The Central Bank of Russia is considering changing the principles for calculating the cost of auto insurance policies depending on the accident rate in the regions. This means that drivers from regions with a low number of accidents will be able to pay less, while in regions with a high accident rate, tariffs may increase.
Currently, the cost of auto insurance is regulated by a tariff corridor set by the Central Bank, and insurance companies cannot go beyond it. However, in some regions of the Russian Federation, due to the large number of accidents, this type of insurance becomes unprofitable for insurers. Deputy Chairman of the Bank of Russia Filipp Gabunia noted that the introduction of an additional regional coefficient or a more complex tariff structure is being discussed.
The President of the Russian Union of Auto Insurers (RSA), Evgeny Ufimtsev, proposed applying the bonus-malus coefficient (BMC) not only to individual drivers, but also to entire regions. This will reduce cross-subsidization, in which relatively safe regions actually subsidize territories with high losses.
The introduction of a regional BMC will change the current situation, in which regions with an acceptable level of losses in auto insurance subsidize regions with an unreasonably high level of losses through the loss redistribution mechanism.
If a positive decision is made on the innovation, the coefficients may be updated every six months or a year. Already, some regions, such as Tatarstan and the Amur Region, have been able to improve accident statistics through tough measures.
The situation with losses on auto insurance operations does not change quickly, although there are known cases when, for example, individual regions of the Russian Federation, such as Tatarstan or the Amur Region, took up the task of improving the situation, and corrected the situation in the auto insurance segment in almost six months with tough actions.
If the proposal is adopted, the auto insurance system will become more flexible. Drivers from regions with low accident rates will receive a financial benefit, and problem areas will be motivated to improve the situation on the roads.
At the same time, automatic control of the availability of policies using road cameras is being discussed. This will help reduce the number of uninsured cars and reduce the burden on the insurance market.
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