Russian car owners will need to pay more for third party auto insurance, with rates expected to as much as double in some cases.
On Tuesday Russia´s Prime Minister Vladimir Putin signed a resolution changing the way calculation methods for third party motor vehicle insurance policies.
According to Kommersant, young residents of large cities, driving low-power vehicles, from 70 to 100 horsepower, for several months a year, will be affected by higher prices most of all.
However, Pavel Bunin, President of the Russian Union of Car Insurance Companies, says the measure was necessary to cover losses of insurance companies in some Russian regions.
“Several higher coefficients for insurance policies is an important and necessary measure seeking for a lower loss-making and the creation of an efficient insurance market in Russia.”
Since 2003, when the motor third party liability insurance law came into force, the coefficients were adjusted only once – in March 2009, meaning rising inflation has pushed a lot of insurance companies into loss making. In some Rusian regions, such as Sverdlovsk, Ulyanovsk, Murmansk, Republic of Dagestan, losses were over 77%, with Bunin stating the situation was critical
“Inflation has reached more than 200% for this period of time. In this respect, several regional insurance companies turned out to be loss-making to pay the insurance premiums”
Following this move, minimum insurance premiums for damage to those injured in road accidents should also be increased from the current 160,000 roubles to 500,000 roubles, according to Vedomosti.
The new calculation method for car insurance is expected applied from next week.