This is not a title commonly used with Tanzania policies, but it usefully describes the scope of cover provided by the Employees’ Compensation (EC) policy. EC is a very important class of business. As with motor insurance, it represents a major branch of compulsory insurance, although (again like most motor policies) the cover provided goes beyond the minimum compulsory insurance requirements.
a) Basic intentions and scope of cover.
Most liability insurances are known as “third party” covers. The term “third party” may be defined as a non-employee of the insured. EC policies cover the legal liabilities of the employer towards his employees. The cover is provided in two major ways:
i. Liability under the EC ordinance: this is the statutory liability which is placed upon an employer, without proof of negligence, to pay compensation in stipulated amounts to employees or their dependents in respect of injury or death arising out of and in the course of their employment.
ii. Liability under “common law”: this relates mostly to liability in tort (mainly negligence) where it can be established that there is fault on the part of the employer in respect of death of or injury to employees, again arising out of and in the course of their employment. Compensation to employees or their dependents is likely to be significantly more than with EC benefits, but (unlikely EC liability) the liability of the employer must be proved and it is contestable by the employer or his insurers.
b) Limitations and exclusions
As EC is compulsory class of business there are not many exclusions and those may be overruled by statutory provisions (see below), typically, however the policy will exclude:
i. Liability under agreement (contractual liability)
ii. Liability to employees of contractors to the insured.
iii. Persons who are not employees within the meaning of the EC Ordinance.
iv. “Standard” exclusions, such as war and nuclear risks.
c) Premium basis
This is usually a rate per cent mille (according to the type of employer concerned) applied to the annual payroll of the employer. As such the initial premium must be provisional, subject to the adjustment where the final figures for the year are known.
d) Other features
i. Avoidance of certain terms and right of recovery: this clause is identical in intent to that in motor policies. It gives a right of recovery from the insured if compulsory insurance legislation compels an insurer to pay a claim when a breach of policy provisions would otherwise allow the insurer to avoid liability, with EC claims, this right may be of more value , since the insured is perhaps more likely to be able to reimburse the insurer.
ii. Premium adjustments: most employers understate their payroll when the provisional premium is being calculated so follow up adjustment is quite important.
