Victims of traffic accidents will receive timely financial compensation
thanks to a new insurance regulation to be effective July 1.
With the "compensation first" principle, the regulation on motor vehicles'
compulsory liability insurance requires insurance companies to pay for the loss
incurred by a third party in an accident, said an analyst with Anbang Property
and Casualty Insurance Co.
According to the regulation, 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 can then ask those responsible for the accidents to return
the money.
Currently, victms of traffic accident have to approach drivers first and are
compensated only after the insurer pays the vehicle owner.
The China Insurance Regulatory Commission, based on the principle of "no
profit, no loss" for this type of business, will set a limit on how much
insurers can charge and adjust it annually.
According to the regulation, the premiums for traffic accident liability
insurance will be higher than the current third party insurance.
Moreover, the premium for this type of insurance is linked to the driver's
record a motorist with a good safety record will pay lower while those who often
break traffic rules fork out more.
The regulation will help deal with the contradictions created by the Road
Traffic Safety Law and the current insurance rules, according to experts.
According to the traffic law, compulsory third party insurance should cover
victims in a traffic accident; but under insurance rules, the insurer should pay
only when the insured driver is found at fault.
"The new regulation complies with common international practice, and gives
priority to victims' compensation," said Lu Yan, a lawyer with Beijing Lihua Law
Firm.
In 2005, 98,738 people were killed and 470,000 injured in more than 450,000
road accidents, according to official statistics.
The number of deaths accounted for about 75 per cent of death toll in all
accidents that year, costing a direct loss of 1.9 billion yuan (US$234 million).
Foreign insurers will not be allowed to offer the new policies as China made
no promise to open up the compulsory insurance business in its commitments to
the World Trade Organization, according to government officials.
(China Daily 03/30/2006 page1)