Car insurance contributes to overall safety

Good insurance policies play an important role in making our roads safer for everyone

Car insurance plays a role in making our roads safer. Silvia Razgova / The National

Addressing road safety is a complex process that requires a partnership between the public and private sectors. And car insurance policies play a role in this, which is why improving the insurance system is necessary and welcome.

As The National reported yesterday, new tariffs will be introduced on January 1, setting maximum and minimum premiums for third-party and comprehensive policies, depending on vehicle type. Customers will pay more for their insurance, including bolt-on premiums to cover the cost of ambulance services and courtesy cars.

The new rules also allow insurance companies to quote prices based on technical or actuarial information. This will have an enormous effect on improving road safety if it is properly implemented. Good drivers will take advantage of discounts on their insurance premiums while drivers with poor records will be made to pay more.

It has been proven that implementing risk-based pricing in car insurance is a powerful tool in fostering a sense of personal responsibility, because it directly links the cause of an accident to financial consequences. A driver who wants to achieve a safe record, and therefore a lower insurance premium, is far more likely to be attentive behind the wheel.

Setting maximum premiums will also protect drivers from overpricing and encourage them to have their cars fully insured, rather than taking out only partial cover.

The new system includes unified motor vehicle insurance policies against third-party liability and against loss and damage, but doesn’t include theft. Car theft is a major insurance issue elsewhere, but is relatively rare in this country. This is one reason why insurance rates remain generally low here, and why they could go even lower for drivers with a safe record.

Improving road safety will also benefit the insurance industry, as reducing the number or severity of crashes automatically reduces the volume of claims to insurance companies. This is why it is also to their advantage to invest in raising public awareness about the risk factors for road users.