Road Crashes Causing Insurance Premiums to Soar

The frequency and severity of road crashes have taken a toll on motor insurance premiums which have soared up to 30 per cent in general over the past year. The hike also affects the premiums of motorists who have not been involved in a crash.

Statistics provided by the Road Traffic Unit in the Ministry of Transport and Mining shows that 2,000 fatal crashes occurred over the past five years resulting in the deaths of 2,237 persons. Last year, there were 425 fatal collisions that caused a record 488 persons to be killed. Up to May 26, there were 150 crashes and 163 deaths.

The high incidence of road crashes is a major concern for insurers.

Orville Johnson, executive director, Insurance Association of Jamaica, pointed out that claims have been rising steadily year-over-year and that increased claims have resulted in higher premiums.

He disclosed that motor risks as at December 31, 2022 were 484,793, a 4.1 per cent increase in comparison to the previous year. Motor claims for 2022 was $16.4 billion, up 16.8 per cent based on the previous year. Also, the number of claims were 53,852, which was more than 1,000 per week in 2022- an increase of 11 per cent over 2021.

“Inflation also plays a role in hiking the costs as we have been grappling with high inflation over the last two years due to external factors primarily as motor vehicles and parts are imported. We have felt the impact of the supply chain dislocations as a result of COVID-19 and its attendant issues, with higher shipping costs,” Mr Johnson outlined, adding that the Russia-Ukraine war has also pushed costs up.

“Inflation is now moderating in Jamaica and the exchange rate has been stable so that provides some hope for the future, but the fundamental issue needs to change, which is the increased crashes. We hope that the changes in road traffic regulations with its increased fines will prove to be a deterrent to those who create mayhem on our roads as a result of poor driving behavior,” he said.

Andrea Gordon Martin, assistant general manager, Operations, JN General Insurance Company, explained that road crashes often lead to property damage, injuries, and loss of lives.

“These unfortunate events not only impact individuals and families directly involved, but also the insurance industry on a whole as the higher the number of claims insurers receive for injuries and damage, the greater the need to charge adequate premiums to pay for future losses,” said Mrs Gordon Martin.

“When a policyholder is involved in a collision, the insurance company pays for damage to the policyholder’s vehicle, if it is comprehensively insured, as well as to the other motorist’s vehicle involved. The cost of repairing or replacing damaged vehicles is expensive.  Additionally, there are other associated costs such as medical expenses and lost wages,” she added.

Mrs Gordon Martin further pointed out that another major issue associated with crashes is the submission of false, exaggerated, or misleading information for damage and injuries.

“Such fraudulent claims can further increase the cost of insurance for all policyholders,” she related.

To circumvent the issue of high incidence of road crashes, insurers have implemented various measures, such as offering discounts to policyholders who have dash cams, a video-recording device installed in their vehicle, that tracks driving behavior.

“Dash cams aid greatly in collision investigations as it provides video evidence of what transpired, making it easier for insurers to determine who was at fault; thus, claims can be  more quickly and accurately processed. Additionally, it improves driver behaviour as motorists are more likely to drive more responsibly because they are aware that their driving is being recorded. This can ultimately help in reducing the number of crashes and claims,” the insurer said.

Mrs Gordon Martin urges drivers to take the following precautions to reduce their risk of being involved in a collision:

• Be attentive while driving so you can observe the driving behaviour of other motorists and be able to react quickly if there is the risk of a crash. Keep a safe distance from the vehicle in front of you.  Avoid distractions like texting or talking on the phone while driving which can also result in a hefty fine under the Road Traffic Act

• Obey the Road Code, such as speed limits, traffic signals and stop signs. Use safety gears, such as seatbelt and helmets that can help to reduce injuries if there is an accident.

• Maintain your vehicle regularly to ensure that brakes, tyres, wipers, headlights, and other essential parts are in good condition.

• Avoid driving under the influence of drugs or alcohol, which is extremely dangerous. Never get behind the wheel if you are impaired. Be aware of the side effects of medication you are taking, which can cause drowsiness and similar impairments.

• Do not drive when feeling fatigued as this can slow down your reaction time or cause you to fall asleep at the wheel. Ensure you get adequate rest and take frequent breaks during long trips to keep alert.

“By following these tips, motorists can help to keep the roads much safer for themselves and other road users.  They will also enjoy a safer driving experience and be able to keep insurance premiums down,” Mrs Gordon Martin maintains.