More uninsured drivers could be on Malta’s roads as many insurance companies refuse to cover for motorists with a poor safety record or make a single large claim, the financial services arbiter has warned.

Reno Borg described the issue in his 2019 report as a “worrying aspect” of the motoring industry and a “serious concern” that needs to be addressed, but the Malta Insurance Association said they had seen no evidence of a problem.

The report said that insurance-related complaints made up 57 per cent of the 1,062 complaints received last year by the Office of the Arbiter for Financial Services.

Motor insurance, which is compulsory, is the biggest single component of the local insurance industry, accounting for over €70 million in annual premium.

According to the arbiter, some of the complaints originated from drivers who were unable to source insurance cover for their car.

He said: “This is the direct result of the increasing trend implemented by motor insurers to decline the renewal of a policy as a result of a negative claims record; such record may have been registered over a number of years but there have been instances where policyholders were shown the door by the insurer concerned after a single large claim”.

The situation, he added, was being “exacerbated” by the fact that insurance companies were sharing a common claims database while the afflicted policyholders were “desperately” going round the market seeking an alternative as the termination date of their policy loomed nearer.

Few deemed 'uninsurable' - insurance association

A spokesman for the Malta Insurance Association said that they had seen no evidence suggesting that there was a major problem for motorists to buy insurance liability.

He said that these cases only concerned a few individuals who were prone to have an accident and consequently deemed as “uninsurable”.

“This can, for instance, be due to a history of many claims already registered, the nature of use of the vehicle or the combination of the vehicle’s power and the driver’s age and experience,” the association said.

The spokesman pointed out that the legal obligation to have a third-party liability insurance policy caused no obligation on an insurer to accept every risk proposed to it as this was ultimately a commercial transaction. 

He said that insurers shared a claims database to crack down on fraudsters.

Another source of motor insurance complaints flagged by the financial arbiter was an apparent increasing trend of declaring a vehicle involved in an accident as “beyond economical repair”. This was an “utmost concern” of complainants and would lead to disputes over the financial compensation offered, which would fall below the insured value of the vehicle.

In its reaction, the association noted that by law, insurers may choose to settle the claim through cash settlement equivalent to the loss or damage incurred, paying the cost of repairs or by replacing the vehicle with one of a similar make and condition. 

However, due to the fact that many vehicles in circulation on Maltese roads had low market value, major repairs often exceeded this value, with the result that the only viable option would be to settle the claim through a cash settlement equivalent to the value of the car, the spokesman said.

However, if the owner was adamant to repair the car, there was the option to cover these costs with the money received from the insurance and make up for the difference through their own funds.

The Insurance Association said that vehicle owners had the tendency to overestimate the market value of their car and failed to revise it to take into account depreciation. 

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