Wednesday, June 3, 2009
No Guilty Party in Accidents
Strait Times: "No-fault motor claims" hits the headline news this morning. Motorists have recently been agonizing over fast raising motor insurance premium and inflated claims. A radical proposal to do away with third-party claims and have a "no-fault regime". The system is used in New Zealand, Canada and United States.
So what is a no-fault system? Motorists make claims against their own insurer in an accident irregardless who is at fault. The system eliminates disputes and theoretically reduces claims amount and insurance premiums in the long run.
The problem with third-party claims is that accident parties will always be encouraged to paint the story along this line "the other party is at fault!" so as to minimize any claim payout from his own motor insurance policy, avoid loss of no-claim discount and increased premium. There are vested interests for the workshop, doctor, lawyers, etc. to provide services and make profits, whether ethically or in-ethically. It is also difficult, expensive and time-consuming to prove who was at fault in court. Thus, I can understand why some insurers will just go ahead to pay any claim. They will just need to raise the insurance premium to recover the costs.
I strongly support the no-fault system since inflating claims will only impact the motorists' own insurance policy. Other major accident cases should then rightfully be addressed in court to find the party at fault.