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Izam Said Ya'akub
BANDAR SERI BEGAWAN

THE General Insurance Association Brunei (GIAB) and the Ministry of Finance are currently discussing a proposed new motor insurance payment system in the wake of the insurance industry's massive payout of $3.6 million.

The move was made as increasing number of claims and larger payouts — a result of Brunei's dismal traffic safety record — mean the industry is rapidly losing its business viability.

Motor insurers have said the tariffs are grossly inadequate and argue that without a change in the tariff regime, the industry will simply become unprofitable.

The total industry volume for motor insurance is about $34 million, and new legislation introduced in 2006 requires companies to have total paid up capital of $5.4 million.

The discussions with the Ministry of Finance regarding the creation of a new motor insurance tariff regime, could potentially see a different tariff regime for foreign nationals.

The largest claim to be paid out by insurers was the award of a $3.6 million accident compensation to a nine-year-old boy injured in a car accident in 2000.

The child was of Nepalese origin but now resides in the UK. Under Brunei law the court was obliged to take into account living costs in the UK, despite the fact that the premium paid was in Brunei dollars.

With the precedent now set, motor insurers are now arguing that insurance premiums are out of sync with the claims now possible, with many forecasting that greater awards could be made.

For Southeast Asia, the $3.6 million award is a record figure, and with many expatriates living in the sultanate, the fears of the insurance industry appear well founded.

Brunei Darussalam has some of the lowest motor insurance premiums in the world. In the case of this latest record payout the claimant was covered for unlimited bodily injuries by an annual premium of just $67.50, compared to the lowest premium available in the UK of $607.50.

Industry insiders have also called for government action to improve road safety.

An Oxford Business Group report states that while the rate of accidents to vehicle population has fallen by 2 per cent since 1994, a worrying 25 per cent of all accidents have resulted in either death or serious bodily harm.

Government action to push down the number of accidents can significantly ease the industry's burden, argued the GIAB.

The report also points out that the introduction of the contingency fee rules — where claimants can split rewards with their lawyers if the case is won, and do not have to pay any fees if they have lost — resulted in more personal injury claims being made.

For instance, in 1993 only 10 annual claims were recorded. This figure jumped to more than 150 in 2004, as more people are suing for damages as they are protected by the law from financial risk.

The Brunei Times

1 comments:

as a professional rally driver, here is the best advice i have to offer on how to avoid a serious spinal injury should the worst happen when you are driving. As you can imagine, i have the odd accident at work, and my co-pilot told be that if i am seated with my bum right in the corner of seat and my back against the back rest from bum to shoulders (i.e with the spine in an upright, supported position, then should we have a crash, or have to stop suddenly, the damage to my spine will be minimal. I haven't had another accident at work since he told me this, but next time i do i promise to update you guys and let you know how the spine was after!

January 17, 2008 at 8:06 AM  

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