents and incidents, and insurance plays a crucial role in managing the financial risks associated with these events.
• Case Study: The Hatfield Rail Crash in 2000, where four people were killed and over 70 were injured, highlighted the importance of comprehensive insurance. The insurance coverage facilitated prompt compensation for victims and ensured that necessary repairs and safety improvements were funded. This incident led to increased scrutiny and enhancements in insurance requirements for rail operators.

2. Japan: The Shinkansen Insurance Model

• Background: Japan’s Shinkansen (bullet train) system is known for its safety and efficiency. The Japanese government and rail operators invest significantly in insurance to manage risks associated with this high-speed rail network.
• Case Study: After the Great East Japan Earthquake in 2011, the Shinkansen network was severely affected. The comprehensive insurance coverage ensured that the damages were promptly repaired, and operations were restored quickly. The insurance not only covered physical damages but also provided financial support to passengers affected by the disruption.

3. Netherlands: Ferry Insurance and Disaster Management

• Background: The Netherlands has a well-established system for insuring ferries and other maritime vessels. The country’s geographic location and extensive waterways necessitate robust insurance mechanisms.
• Case Study: The MS Prinsendam Fire in 1980, where a fire on the cruise ship led to a major rescue operation, was covered by insurance. The insurance not only provided compensation for the damaged vessel but also covered the costs associated with the rescue and accommodation of passengers. This case underscored the importance of having comprehensive insurance for maritime operations.

4. United States: The Amtrak Insurance Framework

• Background: In the United States, Amtrak, the national rail operator, has extensive insurance coverage to manage risks associated with its operations.
• Case Study: The Philadelphia Train Derailment in 2015, where eight people died and over 200 were injured, showcased the role of insurance in managing such large-scale incidents. Amtrak's insurance framework ensured that victims received timely compensation and that the necessary repairs and improvements to the rail infrastructure were funded.

5. Australia: The Insurance Approach to Public Transport Incidents

• Background: Australia has a comprehensive insurance approach for public transport systems, including trains, buses, and ferries.
• Case Study: The Sydney Train Collision in 2003 involved a crash between two trains, resulting in multiple injuries. The insurance coverage helped manage the financial impact of the incident, covering medical expenses for the injured and compensating for the disruptions caused. This case highlighted the role of insurance in ensuring that public transport systems can quickly recover from accidents and continue to operate safely.

These case studies demonstrate the value of insurance in managing risks, providing compensation, and facilitating the recovery of public transportation systems in the aftermath of accidents and disasters. They underscore the importance of having robust insurance coverage to protect both financial interests and human lives.

Conclusion

Given the tragic examples of the MV Bukoba and MV Nyerere accidents and various train accidents in Tanzania's history, it is clear that insuring government-owned assets like the SGR, passenger ships, and ferries is not only a financial necessity but also a moral and ethical obligation. It protects the government from severe financial losses, ensures victims receive timely compensation, and helps manage the risks associated with operating large-scale public transportation systems.

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Prepared by:

Fareed S Seif

Pan Oceanic Insurance Brokers Limited

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