The Press FRIDAY, MARCH 26, 1971. Car insurance

Press, Volume CXI, Issue 32565, 26 March 1971, Page 8

The Press FRIDAY, MARCH 26, 1971. Car insurance

For the ordinary motorist, an increase in the cost of third-party insurance or an increase in the premium he pays on his car insurance amounts to the same thing—an increase in the cost of motoring. When increases in the two forms of insurance are announced within 24 hours he feels doubly aggrieved. Understandable though this is, it is important to distinguish between the two kinds of insurance. Third-party insurance, which is compulsory, compensates persons other than the driver of the vehicle insured, for personal injury caused by the insured car. Ordinary vehicle insurance covers the driver for damage caused to his own vehicle and, if he is responsible, for damage caused to another vehicle.

The increase in third-party insurance announced this week by the Minister of Transport (Mr Gordon) is “to meet the rising cost of claims which they “ [companies undertaking third-party insurance] “are being called upon to pay”. These claims are typically for costs incurred in hospital treatment by victims of motor accidents. Insurance companies have little or no control over these costs, which reflect rising wages, salaries, and other costs incurred in running hospitals and in providing other medical services. But the insurance companies can and should seek to reduce the cost of car repairs. “ Is this an insurance job? ” is, all too often, the first question asked by a panel-beater when he is shown a damaged car. The inference is that if the repair bill is to be paid by an insurance company the bill will be somewhat higher than if it has to be paid out of the motorist’s pocket Certainly, the motorist who is prepared to shop around can usually get a cheaper quotation. And it may be suspected that not a few dishonest motorists whose cars have been moderately damaged in accidents have been able to get their cars wholly repainted at their insurance companies’ expense. Such practices add up to an imposition on the insurance companies which ensures that motor vehicle insurance remains unprofitable—and that car owners ultimately foot the bill through higher insurance premiums.

In the United States the insurance companies have formed an Insurance Institute for Highway Safety, which carries out rigorous tests on all new automobile models. The institute reported this month that a front-end crash into a test barrier at five miles an hour in a 1971 car caused damage which cost, on average, $332 to repair—an increase of $136 on the comparable bill for a 1970 model. For a rear-end crash the bill was $329, an increase of $llO. In evidence before a Senate committee, an officer of the institute said that any crash at this speed should cause no damage at all to a well-designed vehicle.

The British Insurance Association last year set up a research centre to investigate repair costs and methods. The centre has provided valuable information to insurance companies on repair costs, so that they are able to prevent profiteering by panel-beaters. One of the recent findings of the centre is that most damaged car doors can be repaired in less than two hours—some of them in less than 45 minutes. They have pointed out that if all manufacturers made available to the trade spare outer panels—instead of, as at present, spare doors—damaged doors could be repaired more cheaply than they could be replaced. Insurance companies in this country may not be big enough to influence the decisions of motor designers, but they are certainly big enough to set up their own model panel-beating shop. The two, mutual insurance companies backed by the automobile associations—the N.LM.U. and the S.LM.U.—and the State Insurance Office might well join in such a venture. Their combined business must comprise more than half the country’s fleet of a million vehicles; and they should be specially sensitive to the charge that, not being profitoriented, they are not cost-conscious either. Until they show more initiative in this direction they cannot be cleared of the charge