Motorists having a high record of traffic accidents would face trouble when they apply for insurance coverage as insurance companies are determined to charge high premiums on them.
In the second phase of the new insurance pricing policy approved by Saudi Arabian Monetary Agency (SAMA), the Kingdom’s insurance regulator, allows companies to impose high premiums on motorists who are involved in excessive claims and dangerous accidents.
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Companies have started implementing the first phase, which offers a no-claim bonus of up to 30 percent to motorists who did not make any accidents for three years. SAMA has not yet implemented the second phase of the program.
SAMA has emphasized that involvement in traffic accidents by a motorist would be considered a major factor in determining his premium.
Insurance companies are facing several questions after the implementation of the program’s first phase last Saturday and have published answers for 20 frequently asked questions on their websites to avoid recurrent queries from customers.
At present traffic violations are not considered as a factor in determining premiums by insurance firms.
“We have informed customers that insurance premiums will change when SAMA implements the second phase of the program,” an informed source at an insurance company told Al-Watan Arabic daily.
Insurance companies said the delay in implementing the second phase would increase their financial burden due to coverage given to motorists having a high record of traffic violations. Companies will revise their prices on the basis of SAMA’s new instructions.
The companies published frequently asked questions on their websites following implementation of the first phase of the new pricing policy. The main question was whether the premium would go up or not for those involved in a large number of traffic accidents.
Companies have clarified that taxis and commercial transport vehicles would be exempted from the no-claim bonus.
The first phase of the insurance pricing depends on the age of the driver, the age of the vehicle and the country of manufacture.
During the second phase, the premium will be determined considering how the vehicle is used, its model and brand, type of insurance, traffic violations, excessive claims and dangerous accidents in which it was involved.
SAMA has instructed insurance companies to provide a no-claim policyholder with a discount when pricing mandatory individual motor insurance policies. SAMA instructions were aimed to protect the insured and provide advantages for policyholders whose insurance records are free of claims.
The new policy also promotes fair competition between insurance companies, ensure better insurance services at competitive prices and encourage motorists to drive safely.Traffic accidents cause about 7,500 deaths and 68,000 injuries that leave more than 2,000 people handicapped with permanent disabilities annually. Financial loss from car accidents is estimated to be SR18 billion a year.
The non-claim discount is calculated based on the number of years a policyholder has not been involved in a claim. The discount could go up to 15 percent of the rates in force for motorists having no claims against for one year and it increases according to the number of years without claims, going up to 30 percent for three years.