Nonlife insurers will sharply boost automobile insurance premiums for drivers who have had an accident, under a new system taking effect on Monday.
The new system will take into account accidents that happen after renewals of existing policies in or after October. Premium rises reflecting new accident history will begin after the next policy renewals one year later.
“Drivers who have had an accident tend to have repeat accidents,” an official of a major nonlife insurance firm says, stressing that the new system is necessary to reduce the inequality between policyholders who are prone to accidents and those who are not.
Another key purpose is to shore up auto insurance operations, which are running at a loss at many firms, industry people say.
At present, auto insurance firms classify policyholders by giving them a grade of 1 to 20. The longer the policyholders stay without any accident, the higher grades they are given and the steeper discounts they enjoy.
Once policyholders have any accident, they are downgraded three notches. Under the new system, the industry will charge them special penalty premiums for three years.
If a driver with the highest grade of 20 who pays an annual premium of ¥50,000 has an accident, he or she will be downgraded to 17 and see the premium soar to ¥83,790 at the time of the next renewal. The premium under the new system will be 40 percent higher than the postaccident premium of ¥58,110 under the present system.
Such drivers are upgraded again gradually if they cause no further accidents, but the margin of premium discounts under the new system will be far slimmer than those for policyholders without any accident at all.