In order to use public roads in The Bahamas, drivers must have the appropriate insurance coverage in place - otherwise, they are breaking the law under the Road Traffic Act. Motor insurance is the only class of insurance required by law; it is also the most common insurance in The Bahamas, but it seems like everyone pays a different price for their motor insurance policies.
Like all insurance premiums, the cost of motor insurance is based on statistical calculations to judge the amount of risk that you, as an individual, bring to the pool. The most influential factor on the likelihood of getting in an accident is your previous driving experience. If you have proof of a clean driving record for at least two to five years, your premium can be discounted anywhere from 30 to 65 percent in the form of a "no claims discount".
Another important factor when calculating the premium is the age of the insured driver. Statistically, age is directly proportional to driving experience, yet there are still further calculations based on the amount of time one has held a license as well as the insured's experience driving in a particular location.
According to the police department, the main factor in Bahamian motor accidents is still speed and aggressive driving. Therefore, along with the insured's age and driving experience, your car's engine size is a critical factor in pricing your insurance.
Furthermore, location is another rating factor when it comes to insurance premiums. In a congested urban center like Nassau, there is a higher frequency of losses from minor traffic accidents as well as substantial criminal activity. In the Family Islands, there is less frequency of insurance claims and incidents of loss, however when they do occur, traffic accidents are much more severe and often times fatal. Nonetheless, drivers in the Family Islands still pay less than their Nassau counterparts. This is due partly to high administration costs associated with the high frequency of claims.
Other individual rating factors include the use of the vehicle; shift workers who work late into the night are more likely to have a serious accident. Also, the price of your vehicle reflects in the price of a comprehensive motor policy.
Unlike other countries, such as India, Bahamian insurers don't discriminate between male and female drivers when rating motor policies. In light of the 2011 European Union legislation - where the Court of Justice ruled that gender can no longer be used to set insurance premiums or benefits - our Bahamian industry may be unconsciously ahead of the times.
Taking these factors into consideration, your insurance broker can negotiate the best insurance premium for you; careful drivers and loyal customers should be rewarded with special discounts.
Nonetheless, there are things we can do as a community to help prevent an increase in the cost of motor insurance by reducing insurance claims. By simply abiding by the traffic laws such as wearing our seatbelts, we can avoid personal injury and the huge legal costs involved in defending these cases. In 2013 there were 51 traffic fatalities in The Bahamas, with most occurring in New Providence, and sadly, the numbers have been steadily increasing for years.
In the U.K., they have calculated that insurance fraud costs consumers an extra $80 in premiums for each policy every year. It's in the consumer's interest to discourage insurance fraud wherever you see it. Hard fraud includes elaborate staged accident and theft rings, whereas soft fraud is inflating an otherwise legitimate claim. If you are involved in an accident, take pictures and video with your cell phone to avoid the chances of being a dupe in a potential motor insurance fraud.
o Stephanie Cleare is a fully licensed and qualified account executive at Tavares & Higgs Insurance with 12 years experience in the Bahamian insurance industry. Email her at scleare@tavareshiggs.com.
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