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Compulsory vehicle liability insurance triggers disputes

By Shangguan Zhoudong (chinadaily.com.cn)
Updated: 2007-05-31 15:57

In response to the lawsuit, CIRC said it will reset the premium rate after doing more research and analyzing the operational conditions and performance of insurance companies. It may hold hearings if the premium is increased too much.

Shanghai is leading the way in practicing a floating premium rate, as shown by data from CIRC’s Shanghai Bureau. In the first quarter of this year, 40.7 percent of a total of 409,200 compulsory vehicle liability insurance policyholders paid less premium insurance; 15 percent of them spent more on their premiums; and 44.3 percent paid the same.

China launched the compulsory vehicle liability insurance as of July 1 last year. Drivers across China will be forced to cough up around 1,000 yuan for the insurance.

Rates differ, depending on the vehicle and the driver's record. A family car with less than six seats should cost 1,050 yuan every year, with claims limited to 60,000 yuan, including 50,000 yuan for death or deformity, 8,000 yuan for medical treatment and 2,000 yuan for damage.

CIRC, the industry regulator, said the Compulsory Liability Insurance Policy was designed to ensure victims of traffic accidents receive timely medical treatment and financial compensation.

Most car owners said the policy is expensive for them. But CIRC said the standard premium was based on the principle of "no profit, no loss" for this type of business.

The regulator has approved 22 domestic insurers to offer the new policies. Foreign insurers will not be allowed to offer policies as China made no promises to open up the compulsory insurance business in its World Trade Organization commitments.