Monday, December 17 2012 20:35
In contempt of the law on compulsory third-party insurance Armenia's insurance companies "squeeze" as much as they can out of taxi drivers
ArmInfo. In contempt of the law on compulsory third party insurance Armenia's insurance companies are "squeezing" as much as they can out of taxi drivers by imposing expensive quarterly contracts on them, the head of the action group of Yerevan tax drivers Ruben Ayvazyan told ArmInfo on Monday.
"They say that this is an instruction of the authorities, but many of us have bought our cars on credit and left temporarily jobless because of having no insurance policy, are unable to repay the loans," the group say in their letter to Armenia's Prime Minister, asking him to solve this problem and to help them to go back to their work.
"We went to the Bureau of Car Insurers but they gave us no explanations and sent us to the Central Bank," Ayvazyan said.
ArmInfo has asked them in the Bureau to comment on this situation but they told us that their top managers were absent and they had no right to make any comments.
ArmInfo's experts believe that the low profitability of compulsory third-party insurance in Armenia is the fault of the local insurers, who have spent a lot of money to create the necessary infrastructure and to advertise the product. In Jan-Sept 2012 their administrative and operational costs amounted to 6bln AMD. The greater part of this money was spent on compulsory third-party insurance, while normal spending should not exceed 25% of relevant premiums. So, high costs have made this service unprofitable.
ArmInfo's experts expect that this year the share of compulsory third- party insurance premiums in total premiums will not exceed 60%.
According to ArmInfo's Ranking of Insurance Companies of Armenia, in Jan-Sept 2012 the Armenian insurance companies paid 6.3bln AMD in compulsory third-party insurance compensation - twice as much as a year ago against a 3% decline in insurance premiums to 12.3bln AMD. The net profit of the companies has almost halved to 1.1bln AMD ($2.7mln).
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