Drivers face 1,000 yuan insurance charge
By Hu Yuanyuan (China Daily)
Updated: 2006-06-20 08:50 "As 80 per cent of traffic accidents result in some damage, insurers can
hardly reach the break-even point, even with such a premium," he added, warning
the regulator may raise premiums next year.
The standard premium was
based on the principle of "no profit, no loss" for this type of business, which
may enhance competition on services, according to Zhang Huaili, general manager
of the Beijing branch of China Continent Property and Casualty
Insurance."Products from different insurers will be quite similar with the
standard premium and clauses," Zhang explained. "And big insurers will have an
upper hand as they have a sound client base and better publicity."
The
regulator has approved 22 domestic insurers to offer the new policies. Foreign
insurers will not be allowed to offer policies as China made no promises to open
up the compulsory insurance business in its World Trade Organization
commitments.
Under the new policy's "compensation first" principle,
insurers will have to pay for losses incurred in an accident before
responsibility is clarified.
A fund will also be set up to pay in advance
for rescue, medical treatment and funeral service costs not covered by
insurers.
The fund authority will be able to reclaim money from those
found responsible for accidents.
Currently victims of traffic accident
have to approach drivers first and are compensated only after the insurer pays
the vehicle owner.
In 2005, 98,738 people were killed and 470,000 injured
in more than 450,000 road accidents, according to official
statistics.
Traffic accidents accounted for about 75 per cent of all
accidental deaths that year, causing a direct loss of about 1.9 billion yuan
(US$234 million).
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