We were surprised to read recently, in view of the analysis of the 2016 auto insurance claims figures, that the reform introduced in 2015 on the traffic accident scale, which was effective as of January 1, 2016, has notably benefited insurers. And, along the way, it has especially harmed the slightly injured.
The reform of the accident scale… How was it?
As we already explained in a post months ago, a reform of the traffic accident scale was introduced in 2015, whose main purpose was:
- Increasing compensation in case of injuries and very serious claims (these increases in payments were very high in percentage with respect to the previous schedule).
- However, in minor personal injury claims, the new schedule has been detrimental to the injured party.
- The evidentiary requirements of the damage and its link to the traffic accident were tightened.
It is common knowledge that the most common accident is the one that causes minor damage. On the other hand, the number of fatalities is below 10%.
Consequences on auto insurance loss ratio
In view of what was a foreseeable rise in compensation for injuries, or at least that is how they had sold it to us, the companies raised the prices of auto insurance, in their renewal of policies. We already mentioned it in this post, as well as important newspapers such as ABC, Expansión…
However, it has become clear after the close of 2016 that the accident rate has not gone up, but rather has gone down, for the reason we saw above. Insurance companies have paid out less in compensation to injured parties than in 2015.
In fact, the offers made by insurance companies have been greatly reduced, so that legal proceedings have increased in the absence of an amicable settlement. This will lead to an increase in legal assistance costs.
The change in the accident rate will be felt at a later date.
However, it is indicated from the companies that as a serious loss is delayed in time until reaching a compensation, they state that the new Schedule will be noticed in the income statements of the year 2017. We will be watching to see if this is really the case.
If you want to compare car insurance, we are what you need. Contact us without any commitment and you will notice the difference from the first day.
