On 20 February 2010 amendments and additions came into force to the Law of the Republic of Kazakhstan "On Compulsory Insurance of Civil Liability of Vehicle Owners" (hereinafter the Law).

Motor insurance, the price of motor insurance

Motor insurance is the most widespread type of insurance throughout the world: compulsory motor insurance, Auto CASCO, motor third-party liability insurance and so on: there are as many names and variants as there are names motorists use for this type of insurance. That is precisely why Polis Re will look at the questions that arise most often in motor insurance and at the disagreements that occur between the insurer and the client over an insurance payment. Of course, not every question can be covered in a single article, because new situations in motor insurance arise constantly, the rules become more complicated and the laws are constantly being amended.

Question: What consequences have these changes in the legislation had for motorists?

Answer: As always, the legislation is on the side of policyholders and victims. Many motorists know that when an insurance policy is bought, information about the policyholder and the insured is entered into the unified insurance database, which is maintained by Actuarial Statistical Bureau LLP. With the adoption of the amendments and additions to the Law, the policyholder has the right to apply to the Bureau independently for information, namely for an insurance report, and to declare disagreement with the insurance report. In this way, a policyholder or an insured person can find out whether information about them has been entered in the unified insurance database.

Question: What if the policyholder honestly bought an insurance policy and paid the full amount, but there is no information about them in the unified insurance database?

Answer: The legislation takes this into account in light of past events involving JSC "Altyn Polis" Insurance Company, when insurance policies were sold but the information was not entered in the proper manner. So now, if there is no information about the policyholder (the insured) in the database, then when concluding a compulsory insurance contract for a new
term the insurer applies a reduced coefficient under the "bonus-malus" system, provided the policyholder presents the original of the previous insurance policy.

Question: What awaits motorists who evade buying compulsory insurance?

Answer: Such a motorist will have to pay a fine of 20 monthly calculation indices (MCI), that is, 28,260 tenge. I think it is more sensible to buy insurance for 17-18 thousand tenge. Moreover, an insurance company is prohibited from granting discounts, other than the "bonus-malus" coefficient. Therefore an insurance policy bought at a large discount is most likely counterfeit.

Question: Are there any additions regarding the persons who must insure their civil liability?

Answer: From 20 February 2010, the owners of vehicles that are delivered under their own power from manufacturing organisations, repair and trading organisations and customs control bodies to the place of registration, as well as vehicles deregistered by the traffic police unit because of a change in the owner's place of residence or a change of ownership, must also insure their liability.

Question: Has the cost of insurance changed?

Answer: For individuals the coefficients used to calculate the insurance premium have not changed, but for legal entities there is good news. The "bonus-malus" coefficient will not be applied to legal entities; this is a system of discounts and surcharges depending on the traffic accidents caused by the policyholder.

Question: What if the policyholder wants to make changes to the insurance policy?

Answer: Under paragraph 6-1 of Article 10 of the Law, making changes to an insurance policy is not permitted (insurers call this re-issuing the policy, that is, previously a new policy with new details but the old terms was issued free of charge). Now, if the policyholder wishes to change the insurance policy because another person has been added, or the owner of the car has changed and the registration number has changed accordingly, or in other cases, the policyholder comes to the insurer and writes an application, the old contract is terminated with them and the insurance premium to be refunded is calculated, and then they are issued a new insurance policy for the next 12 months, paying only the missing part of the insurance premium. Here is an example: I concluded a contract on 13 November 2009 and paid 14,472 tenge for the insurance policy. If I want to conclude a new contract with the same insurer, the part of the insurance premium is calculated as follows: 14,472 (insurance premium) * 102 days (the period the contract was actually in force) : 365 days (the full term of the contract) = 4,044 tenge. Thus, the amount to be retained by the insurer is 4,044 tenge, and the amount to be refunded to the policyholder is 10,428 tenge. So I will only have to pay the missing part of the insurance premium. If the policyholder terminates the contract and does not want to conclude a new contract with the same insurer, the premium to be refunded will be considerably smaller, because in that case the calculation is done differently, which is not advantageous for the policyholder.

Question: Have there been changes in insurance payments when an insured event occurs?

Answer: The insurance payment for damage to property is made in the same amounts. For harm to the health and life of the victim, the insurer pays not less than 10 MCI for each day of inpatient treatment, but not more than 300 MCI. Funeral expenses of 100 MCI are also provided for, payable to the person who arranged the burial, that is, they are paid in addition to the amount established for the victim's death. The new deadline for making the insurance payment is no later than 15 working days from the moment the insurer receives all the documents.

Question: Can the policyholder or the victim choose the expert organisation to assess the damaged car themselves?

Answer: The victim (beneficiary) whose property was damaged is obliged, within seven working days from the day he or she or the policyholder (the insured) submits an application for organising the assessment to the insurer, to keep the property in the condition in which it was after the traffic accident and to give the insurer the opportunity to inspect the damaged property and an independent expert the opportunity to assess the harm caused. In this case, on the basis of the application, the insurer arranges, within 10 working days, the assessment of the property by the appraiser chosen by the victim.

Question: What is a direct payment?

Answer: To be precise, under the legislation a direct payment is called direct settlement. Direct settlement can be carried out by any insurance company. The conditions of direct settlement are simple. If a policyholder of our company is involved in a traffic accident caused by another person who has an insurance policy, our policyholder applies to our company with an application and a copy (or the original) of the at-fault person's insurance policy. For the insurance payment, the policyholder submits all the documents specified in the Law. The positive side of this rule is that the insurer, valuing its client, will try to make the insurance payment without red tape. However, direct settlement cannot be used by a victim who is not the owner of the property that was harmed.

Contact Polis Re for a full consultation; we will be glad to help you.