The Bank of Russia plans to expand the compulsory motor third-party liability insurance (CMTPLI) rate corridor, both upwards and downwards, by 11.57% for public transport (trolleybuses, trams, and regular passenger buses) and by 20% for motorcycles and trucks with a permissible maximum weight of up to 16 tonnes, as stipulated by the regulator’s draft ordinance. The base CMTPLI rates for personal cars will not change.
As to the vehicles for which the rate corridor is proposed to be expanded, their owners account for about 4% of all CMTPLI policies. The corridor has remained unchanged for more than two years, despite the surge in prices for spare parts and increased losses.
Currently, motorcycle owners pay less for CMTPLI than other policyholders, although the amount of damage caused to victims through their fault has become comparable to that caused by cars, having increased by 32% in two years. The analysis of the statistics on motorcycle policies has also revealed the need to revise the procedure for setting insurance rates for motorcycles. The draft ordinance stipulates a change in the age-experience coefficient range for motorcyclists, as well as the introduction of a new coefficient depending on the power of a motorcycle.
As for small trucks, their drivers cause road accidents with maximum damage of ₽400,000 more often than other road users. The number of such payments under their policies is twice the average for all car drivers.
The proposed expansion of the rate corridor will make it possible to set fair rates for high-risk drivers and will encourage accident-free driving.
In addition, the Bank of Russia suggests updating the local coefficient (LC), which affects insurance policy prices, for several regions. The regulator plans to cut the LC for 21 territories where its values are above the Russian average, with a maximum reduction of 6%. Contrastingly, the LC is planned to be raised for 18 territories where its low values do not factor in higher losses. Its maximum increase will amount to 10.5%. However, the LC for these regions will stay below the Russian average even after this rise.
The document also provides an increase in the coefficient for CMTPLI multi-driver insurance policies for individuals. These are insurance contracts with no limit on the number of people allowed to drive the insured car. At present, they are often taken out by car owners whose price of this kind of policy does not differ significantly from that of a standard CMTPLI policy due to high individual risks (e.g., accident rate in previous periods). Multi-driver insurance policies account for less than 2% of all CMTPLI policies issued to individuals.
The Bank of Russia welcomes any suggestions and comments regarding the draft ordinance through September 17, 2024.
Preview photo: Dmitry Kalinovsky / Shutterstock / Fotodom