The Insurance Regulatory Unit (IRU) is working on preparing a new motor TPL insurance system under which various insurance packages will be offered based on the driver’s age and traffic record, the vehicle type and other factors that affect the degree of risk.
The new pricing system being considered by the IRU, which is part of the Ministry of Commerce & Industry, will mean higher premiums for sports cars, young drivers and those who violate traffic rules, an informed insurance source told the daily newspaper Al-Jarida.
The IRU is carrying out a study on matters that include determining depreciation rates, total loss, and compensation in case the repairs of a vehicle damaged in an accident take more than a week, according to market sources. The IRU is also studying the status of supplementary comprehensive insurance.
In addition, the IRU has decided to increase motor insurance tariff rates, ending the current annual premium of KWD19 ($62) that has been applied since 1961. The reason for the increase is higher pay-outs and hikes in the prices of cars and spare parts that have caused huge losses for motor insurers over the years.
The new motor insurance policy will take into account the driver’s age, vehicle weight, payload, type and engine power, said the sources, adding that actuarial calculations are needed. However, data in the insurance market are incomplete due to the lack of commitment by insurance companies and insufficient clarity on issues like engine power, vehicle weight and the wrong use of vehicles.
The insurance industry has tried several times in the past to convince the authorities to revise the motor TPL insurance tariff, calling the current KWD19 premium an unfair price. Despite significant increases in the prices of cars, spare parts, court awards, personnel costs and services, insurers have met with no success until now.
Industry sources said that the size of the insurance market in Kuwait will grow if a study is carried out on regulation in the insurance market and if insurance companies work in partnership with the IRU to change the sector. M