Rising road deaths bring drive for more insurance

Sok Chan

Owners of vehicles need increased cover: experts

The government is seriously considering whether to make insurance mandatory for every vehicle owner because of rising numbers of deaths in road traffic accidents.

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No specific timeframe for its implementation has yet to be confirmed but it will add to personal insurance citizens should have.

Mey Vann, director-general of the General Department of the Financial Industry at the Ministry of Economy and Finance, says the death toll caused by road accidents has increased year-on-year.

“We are planning to make vehicle insurance compulsory for every vehicle owner,” Mey says. “We will put more effort into this task because fatal road accidents are rising annually.”

He adds that the government will deliberate thoroughly over the action because of the financial burden it would impose.

Mey is fully aware of the lack of compensation for  victims and the social impact accidents have.

Road accidents happen regularly in the Kingdom. There were 3,430 reported traffic accident in which 1,932 people died, 3,168 were critically injured and 1,991 were slightly injured in 2018, according to a report from the Traffic Police and Public Order office at the Department of the Ministry of Interior.

Nationwide, road accidents in 2018 were mostly caused by speeding, overtaking, disrespecting traffic signs and other inappropriate driving. Most accidents occurred in Phnom Penh, and Preah Sihanouk and Kandal provinces.

They Visa, deputy director of Traffic Police and Public Order at the Department of the Ministry of the Interior, says that more than 3,530 vehicles suffered serious or slight damage – 1,512 cars and vans, 798 trucks and 255 other vehicles.

They says only 169 van and car drivers have insurance – 11 per cent of those on the road – while just 192 trucks are insured – amounting to 24 per cent of the total being driven. Only eight motorcyclists are listed as being insured – about 0.2 per cent of those on the road.

“We have urged the Insurance Association Cambodia (IAC) to partner with the National Road Safety Committee at the Ministry of the Interior to establish a way to prevent or at least reduce traffic accidents,” he said, adding he wanted more insurers to join the IAC.

At present, vehicle insurance is not compulsory in the Kingdom, despite the number of road fatalities.

“After conducting the study, we will announce publicly whether we will make vehicle insurance obligatory in the interests of social responsibility,” Mey adds.

The government will also consider the premium people will have to pay for insurance, Mey says.

“We will hold a public discussion on how we can proceed and we also discuss with  lawmakers whether now is right time for us to apply mandatory vehicle insurance in the Kingdom,” he adds.

“We have yet set up any mechanism or policies on the mandatory insurance regarding compulsory vehicle insurance, but we must promote and raise awareness of it otherwise people will not be happy with the government,” Mey points out.

According to the IAC, premiums on vehicle insurance increased from $7.2 million in 2013 to $14.3 million in 2018 across the country – about 14.7 per cent per year on average. Claims are also rising from $2.7 million in 2013 to $6 million in 2018 – an increase of 17.2 per cent per year.

Youk Chamroeunrith, Forte Insurance managing director, says mandatory motor insurance has been implemented in all  countries all over the world, except Cambodia.

Youk adds that the insurance will provide financial protection against physical damage resulting from traffic collisions as well as protect the insured against any liability arising from such incidents.

“From January to September, our company insured more than 10,000 cars with  premium vehicle insurance worth $4 million to $5 million – a 20 per cent increase year-on-year. On top of this, we have sold insurance policies to 6,000 customers who purchase it voluntarily for their motor,” he adds.

For the first nine months of this year, $3 million in claims were paid out to  customers, he adds.

“In Cambodia, the premium on the vehicle insurance is bigger than the claim but, in neighbouring countries, the premium is less than the claim,” Youk adds.

“At present, there is no compulsory vehicle insurance compulsory, so they [drivers] tend to do a “hit-and-run” when there is an accident and a lot of victims do not get any appropriate compensation,” he says.

“However, when there is a mandatory law on insurance, both parties are covered,” he adds.

Speaking during “Insurance Day”, in July this year, Finance Minister Aun Pornmoniroth said the government is planning to issue a law that will make vehicle insurance mandatory for every vehicle owner, which, he added, is in line with the existing Insurance Law.

He said the law will aim to provide financial protection against physical damage resulting from traffic collisions.

“Victims will be appropriately compensated for their injuries,” he said, adding that the regulation will contribute to the development of the industry.

Aun adds now we have no compulsory law for the motor owner but, when one does exist, the government will set a premium payment for the motorist that will be affordable. “When the law is mandatory, the government can control the price and make it more affordable,” Youk adds.

Last week, the Insurance Association of Cambodia signed a memorandum of understanding with general insurance companies on vehicle insurance. The agreement was designed to build trust among general insurance providers and Cambodian people.

Huy Vatharo, IAC’s chairman, said the memorandum of understanding on the “Barometer of Liability Agreement” will make processing claims more accurate and faster. “This agreement focuses only on the payment for damage to the vehicles and excludes insurance for injury or fatal accidents,” he said.

“With this agreement, the general insurers will use the accident reports from traffic police to create an accident scenario assessment and decide compensation. This agreement will help decide the issue in a timely and accurate way acceptable to the customer,” Mr Vatharo said.

“This is a positive step for vehicle insurance. Therefore, all the general insurance companies must implement it effectively.”

Mr Vatharo said one of the driving factors behind the memorandum was to build confidence among insurance customers.

“This is a positive step for vehicle insurance. Therefore, all the general insurance companies must implement it effectively.”

According to the agreement, the IAC’s claims committee will work with the insurance companies on claims. The agreement will come into effect in January next year. From now until the end of the year, IAC will train staff on how to adapt to the changes to be introduced by the agreement.

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