LatAm urged to review vehicle insurance rules

As part of a push to boost road safety in the region, the IDB and partner organizations are urging nations to put motor vehicle insurance rules under the microscope.

The call is in a draft report produced as part of the Movernos Seguros initiative, being spearheaded by the IDB, motorsport governing body FIA and the insurance industry.

The report follows a study into the state of play in terms of vehicle insurance and how this relates to road safety, the IDB said in a release.

Researchers found shortcomings in the region in the areas of driver training and road and vehicle safety.

In the region, about 100,000 people die each year in road accidents. Latin America has a higher mortality rate (19.2 per 100,000) than the EU (9.3) and Japan (4.7) despite having a lower rate of vehicle penetration.

Among the findings was that car insurers can play a role through the likes of structuring products that incentivize safe driving habits, and generating robust and timely data that can be used in the policy-making process.

In Latin America, mandatory and voluntary vehicle insurance accounts for 26% of overall written premiums, compared with 13% globally, the IDB said in a statement.

However, on average in the region only 40% of vehicles that are required to have a mandatory policy have such coverage.

Generally, mandatory vehicle insurance in Latin America only covers injuries sustained to parties involved in a collision - not damage to vehicles. It is generally known as SOAT or SOAP.

VIEW FROM FIDES

"We support having mandatory insurance in every country in Latin America," Francisco Astelarra, the secretary general of Inter-American insurer association Fides, told BNamericas. "We support unregulated pricing and, what is much more important in terms of the enormous road safety problem that exists, that compliance with the rules is enforced."

He added: "The issue of road safety is a pressing one and requires, fundamentally, awareness training, from primary to university level, as well as improvements in all highway infrastructure, campaigns to promote compliance with traffic rules, and traffic policing and sanctioning. These are basic pillars to improve road safety in any part of the world."

IDB PROPOSALS

In Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Peru and Uruguay - which require motorists to purchase a SOAT policy - the report proposes that authorities step up oversight to ensure compliance, review payout size and compare this with medical costs, remove price controls and migrate to systems that reward drivers for safe driving through the likes of no claims bonuses. Uruguay does not have price controls.

Among those without a mandatory insurance scheme are Guatemala, Honduras and El Salvador. In Mexico, certain states have implemented rules and motorists who used federal roads are required to have coverage. IDB has urged these countries to have universal coverage.

The multilateral also urged Nicaragua, Panama, Dominican Republic and Venezuela - which have mandatory insurance - to introduce systems to calculate losses incurred.