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. Last Updated: 07/27/2016

Auto Insurance Law Cleans Up Roads

MTThe passing of the bill amending mandatory auto insurance could stand to benefit accident-free drivers financially.
Warning to Moscow's bad drivers: The days are numbered when you can switch cars to clean up your insurance record and lower your premiums.

The State Duma on Wednesday approved in a second reading a bill that would change the way mandatory auto insurance works.

Currently, the country's drivers are forced to pay for mandatory car insurance for each car they buy. The more accidents that the car is involved in, the higher the insurance premiums. The new law would change insurance records so that they follow the driver, which means an accident-prone driver could no longer clean his record by getting a new car.

"Generally, I think it was a great step," said Ilya Solomatin, vice president at state insurer Ingosstrakh. "Big insurance companies worked together to implement this new law."

Solomatin said he could not comment in detail on the bill until Ingosstrakh had fully analyzed its provisions. The bill has to pass a third reading and be approved by the Federation Council and President Vladimir Putin before becoming law.

"Now, if you switch cars, regardless of whether you had any accidents, the insurance company has to apply a lower premium multiplier to the new policy, and the driver ends up paying less," said State Duma Deputy Viktor Pokhmelkin, who is also chairman of the Russian Motorists Movement, which promotes drivers' interests.

Sergei Abalakin, head of auto insurance at Rosno, said little good would come out of the law, partly because it failed to take into account insurance companies' recommendations on the data systems that keep track of accidents.

Many well-to-do drivers settle in cash on the spot when they have minor accidents, but those who cannot afford this make use of the mandatory insurance they purchase each year.

Abalakin said mandatory insurance costs a Moscow resident at least 4,000 rubles ($150) per year, but that many clients pay much more to get a higher level of coverage.

Each year in Russia, from 30,000 to 35,000 people per year die in road accidents. Accidents have steadily grown by 8 percent per year for the past three years, fueled in part by a surge in the number of cars on the roads. The economic cost is enormous, shaving 1 percent to 2 percent off the gross domestic product every year.

In theory, targeting risky drivers -- not risky cars -- would be good for public safety, since drivers would avoid having accidents to save money. But Solomatin said it would take more than a change in the law to make a dramatic impact on road safety.

"I don't that the problems on Moscow's streets will be solved by this law," Solomatin said.