Tuesday 16, May 2017 by William Mullally

Engaging the insurance sector in making roads safer for all

Insurers have a key role to help improve road safety worldwide. The potential benefits of these initiatives for society as a whole are even larger, as road safety improvements are also linked to environmental and health issues.

Road traffic crashes are one of the leading causes of death globally – 1.25 million people are estimated to be killed on the roads each year, representing more than 3,400 deaths per day – equivalent to more than 141 deaths per hour – while another 30 to 50 million people are injured every year. Road crashes are responsible for more deaths than malaria, suicides and homicides and are the only non-disease-related cause among the ten leading causes of death ranked by the World Health organisation (WHO).

Road crash deaths are estimated to rise to 1.9 million by 2020 due to increased motorization across the world, especially in low and middle income countries (LMICs), which are highly likely to experience the greatest increases in future fatality rates. Today, 91 per cent of the world’s collisions happen in LMICs, showing significant gaps of impact between high income countries vs. LMICs.

Road collisions have a total global cost of $ 518 billion, which corresponds to 1 to 3 per cent of the countries’ GDP. Costs can rise up to 5 per cent in LMICs and even to 8 to 10 per cent in some cases such as South-Africa and Uganda where road crashes are a crucial challenge.

The insurance industry has a key role to play to impact road safety and contribute to the global target set by the United Nations within the Sustainable Development Goals (SDGs) to halve by 2020 the number of global deaths and injuries from road crashes. Covering almost 1 billion vehicles globally, with $ 626 billion premiums in 2016, Motor Insurance is a major business for insurers. It accounts for 12.8 per cent of the total insurance premiums.

The motor vehicle insurance value chain highlights how the insurance industry can respond to road risks, by embedding road safety incentives in their business model, in order to provide benefits to their customers and the wider community:

Road safety leaders in international organisations also recognise the power of the insurance industry to drive change in road safety by fostering risk prevention with road users every day and working with governments for enforced regulation and infrastructure.

Insurers have a key role to help improve road safety worldwide. The potential benefits of these initiatives for society as a whole are even larger, as road safety improvements are also linked to environmental and health issues.

New technologies will heavily disrupt the traditional motor vehicle insurance business. It is expected that many risks will be transferred from individuals to vehicles and in-vehicle connected devices, which will involve vehicle manufacturers, technology providers and other stakeholders.

Opportunities coming from new technologies and responsible use of data will certainly reinforce and expand insurers’ role in protecting our customers on the road.

Features & Analyses

Investment Banking Creating a diverse bond market

In an exclusive mini roundtable, Nabilah Annuar, Banker Middle East Editor, sits down with Michael Grifferty, President of the Gulf… read more