Besides serious traffic jams, Taiwan is widely known for its high rate of vehicular accidents, which cause about 4,000 deaths a year. According to government statistics, for every 100,000 people, there is an average of 19.23 traffic-related deaths each year. This death ratio is appallingly high compared with foreign countries such as Japan, where the ratio is 6.1 persons. But these statistics tell only part of the story.
"In fact," says Cheng Chun-ming of the Institute of Transportation in the Ministry of Communications, "if you take into account that car accident deaths are calculated differently in Taiwan and Japan, the ratio of Taiwan people killed in traffic accidents is considerably greater than this statistic. Here, the tally counts only persons who die within twenty-four hours of a traffic accident. But in Japan, it includes anyone who dies within thirty days after the accident." In addition to the heavy death toll each year, some 6,500 people suffer serious bodily injuries. No exact statistics for property damages from traffic accidents are available, but the figures can also be expected to be alarmingly high.
Automobile insurance firms bear the brunt of the heavy financial burdens stemming from the large casualties and property damages, as they must compensate their policyholders for death, injuries, and property damage. Almost all of Taiwan's automobile insurance companies have registered high losses.
Insurers currently offer three categories of coverage for Taiwan's 3 million registered motor vehicles: comprehensive damage, where the company is liable for any loss of, or damage to, the insured automobile (normally including collision, fire, lightning, explosion, flying objects, falling objects, and malicious acts of a third party), theft, and third-party liability. According to an industry association official who prefers to remain anonymous, insurance companies are suffering high losses in all three categories, ranging from 100 percent to 150 percent.
Take theft coverage, which has incurred the heaviest losses of the three. Companies are currently paying out NT$150 (US$5.50) for every NT$100 (US$3.70) in premiums. Such heavy loss, says the official, is a result of the unusually high rate of car theft. "Each year, as many as 10,000 cars are stolen from our policyholders," he says. "This figure could run three times larger if the theft of non-insured cars throughout Taiwan is included."
The high rate of traffic accidents (according to one auto mechanic, each motorist can expect at least four to five incidents per year that will require repairs) means that insurers are experiencing large losses on both their comprehensive coverage, which includes damage to the vehicle and occupants, and their third-party liability coverage, which includes bodily injury liability and property damage liability. On the average, the losses to insurance companies still exceed 100 percent of earned premiums.
Since the insurers are faced with disbursing huge indemnity payments, which seriously undermines their profitability, their ability to play an active public role in reducing the number of accidents is also curtailed. Thus, unlike their counterparts in many other countries, few local companies sponsor traffic safety promotions. For the car insurance industry as a whole, it is a vicious circle. As long as the rate of traffic accidents remains high, insurers face higher liability claims; and without adequate profits, insurers become even more re uctant to spend time and money promoting traffic safety.
Although there are occasional traffic safety programs sponsored by both the public and private sectors, more needs to be done. According to a resident veteran American journalist, who has more than ten years of driving experience on Taiwan's streets and highways, there has long been a need here to promote responsible driving. And in this regard, local insurers can play a vital role. Earl Wieman, a senior editor at the Taipei based China Economic News Service, says that from his long-standing personal observation, there seems to be virtually no observance of traffic regulations in Taiwan.
"Most drivers in Taiwan do anything they want, without regard to the rights of pedestrians and other drivers, and to common decency," Wieman says. "When a driver threatens a pedestrian's safety by denying his rights, he does not care - because he himself is not threatened. He is protected in the car." Wieman's observations have merit. The latest official statistics show that as much as 97 percent of Taiwan's traffic accidents occurred because of reckless or blatantly irresponsible driving.
The most common traffic violations by local motorists, according to Wieman, include speeding, making turns from the wrong lane, driving in the wrong lane, using turn lanes to overtake, and ignoring traffic lights. He adds that motorists can afford to drive recklessly and commit various violations because traffic rules are not strictly enforced. According to Wieman, the only way to improve the observance of traffic rules is to use the point system. "If you are convicted of a violation you are assessed a certain number of points," he says, "and if you accumulate a certain amount of points within one year, your license is suspended or revoked."
Taiwan has a point system, adopted about four years ago, but it is having operational difficulties. Under the system, drivers can have their licenses suspended if they accumulate six points within six months, and revoked if they accumulate 13 points within 12 months. Once licenses are revoked, drivers have to wait one year before they can re apply.
Wu Wen-ching, a section chief at the Center for Traffic Accident Arbitration of the Taipei Municipal Office of Motor Vehicle Inspection, says: ''The enforcement of the point system has a deterring effect on drivers." But two of his colleagues, who spoke on the condition of anonymity, point out that the system has not been effectively carried out for two main reasons. One is be cause enforcing agencies lack adequate manpower and equipment. Some police units, for example, do not have computer support and have to record traffic violations by hand. The result is inefficient record-keeping.
Although the Taipei and Kaohsiung municipal offices of motor vehicle inspection have computerized their records of traffic accidents and other vehicle information, some of these units are understaffed. Thus, they often do not have the manpower to actually revoke drivers' licenses, even though drivers have accumulated enough points to deserve the punishment. (Currently, the registration of traffic offenses in Taiwan is mainly the work of police units. But in the two cities of Taipei and Kaohsiung, which are under the direct jurisdiction of the Executive Yuan, the offices of motor vehicle inspection have the responsibility of keeping track of traffic accidents.)
