Insurers to be able to reduce OSAGO tariffs for careful drivers
The Bank of Russia plans to widen compulsory motor third party liability insurance (OSAGO) tariffs’ corridor to let insurance companies assign a lower tariff to careful drivers and a higher tariff to risky drivers and traffic rules violators. The corresponding draft ordinance is published on the regulator's website.
On 24 August, 2020, amendments to the Law on OSAGO covering tariffs individualisation will come into force. The basic tariff rate will no longer be the same for all drivers in the same territory, and will be determined by the insurer for each car owner individually, depending on his or her risk profile.
In addition to the factors directly established in the Law (such as gross traffic rules violations), insurers will be able to take other circumstances into account when setting the tariff. This may include the age of the vehicle, its mileage, the driver's marital status and children, the installation of telematics on the vehicle, and other factors. The use of all available information by insurers will increase the accuracy of separating low-risk and high-risk drivers and, accordingly, will allow the actual risk to be more accurately reflected in the policy price.
As the experience of the first stage of OSAGO individualised tariffs shows, insurance companies are interested in good drivers and ready to compete for such customers. Thus, as a result of a 20% widening in the tariff corridor in early 2019 down and up, the average OSAGO premium for 2019 decreased by 4.8%.
The draft ordinance provides for a 10% wider tariff corridor for passenger cars of individuals down and up, which will allow for a greater differentiation of tariffs for drivers with different risk levels.
For public transport (regular buses, trolleybuses, trams), the bottom tariff limit will be lowered by 5%, while the top tariff limit will remain unchanged.
Due to a high accident rate, a significant difference in drivers’ skills and a serious underestimation of tariffs, the corridor was widened the most (by 30%) down and up for taxis. This will serve as a monetary measure to effectively influence undisciplined taxi drivers and reduce tariffs for careful drivers.
The draft ordinance also sets out discriminatory factors that insurers will not be allowed to take into account when determining the base tariff rate. These include nationality, race, language, religion, and official position.
The new tariffs are expected to come into force simultaneously with amendments to the Law on OSAGO.