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No claims bonus under compulsory motor TPL policies are used by 81% of drivers – RAMI President I.Yurgens

23.10.2017

81% of Russian car owners have Bonus-Malus Factor (BMF) less than 1, which implies application of no claims bonus under compulsory motor third party liability insurance, president of the Russian Association of Motor Insurers (RAMI) Igor Yurgens said.

According to his words, this indicator has grown by 1 percentage point over the Q3 2017. Thus, according to the data of the end of the Q2 2017, 50 mln people (80%) had the bonus, while at the end of the Q3 2017 the number of drivers who have the bonus is already 50.2 mln (81%). That is to say that the number of drivers with the bonus has grown by 0.2 mln persons over the quarter.

I.Yurgens added that according to the results of the Q3 2017 34% of car owners (21 mln people) have more than 20% bonus (i.e. their BMF is less than 0.8%. Maximum bonus in the amount of 50% (BMF 0.5) has been obtained by 15.5% of drivers (9.6 mln people).

“Such indicators show that the financial awareness of the car owners is growing, as they understand that driving without accidents can save up to the half of the cost when buying a policy,” – I.Yurgens noted.

The Association President reminded that RAMI has simplified the BMF adjustment procedure since December 1, 2015. If the car owner does not agree with the BMF value determined as the result of calculation of the motor third party liability coverage, he/she can apply with a respective statement to his/her insurance company under the existing contract or to the company to be contracted. If the inspection shows that the BMF value has indeed been wrongfully applied, the company shall adjust the value of this factor.

I.Yurgens drove the attention of the car owners to the need of timely submission of data on amendments in the documents used while issuing a compulsory motor TPL contract, such as change of passport data or driving license. In the absence of correct information the RAMI Automated Information System will not be able to calculate the factor correctly. Thus, for example, if the last name has been changed, AIS will not find the initial data, and BMF will be automatically equal to 1 like in the case of a new driver.

The other case when the factor can be overestimated is when the driver is inserted in several motor TPL policies which include some with “bad” history. The scale-up factor can be also lost, if there is a significant interval between insurances or if a forged motor TPL Policy was purchased, I.Yurgens explained in addition.

“We rely on further improvement of this system. One of proposals in this direction is to calculate the BMF value in the RAMI base as of January 1 every year and not to change it during the year. It would make the BMF value more clear and transparent for the car owners, motivate them to drive carefully during the year, preserving in such a way the purity of their factor”, - RAMI President said.

The proposed mechanism will provide material reduction of the number of claims which often arise due to the fact that the person can be indicated in different policies, so that one driver can have several BMF. The driver will surely save its accumulated bonuses, but he/she will always receive a “Malus” under results of the year for each accident occurred due to his/her fault, irrespective of the contract of insurance under which such loss was insured.

The Bonus-Malus Factor (BMF) is the factor which influences the policy cost (upward or downward depending on existence or absence of events insured against in the previous insurance periods).


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