Opinion: Change the law, it's time for compulsory third party insurance

By John Grant The UK government are further tightening the law on compulsory third party insurance and there are some good lessons that NZ could take from their experience. Currently in the UK, every vehicle driven on the road is required to have third party property damage insurance. The proposed changes will require every car to have cover regardless of whether its being driven on the road or not. Failure to comply will result in a fine of £1000 ($2300). The reason for the change, according to their Department of Transport, is that in the UK uninsured and untraceable drivers kill 160 people, injure 23,000 and add £30 ($70) a year to every motorists' insurance. Police there are seizing 400 uninsured vehicles a day. Motoring organisations are welcoming the move to curtail the number of uninsured motorists.

Meanwhile, Steven Joyce, the new Transport Minister here is awaiting a report on this issue which is due to be delivered in October. The previous Labour Government through their Transport Minister Harry Duynhoven had shown enthusiasm for the idea. He had called for submissions but this seems now to be part of a wider look at various transport initiatives. Various groups have come out in support of the concept of compulsory property damage insurance but the Insurance Council in a submission to the previous government warned of what they perceived as a downside to a compulsory scheme. Chris Ryan, CEO of the Insurance Council, believes the policing costs will be an issue, as will good drivers subsidising younger drivers and those who are yet to establish a risk profile. However, the current President of the Insurance Council, AMI's CEO John Balmforth said in AMI's last annual report "As a major motor vehicle insurer AMI has made a submission to the Government's current investigation into the introduction of Compulsory Third Party Vehicle Insurance (CTPVI). Should CTPVI be introduced, AMI will work with the Government to help ensure it is implemented successfully. We support a privately administered scheme involving insurance companies to generate competition in the market and to reduce administration costs. We also believe the scheme should be based on assessed risk, with more high-risk motorists paying higher premiums." Another influential motoring organisation, the AA, has said it will work with government on the scheme if introduced but has reservations on whether it will achieve what it is hoped to do. They say, "The AA has concerns about the introduction of a compulsory third party insurance scheme, and notes that:

• It is not clear how such a scheme could operate or how it would be effectively enforced
• It is possible that insurance companies will spread the increased cost of providing cover to high risk individuals across all policy holders
• It is not clear whether a compulsory scheme will change driver behaviour
• Non-compliance levels (registration, warrant of fitness and insurance) are likely to remain high even with a compulsory scheme."

What does seem clear is the current optional arrangements are just not working. We've finally seen the law changed on cell phones so perhaps the willingness to tackle these thorny issues is there? Anything that can reduce the current boy racer issues, get the heavily modified and dangerous vehicles off the road, can only help reduce our appallingly high road toll. This just has to be good for the country. It's time this was debated and resolved once and for all. "”"”"”"” John Grant edits the insurance coverage on interest.co.nz