An incentive system for drivers in Armenia might backfire says one insurance coverage skilled if the program utilized to check out a driver’;s historical past is not improved.
The incentive plan, known as “Bonus-Malus,” was introduced on January one, 2013, even though it was formalized only this 12 months. The plan rewards drivers with a very good track record by making them pay out much less for car insurance (the “bonus” part of the program’;s name) and punishes accident-prone drivers by producing them pay far more (the “malus” portion). The program is in conjunction with compulsory third-celebration liability motor car insurance (more often referred to and acknowledged by its acronym in Armenian: APPA), which was launched in Armenia on January one, 2011.
The Bonus-Malus system operates in Armenia according to the principles of the Armenian Motor Insurers’; Bureau: each driver in Armenia, the initial time he obtains motor vehicle insurance coverage, is categorized in class 10 (see table). If at least 345 days following registering with APPA, the driver does not get into any accidents, when he renews his insurance coverage, he is categorized in class 9 and pays 3% less for his car insurance. In this way, 9 many years later on, he can spend 50% much less insurance coverage if he continues to keep a clean driving record. The reverse is also accurate: if a newly insured driver gets into an accident in which he is at fault, the following time he renews his insurance coverage he will be categorized in class 14 and will have to pay 16% much more for his insurance coverage — that is, each automobile accident actually costs him 4 courses, not 1. This way, a driver who was in 3 accidents in a single yr in which he is at fault will have to pay out twice as considerably insurance (as every accident will value him 4 courses, bringing him up to class 22) the up coming time he renews his APPA. Consequently, only right after a clean driving record of12 many years will this driver return to paying out his original, regular insurance coverage charge (class 10).
All organizations in Armenia offering APPA send driving accidents to the Armenian Motor Insurers’; Bureau. If a driver renews his insurance coverage with both the exact same or a different business, an inquiry is sent to the bureau to determine the driver’;s class class. The bureau checks these inquiries towards the driver’;s passport serial amount and, if there is 1 on file, his social insurance card. Even though the Bonus-Malus incentive program was introduced in 2013, due to technical issues, inquiries had been not processed at the bureaus and insurance businesses basically asked drivers if they have been concerned in any vehicle accidents in the previous year.
According to APPA specialist Hayk Melkonyan, there is a shortcoming in this technique. Because the inquiry is based mostly on one’;s passport number, earlier information on a driver isn’;t going to appear as soon as he renews his passport. The only identity document that is not renewed is the social insurance coverage card, but this is not an obligatory document. This way, a driver who’;s been involved in several accidents can simply renew his passport and register as a new driver when applying for insurance and people drivers who’;ve acquired “bonuses” will shed them after they renew their passports.
According to Melkonyan, there are 40,000 automobile accidents on typical in Armenia per yr, for which insurance companies pay. If the information of 10,000 of these drivers is erased, then 2,500 AMD (this is the 16% extra to the insurance of individuals drivers in accidents) won’;t be collected per driver involved in an accident — that’;s 25 million AMD much less to insurance firms per 12 months.
To deal with this problem, Melkonyan offers 2 answers: both make social insurance cards necessary for APPA-insured drivers (that is, all drivers) or have the bureau perform its inquiry into drivers’; history based on their driver’;s licenses. However driver’;s licenses also need to be renewed when every single 10 many years, Melkonyan suggests not shifting the serial variety, as was the situation in the Soviet many years when driver’;s licenses did not require to be renewed.