Motor Vehicle Insurance

Press, Volume CI, Issue 29899, 13 August 1962, Page 8

Motor Vehicle Insurance

Provided that the revised premiums are not excessive, the extra indemnities that will be included in motor insurance policies issued by members of the Council of Fire and Accident Underwriters’ Associations of New Zealand after October 1 will be unreservedly welcomed. The so-called “ com- “ prehensive ” policy will better deserve the title by the inclusion of a number of contingencies that now have to be insured against separately. From the viewpoint of the insurer and of the public interest the greatest improvement is the automatic passenger risk cover up to £5OOO for private and business cars. Some of the new indemnities may surprise insurers who had imagined they were covered in these respects. The indemnity for an employer in respect of the use of an employee’s car on the employer’s business is especially useful. One major change should encourage a better standard of care on the roads by young drivers. In New Zealand, as elsewhere, young drivers have contributed to damage, injury, and death on the roads out of all proportion to their numbers. Various measures to impress young drivers with their responsibilities have been suggested; and “The Press” still believes that the most effective means would be a system of probationary driving licences under which any conviction for dangerous or negligent driving would automatically disqualify the holder from driving again until he reached a mature age. However, requiring a policyholder under the age of 21 to pay the first £25 of damage to a private car should be a useful deterrent.

The change in the noclaim rebate system is more questionable. Instead of a

progressive scale leading up to a 50 per cent, rebate after five years without claims, the rebate will be a flat 33 1-3 per cent, after a year in which no claim is made. This change is clearly unfair to the careful driver who has a claim-free record, perhaps not for only five years but for a driving lifetime. But even the most careful driver may have to make a substantial claim — perhaps for damage to his parked car by some unknown person. In such a case an insurer might be better off if he lost a smaller rebate for one year than a larger rebate for a longer time. The companies should give insurers more information about their reasons for making this change. The assurance that only a “ slightly higher ” premium is contemplated is welcome. Upon examination the companies may find that the present rates are sufficient. Statistics suggest that motor vehicle comprehensive business, which has more than doubled in the last 10 years, is reasonably remunerative. The last three years for which statistics are available (1957-58. 1958-59, and 1959-60) show the percentage of claims to premiums in this class of business to be, respectively, 70.40, 63.83, and 64.33. The companies that have adopted the proposals for the new wider policies are known as the " tariff ” companies. The members of another group, known as the “ non-tariff ” companies, act independently of one another in determining premium rates and conditions of insurance, and independently of the tariff companies. The element of competition here should protect the motoring public against undue hardship once the costs and the benefits of the new policies have been worked out.