Is auto insurance too expensive?
The troubles of drivers are being made the worse by the poor levels of service still being offered by some insurance companies, who are delaying paying out on claims, sometimes through demands for pettifogging details and others by the simple expedient of totally ignoring their customers for as long as seems possible.
As ever though, it is important to realize that there are two sides to this story. If an automobile insurer were thinking of opening up in a new country, it is arguable that Saudi Arabia is one of the last markets it would consider. The standard of driving in the Kingdom remains appalling, as evidenced by the fact that we have one of the highest death rates in the world from road wrecks. Moreover, though insurance is a legal requirement for proper registration of any vehicle, there are still too many automobile drivers and indeed commercial truckers, who somehow feel that the law does not apply to them. It is a mystery how, given the repeated clampdowns by highway police and the strict annual inspections required of every road vehicle, owners are still getting away with flouting the rules.
From the point of view of pedestrians or drivers hit, through no fault of their own, by another motorist, if there is no insurance cover for the guilty party, then at the very least there will be a very long legal process to get the other driver to pay up, during which the victim will have to cover the cost of damage to his own vehicle and hospital care and any other losses.
Uninsured motorists are therefore not only a menace but demonstrate a complete disregard for their social responsibilities. As far as they are concerned, other people do not matter. Moreover they fondly imagine that they will not be in a collision and will therefore not have to pay from damage to their own vehicle either.
The problem with soaring insurance premiums of course, is that it is only likely to encourage more irresponsible motorists to avoid the expense. Thus the situation on the Kingdom's roads in terms of proper insurance cover is only likely to get worse, not better.
Yet to argue the insurers' corner for a moment, if low driving standards mean ever more wrecks and ever more claims, then premiums must rise. Insurance companies are businesses. They are supposed to make profits, not losses. The premium income they receive for any insurance product, including in the automobile sector, has to be invested to earn extra money to bolster their ability to pay out in the event of claims. The premiums are calculated by actuaries and reflect the level of risk that an insurer is assuming. In the old days the actuarial profession used slide rules, or slip sticks. Had they been around now, it must be wondered if the central strip would not fall out the middle, when an actuary tried to calculate the premium that would most reflect the risk of covering some drivers on Saudi roads.
The blunt truth is that premiums will only go down when the risks go down. Every road trip, especially into the suburbs or out of town, will convince a traveler that if anything, the dangers are actually increasing.
It seems clear that the only way people are going to drive safely is if they face real penalties for bad driving. The stiff fines imposed on motorists caught on Saher speed cameras have proved that drivers will improve their behavior, at least while they are in sight of the cameras.
Now the same punishments need to be applied to motorists who drive without insurance. And if fines go unpaid, vehicles should be confiscated and in extreme cases, custodial sentences should be imposed.
Meanwhile the insurance companies can do something important as well. They must reward with lower premiums and no-claims bonuses, responsible motorists who avoid accidents and thus make no claims, while those who have collisions must be punished with yet higher costs. Hand-in-hand with this, uninsured motorists should feel the full force of the law they are willfully disobeying. Traffic cameras are readily available which scan number plates, check insurance and driver details and automatically issue fines to anyone without the proper documents.
Source: ARAB NEWS
