ABU DHABI // A shared database on drivers' accident histories would help car insurance companies to charge fairer premiums and reduce exposure to fraudulent claims.
Without it, insurance companies apply a limited background check when drivers request a quote for a policy, said Pascal Persoon, chief executive of eData Management Solution in Dubai.
“This means all drivers pay approximately the same comprehensive insurance rate of between 2 and 3 per cent on average,” Mr Persoon said.
If a car is valued at Dh60,000, the premium of 2 to 3 per cent of the value is between Dh1,200 to Dh1,800.
Insurance is normally calculated on the value of the car and its specifications, the age and nationality of the driver and their driving experience.
As it is now, “good drivers subsidise bad drivers”, Mr Persoon said.
“If an insurance company charges me a 2 per cent premium and I haven’t caused a single accident, why would someone who caused five to six accidents get the same premium?” he asked. “That’s ridiculous and unfair.”
Benjamin Graham, chief risk officer at Abu Dhabi National Insurance Company, or Adnic, said a shared database would “assist the industry in tackling an important issue together”.
“We are all trying to assess driver records and vehicle history individually,” Mr Graham said. “If this means we can collectively provide a more accurate assessment of risk, then that must be positive.
“Simply put, good drivers are rewarded with lower premiums.”
Car-insurance premiums in most of the West are calculated by drivers' history and vehicle specification such as engine size and body type, Mr Persoon said.
“In the US, insurance companies can access the department of motor vehicles’ records and determine if you’re a good or bad driver,” said Glenn Havinoviski, a transport expert in Abu Dhabi.
“In some states, if you’ve got a clear record for the past three to five years you’ve got a clean record so your insurance premium will be lower.”
A risk-management tool has been developed by eData for the insurance industry in the Middle East.
It gives insurers access to the accident history of drivers and vehicles, enabling them to identify the risks.
“This system is currently being rolled out throughout the Middle East, and the first version of eData’s driver and vehicle history has been well received by the industry,” Mr Persoon said.
The company has signed a data-exchange contract with the Dubai Government and hopes for a similar deal in Abu Dhabi.
There are many ways for drivers to get the lowest rate without an insurance company doing a background check, Mr Persoon said.
A driver with a bad record will probably approach another insurer as his premium with the former company is likely to increase.
“A friend caused a major accident in Dubai and his insurance company wanted to raise his premium because of the accident,” Mr Persoon said.
“He went to another company and said he had a UAE licence but never drove a car in the country. He got the lowest premium.”
If insurance companies had access to better information they could control payouts, ensuring a much smoother system with easier claims processing.
Mr Graham said the car insurance business was full of fraud risk.
“We have all heard of fraudulent insurance claims in the market and a shared database is a critical step in allowing us to reduce insurance companies’ exposure to fraudulent behaviour,” he said.
“Most companies now have specialised teams of fraud detection officers to identify trends and investigate suspicious behaviour. Ultimately, this cost is borne by the insured community.
“If we reduce fraud, we can lower premiums so everyone in the cycle benefits from reduced fraud.”
Mr Persoon said motorists would be encouraged to drive more cautiously if their premiums were tied to road incidents.
“What will a risk management system mean for the Government?” he asked. “There will be fewer accidents, deaths and injuries, and less material damage to infrastructure.”
rruiz@thenational.ae
