MOTOR INSURANCE Statistical backing for premium rises

Press, Volume CXI, Issue 32568, 30 March 1971, Page 1

MOTOR INSURANCE Statistical backing for premium rises

In the last 10 years the cost of motor-insurance claims had risen 58 per cent, panel-beaters’ award wages had risen 78 per cent, and the cost of a typical selection of car parts had risen more than 44 per cent, the assistant general manager of the S.I.M.U. Mutual Insurance Association (Mr E. B. McKessar) said yesterday.

Referring to recent increases in the cost of motor insurance, Mr McKessar

said that S.I.M.U. premiums had been increased by 10 per cent from March 1, and that further increases were being considered.

In 1961, the average cost of a motor-accident claim to his company was $7l; this year it was $ll2, Mr McKessar said Tlie hourly award wage for panel-beaters had risen from 71c to $1.26, and a selection of parts including a grille, bumper, windscreen and front guard—which cost $172.15 in 1963 now cost $248.37.

On top of this, the incidence of claims to policies

had increased by about 41 I per cent during the 10 years, and average weekly wages ■ throughout New Zealand — ; which had a major effect on insurance company overheads—had risen by about 62 per cent. On S.I.M.U. rates, the average insurance premium for $lOOO comprehensive motor-vehicle cover had risen by 39 per cent between 1961 and the present, Mr McKessar said.

In 1961, the gross premium for $lOOO cover had averaged $27, and was subject to onethird no-claim discount. Now the same cover cost $44, and

was subject to 40 per cent or 50 per cent no-claim discount depending on the period since the last claim.

Rising costs The statistical information now available by use of computers made premium-setting a more precise and scientific thing than it had been in the past, Mr McKessar said, and premiums varied widely depending on the circumstances.

The age of drivers had a clear bearing on claims, Mr McKessar said, and when rising costs were considered, it should be remembered that the car-insuring public was now younger than was the case 10 years ago. In the S.I.M.U.’s experience, the claims cost per 100 policies at May last year ranged from $3277 per 100 policies for drivers under 21, to a lowest figure of $lOl4 per 100 policies for drivers aged between 35 and 44.

Third-party cost

The figure for drivers aged 21 to 24 was $2698 per 100 policies; aged 25 to 34 it was $1558 a 100 policies, aged 35 to 44 it was $lOl4, aged 45 to 54 it was $1056, and 55 to 64 it was $1062, and for drivers aged over 65 it was $1136 for every 100 policies. Mr McKessar also spoke of the recent increase in the cost of compulsory thirdparty motor insurance, and

said that, according to the Department of Statistics, New ■ Zealand’s insurance com- . panies had run third-party I insurance at a loss during the ■ last 10 years: the cost had been 102.9 per cent of I premiums. . Hospital costs were the minor part of third-party in-

surance costs, he said. General damages settlements] were the main cost—and these were influenced by in- 1 flation and the large amounts I awarded by juries in cases which came to court. i Hospital rate In any event, the hospital in-patients daily rate had risen from $8.60 a day in 1960 to $22 a day now: a rise of 156 per cent. The third-party premium had risen from $4.60 a year in 1961-62 to $9.90 a year for 1971-72: an increase of 115 per cent.

The inflationary trend in New Zealand had been reflected in general damages claims, and also in special claims, Mr McKessar said. Loss-of-earnings claims had risen in accordance with award increases.

About three years ago increased passenger-risk benefits had been added to thirdparty insurance, and it should also be noted that some comprehensive motor-insurance policies now gave unlimited passenger cover without extra charge. No control A major point where thirdparty insurance was concerned was that the insurance companies had no control over who they accepted for compulsory third-party insurance: motorists nominated a company on their registration form, and that was that. The motorist might be one whom that particular company would refuse to insure under a normal comprehensive insurance policy, Mr McKessar said.

The S.I.M.U. had made public its figures on the cost of motor-insurance claims because it felt motorists were entitled to know the facts and figures behind premium increases, he said.