Cedric Stephens | Crash prevention central to insurance business

Movernos seguros is a Spanish phrase. In English, it means ‘moving forward with insurance’ and refers to the policies of governments that are specifically ‘related to mandatory or compulsory vehicle insurance and road safety’.

I learnt that Movernos Seguros is also the name of an organisation whose mission is to support and collaborate ‘with government initiatives aimed at establishing or enhancing mandatory vehicle insurance, transforming them into dynamic tools for preventing road crashes and providing comprehensive support systems for traffic victims’.

Successive Jamaican governments, their agencies, and even insurance executives, have treated the two elements of Movernos Seguros’ mission as separate.

Life, accident, health, and motor insurance providers are in the road crash prevention and compensation support business. Blinkers – leather devices on the bridles of horses that force them to look straight ahead during the era when these animals dominated the roadways – have deterred some persons in the industry from seeing that the prevention of road crashes and the provision of support systems for crash victims are central to their business. Instead, making money is the mission of these enterprises.

The ideas behind Movernos Seguros are intriguing. For years, I have been trying unsuccessfully to convince motor insurers that crash prevention is part of their core business. The Fédération Internationale de l’ Automobile and the Inter-American Development Bank, which launched Movernos Seguros in 2018, agree. Its goal was to improve road safety in Latin America and the Caribbean through the promotion of vehicle insurance.

One year later, Movernos Seguros began working in Paraguay, El Salvador, and Costa Rica. Its website says it is also conducting activities in Guatemala, Honduras, Jamaica and Peru.

Movernos Seguros commissioned a research firm to conduct a Perception of Road Safety and Third-Party Insurance Survey in Jamaica last year. Even though the research brief was not included in the 22-page PowerPoint file, it appears that neither Movernos Seguros nor the company that supervised the project was familiar with the legal frameworks that governed the provision of compulsory motor vehicle insurance. The Motor Vehicles Insurance (Third-Party Risks) Act and The Insurance Act 2001 and regulations were not mentioned.

The researcher also seemed unfamiliar with local motor insurance products.

While the detailed research objectives were listed among the survey results, I found the report difficult to understand until I read the Costa Rican legal framework for compulsory motor vehicle insurance.

It is vastly different from that of Jamaica. For example, ‘every vehicle owner in Costa Rica is required to pay an annual property tax and obligatory insurance known as marchamo. This insurance covers a minimum amount of liability for injuries caused by the vehicle, regardless of who is driving or who is at fault. The mandatory or compulsory insurance includes coverage for ‘personal liability, injuries or death, medical care for the driver and family, property damage, collision, theft, and additional risks such as natural disasters’. Drivers must also buy additional liability insurance to protect themselves if they caused injuries or damage to third parties while driving.

Despite those flaws, the report was useful, even though it appears that neither the project sponsors nor the research firm were aware that, a decade earlier, the IDB, in association with the Access to Insurance Initiative, the Multilateral Investment Fund, and the Financial Services Commission, conducted a study that covered similar topics. That investigation was designed to “improve access to insurance for the low-income population of Jamaica”.

Perceptions about the local insurance industry generally, and about motor insurance specifically, were sought during islandwide focus group discussions conducted by the Mona School of Business and Management of The University of the West Indies in 2014. Here are extracts from that report:

• Respondents have unfavourable opinions about some insurance industry practices. Issues were raised about the length of time to settle claims (particularly for motor insurance) and the low benefits received compared to the premiums paid in the event of a claim (homeowner’s insurance). A St Ann participant said that insurance companies are very time consuming whenever they are to compensate for damages. They have too much process to follow before they compensate persons for damages. There was some dissatisfaction resulting from confusion about the benefits offered by a given insurance policy. Grievances include a misunderstanding about the coverage provided by a third-party motor policy versus a comprehensive motor policy and a complaint about the effect of the average clause on a homeowner policy claim payment.

• Motor vehicle insurance policy holders are often unwilling customers. Industry interviews indicate that about 25 per cent of vehicle owners do not purchase motor vehicle insurance, although it is required by law. Those persons who do often do not value the coverage, and resent having to pay for it. A respondent (in St James) explained: The only insurance I have (a) problem with is car insurance. If you (are) in one accident your premium and the other person’s premium will go up even if you are not at fault. Also, it takes forever like they want you to forget about it.

Have those perceptions about the industry changed during the last decade? The 2024 study found that: perceptions about the motor claims process have remained unchanged; and widespread confusion exists about compulsory motor vehicle insurance coverage.

Nearly three out of every four people surveyed believed that a portion of the motor insurance premiums paid by motorists should be deployed to fund campaigns to improve road safety. This finding appears to be supportive of Movernos Seguros’ mission.

Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: aegis@flowja.com or business@gleanerjm.com