The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

INSURERS yesterday warned that the Bahamas' 40 per cent "uninsured driver ratio" is a significant obstacle to the creation of a 'rogue motorist' protection fund.

While agreeing that the havoc caused by uninsured and 'unauthorised' motorists is "unacceptable", local property and casualty underwriters said the Court of Appeal president's renewed call could effectively result in responsible drivers paying for the sins of their irresponsible counterparts.

Responding to Dame Anita Allen's call for the Bahamas to establish a fund similar to the UK's Motor Insurers Bureau, as a mechanism to compensate victims of uninsured and 'hit and run' drivers, the insurers said this sounded fine "in theory" but needed to be carefully "thought through".

Tom Duff, Insurance Company of the Bahamas' (ICB) general manager, told Tribune Business that while the Motor Insurers Bureau worked well for the UK it was not necessarily the most suitable model for the Bahamas. He added that the UK scheme imposed a "fairly significant" levy on insured motorists' premiums to finance it, and questioned whether Bahamian consumers would agree to such a charge in an already-high cost environment.

Mr Duff also warned that the costs of a Motor Insurers Bureau-type scheme were unlikely to be easily "contained" in the Bahamas, given the high percentage of drivers who either lacked insurance or were not 'authorised' to operate a particular vehicle by its insurance policies.

He suggested this could impose ever-increasing costs on responsible motorists who always maintained appropriate insurance coverage, and instead recommended the increased use of technology to enable the Royal Bahamas Police Force to better identify and "clamp down" on uninsured drivers.

The ICB general manager estimated that up to one-third of Bahamian drivers could be on the roads without the required insurance coverage, but his colleague Timothy Ingraham, Summit Insurance Company's president, put this as high as 40 per cent - two out of every five motorists.

"The Motor Insurers Bureau does work reasonably effectively in large, established markets like the UK for example," Mr Duff told Tribune Business, "where you have a containable element of uninsured drivers.

"My concern, perhaps, for the Bahamas if we were to look at that type of set-up would be how many uninsured drivers we have here. Is our uninsured driver ratio higher than established markets? I suspect it would be. That becomes a problem if we're asking insured motorists to fund a higher uninsured risk than in established markets.

"That means a higher levy on policyholders. In the UK it's a fairly significant amount, and that goes on top of premiums. It is not broken out, so the consumer doesn't see it, but the levy is quite significant," the ICB chief continued.

"If you translate that to the Bahamas market, where you have a higher percentage of uninsured drivers, the levy will require a greater dollar amount put towards it."

While describing Dame Anita's call as "a great idea", and acknowledging the extent of bodily injury and financial hardship caused by uninsured drivers, Mr Duff reiterated that a Motor Insurers Bureau would require detailed analysis of its potential costs and the Bahamas' uninsured driver ratio before it can be implemented.

"Everyone wants to see persons injured by uninsured motorists protected, but we have to measure that against the cost of doing so," he argued, adding that "anything from 25 per cent up to 33 per cent" was "in the ball park" when it came to the proportion of Bahamian drivers lacking the necessary insurance.

"We have people driving vehicles they are not insured to drive, and have individuals who do not even possess a driver's licence driving as well," Mr Duff continued. "We have uninsured vehicles and uninsured drivers."

Mr Ingraham, Summit's president, told Tribune Business that the extent of the uninsured driver problem was even greater than Mr Duff's estimates. "It's been estimated that 30-40 per cent of motorists could be driving without proper insurance," he revealed.

The Summit chief added that "the funding mechanism is going to be key" if the Bahamas implements a Motor Insurers Bureau-type scheme, suggesting that a portion of the existing 3 per cent premium tax could be assigned to finance it.

The Government, though, has already shown deep reluctance to separate premium tax revenues from its Consolidated Fund, and Mr Ingraham said rules governing how a 'protection fund' will work - the size of payouts, and how they are calculated - need to be developed.

"It's a good idea," he said of Dame Anita's call. "The execution of it needs to be thought through very carefully. At some point it will appear to be a tax on motorists. That's what happens. There are also arguments that its creation will encourage moral hazard, and persons not to insure."

Mr Ingraham said a further levy on insurance premiums to fund a Motor Insurers Bureau-type fund was contrary to the industry's goal of reducing coverage costs, and warned that it amounted to penalising responsible drivers for the sins of irresponsible ones.

The ongoing anarchy on Bahamian roads was recently highlighted by the $12,340 fine handed down to a Wendy's employee for running over and killing a 52 year-old man in an uninsured and unlicenced vehicle, and promptly fleeing the scene.

Maronique Paul, a 24 year-old mother of one, with another child on the way, pled guilty to driving while not insured against third party risk; driving an unlicensed vehicle; driving without a valid driver's licence; fraudulent use of a licence plate; fraudulent use of a licence disk; and failing to remain stationary after an accident.

And Dame Anita's call for a 'rogue driver' protection fund is likely to strike a further chord with many Bahamians who have either been a victim themselves - or seen family and friends suffer - as a result of being unable to claim against the culprit's insurance.

The Court of Appeal president made the call after overturning a Supreme Court verdict that permitted two road accident victims to enforce a $654,000 damages claim against Bahamas First.

The company had insured both the vehicle, and the mechanic, involved in a 2004 collision in Eleuthera. The Court of Appeal, though, found that the victims - Monica and Betty Thompson - cannot claim damages from Bahamas First because the mechanic was not among the 'authorised' drivers listed on the vehicle's insurance policy.

As a result, the Thompsons have yet to obtain a single cent from the $654,000 damages award in their favour. Their case mirrors that of Eric Antonio, who was blinded in an accident with a jitney, yet was also unable to claim $521,943 from its insurers because the driver was not 'authorised' to operate the vehicle.

Bahamians frequently hand vehicle keys to their friends and family, while companies often allow any employee to drive, even though they are not included among the 'authorised' drivers.

Mr Duff suggested that the solution lay with improving the police's ability to better detect and catch uninsured drivers, then enforce the law and appropriate penalties on them.

"We all accept the situation is certainly unacceptable, and as a society the Bahamas has to try better to improve it," he told Tribune Business. "I think giving the police the technology tools to deal with this would be the preferable route from the Motor Insurers Bureau option.

"That comes at a price. My question is: Is the Bahamian consumer prepared to pay that price. He's complying with the law, paying insurance and in effect being penalised for those not covered properly. That would be the debate."

Mr Ingraham said the insurance industry, together with the Insurance Commission, the Government, police and Road Traffic Department, needed to work "hand in hand" to devise a solution that best fitted the Bahamas.

agreed that the situation was "unacceptable", and that Bahamian society