[EDITORIALS]Drive offensively?A proposed change to the automobile insurance policy system will raise the cost of insurance for drivers with clean driving records. Drivers who have stuck to the rules of the road are understandably upset.
After the liberalization of the automobile insurance market in August, the Financial Supervisory Service proposed a change in how premiums can be calculated for drivers with or without a record of accidents. At the core of the proposal is lengthening the period for receiving the maximum premium discount from the current 8 years to 12 years, in effect requiring good drivers be on the road for four more years before they can get a 60 percent discount. The annual discounts, which currently range from 5 to10 percent, will then be cut. Delaying the maximum discount benefits in effect means the insurance costs for good drivers will be higher. The regulators have not set a date for the introduction of the measure, but observers predict it will go into effect sometime next year.
The insurance regulators based the proposal on insurance companies' avoidance of good drivers. That's right. Some insurance companies have circulated internal memos directing sales offices to turn away new insurance policy shoppers who walk in with clean records dating back six years. Their justification is that persons receiving discounts for clean records number far more than accident-causing drivers, who represent 10 percent of total policyholders. Insurers try to be seen as leading the campaign to reduce auto accidents, but their avoidance of good drivers can be interpreted as encouraging dangerous drivers. What is more outrageous is that the regulators are cooperating!
No matter what the justification is, good drivers must not be put at a disadvantage. If the issue is improving the profitability of insurance companies, the solution should start with higher premiums for dangerous drivers. A police campaign for seat belt use and against drunk driving has improved our traffic safety record recently. Insurers have benefited from this campaign. This year, they made over 64 billion won ($48 million) in profits compared to 20 billion won in losses last year. Regulators must stop insurers from turning away good drivers. They should not lead the charge against them.
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