Driving in the Future of Insurance for Road Use - Driver Insurance

Essential Life Aids - Cars

Cars are an essential element of any modern economy and we need them.  More people each year become road users from behind the wheel of a car and driving or using a car has become an essential aspect of life for most Ghanaians.

Better Experiences for Everyone...

In response, more and better roads are built each year, more driving schools are operating, more services to assure owner of vehicles of maximum benefit from their investment are launched each year.  Valet services, tracking devices and other security features, treatments for the fuel systems are but a few of these.  Passenger comfort is improving.  In-car television is commonplace in commercial and private vehicles, seatbelt use is growing in acceptance.

... And More Opportunity Exists to Grow the Vehicle Use Market

Every car user and every player in the vehicle market seems to be better off - except the driver.  And where it is most needed is in managing the greatest distinction they carry which separates them from other road users and players in the vehicle market - the responsibility for lives both in the vehicles they drive and on the streets they drive on.

Innovating the Future of Insurance for Road Use

In my view, one sure way to ensure the proper use and management of cars by drivers is via the insurance market.  Unfortunately, in our new reality where the car as a basic necessity, the area of development and innovation that is lagging automobile trends even as the car population rises, is the insurance segment.  And yet there are multiple insurance markets from which to draw innovative inspiration.  For example, vehicle maintenance plans can be borrowed from the health insurance market, and having an insurance policy as a driver as the primary legal requirement before driving rather than motor insurance can be adapted from other forms of professional insurance packages commonplace around the world.

Think Differently About the Market - Driver Insurance

Just as a mobile phone is merely a tool for communicating, a car is also only a tool for moving around.  If one loses an uninsured phone they can buy a new one, or get another through their insurance provider if it is so insured.  And just as professional or business do not rely solely on the insurance for their tools but on personal and/or business policies when people under the care of a professional or a business suffer injury, the same arrangement could be made available to drivers.  The same logic could apply to the use of cars for both commercial and private purposes, however, presently a car is treated differently and can only be legally driven if it has both a road-worthy certificate and motor insurance cover.

We need an innovation that allows every car on our roads to have the road-worthiness certificate whilst introducing a mandatory legal provision requiring every driver to have an insurance policy coving them personally for any loss or liability in the event of an accident in order to legally drive.

Legal Considerations 

Such a proposal will require a new law and changes to current laws so there must be a clear benefit to justify the effort.  The gains that would accrue are real and demand that we do this.

First, a Fair Sharing of Responsibility

Cars cannot move on their own, if loss or injury occur in an accident it would be fairer if the driver and not the vehicle bears both the commercial and legal responsibilities.  The owners of vehicles can continue to buy insurance to cover the loss of or damage to their property but that should be a personal choice.

This should be good news especially to owners of vehicles who can continue to insure their vehicles against damage or loss but pass on the liability for the costs of an accident to their drivers via their insurance.  Besides, the driver behind the wheel will feel a greater sense of responsibility which should improve the quality of driving in Ghana.

 Second, Higher Industry Efficiency and Profits will Benefit the Tax Coffers

Since there are more drivers than vehicles, this would boost the top line and profits of corporate Ghana and add to Government revenues from profit tax.  This should be good news for Government as it would now earn revenue from both types of insurance.

Also, the growth in the market base should allow the cost of asset insurance for cars and driver insurance to stay low because of economies of scale. 

Conclusions

It’s possible there will be losers and gainers in this new paradigm but more careful drivers, lower costs of owning cars, and the resultant boost in allied product markets can only bode well for the future of 'vehicular-Ghana'.

AUTHOR

Michael Harry Yamson is the Chief Operating Officer of Ishmael Yamson & Associates; a strategy consulting and investor advisory firm that helps organizations improve their performance and profitability. He is a thought leader with interests in economics, governance and investment issues. To see more from Michael, visit Ishmael Yamson & Associates.