The other reason for the failure to enforce an effective point system is there are too many cases of several drivers using one vehicle, including government buses and cars. Thus, when a vehicle is caught violating traffic regulations by remotely controlled roadside cameras, the police often have difficulty identifying the offending driver so they can give citations and assign points.
Gotcha! At least one of Taipei's taxi drivers is caught in the act. But inadequate enforcement of traffic laws is still a major problem, and it is complicated by a shortage of personnel and inadequate record-keeping.
Beyond better enforcement of the point system, Wieman believes that insurance companies can play an important part in promoting the observance of traffic rules and traffic safety. "They could charge higher premiums for reckless drivers, and give discounts to safe drivers as is done by insurers in many foreign countries," he says. "But in Taiwan everybody pays the same!"
Wieman's comment raises an important difference in the way Taiwan's vehicle insurance companies operate. Take the premium system. Local companies providing third-party liability coverage all charge a flat rate. They offer no differential rates, that is, prices that differ according to the policyholder's driving record, age, and marital stat us. Differential premium charges can help boost careful driving. Such premium computations also meet the vital principle of fairness, because reckless drivers are required to pay higher premiums to match their high incidence of traffic violations, while safe drivers are charged less to reward their carefulness.
According to Nimbus Jan, casualty manager of the Taiwan branch of the Royal Insurance Company of the U.S., there are two major reasons why local motor insurance companies have failed to adopt the important differential premium system. One is the lack of data on motorists, which is the basis for differential premiums. Jan says that none of the motor insurance companies in Taiwan keeps such data: "Although police units and motor vehicle inspection offices have records of offenders, they do not have such information as age and marital status, and these data are also necessary for insurance companies to charge differential premiums." Even the information on traffic violations gathered by the government is not available for use by insurance companies, Jan adds, because there is no cooperative arrangement under which government agencies provide the data to the insurance companies.
Another and more fundamental reason for the failure of insurers to offer differential premium rates is that under the existing motor insurance law, the target of coverage is the car, not the driver. In other words, the insured is always the car and its owner, no matter how many drivers use the car. This makes it insignificant, in many cases, for insurers to use differential premiums to reward or punish a driver, because the insured car owner is not necessarily the actual driver.
"As a U.S.-invested property insurance company here, we feel this is a major drawback in the local insurance law," Jan says. "The existing provision on the target of coverage should be changed to one that requires the coverage of drivers as well. Such a change will make it easier for the industry to adopt the differential premium system."
A plan for the motor insurance industry to change to the differential premium system was initiated in August 1990 at the request of the Finance Ministry, the regulating agency for the insurance business. Under the plan, the motor committee of the Property Insurance Association has been charged with the task of coming up with a differential premium scheme before August 1992, subject to the approval of the Finance Ministry. At the same time, the Insurance Institute of the Republic of China, an industry-funded organization, has already begun inputting into its computer system information needed for the implementation of differential premiums.
The Finance Ministry, which itself is moving to change the law in order to expand motor insurance coverage to include all drivers, has also required that motor insurance companies must set up their own computer systems within the prescribed two-year period. The idea is to ensure that the insurance companies will be able to link their computer systems to the data base that will be established by the Insurance Institute and to the government's data base on traffic violations and accidents.
At the same time, the Communications Ministry, which supervises the registration of motorists and vehicles, is acting to integrate the government's collection of data on traffic violations. It will require the Taiwan provincial offices of motor vehicle inspection to take over from police units the job of keeping track of violations and accidents. The transfer will take place as soon as a draft revision of the regulations on road traffic is passed by the Legislative Yuan.
For the insurance industry, the computerized and integrated records of motorists' traffic violations and accidents will make charging differential premiums possible. ''The information will be available to any interested individuals and groups, certainly including the insurance companies, through the ministry's Institute of Data Communications," says an official at the ministry.
How can this mess be better regulated? Try improved insurance laws, better enforcement of traffic rules, more safety programs, computerization of traffic records, and differential insurance premiums.
Local insurance companies could also seek to correct drawbacks in many other related laws and regulations to help promote traffic safety. Under existing laws, for example, third-party liability insurance is compulsory for all car owners. Without coverage, owners are not allowed to register their cars, renew their registration when it expires, or register transfer of ownership when they sell their vehicles. "But the law provides no fines against those who fail to insure themselves against third-party liabilities," says H.C. Chang, general manager of Royal Insurance's Taiwan branch. "This is why heavy fines are essential to prevent motorists from getting around regulations by using legal loopholes."
The lack of such heavy fines has led many unscrupulous motorists to save on premiums by evading their obligation to provide third-party liability coverage. There have been many cases in which motorists cancelled their insurance policies shortly after registering their cars. Such cases were discovered when motorists involved in traffic accidents could not properly compensate third parties for injury or death because they did not carry insurance.
More often than not, when drivers who do not have third-party liability coverage are involved in accidents, they hit-and-run, often causing further traffic accidents. Thus, many experts believe that the government should revise the insurance law and provide stiffer penalties for not having third-party liability coverage. "The automobile insurance industry has the obligation to push for the revision of the law," says Cheng Chun-ming of the Institute of Transportation.
Improved insurance laws, better enforcement of traffic rules, and differential premiums may help bring greater order to Taiwan's streets and highways. Before long, it may be possible for insurance companies to be more active in promoting traffic safety programs through the media to raise public awareness about driving safety. But insurance companies are still worried about their bottom lines. Until there are more profits, according to H.C. Chang of Royal Insurance, "we simply cannot afford to do anything extra to further traffic safety." - Osman Tseng (曾慶祥) is a senior journalist based in Taipei.