I don't really understand the arguments against compulsory 3rd party insurance. I drive a car and have comprehensive insurance over it. If I am hit by an un-insured driver (and it is their fault), then I understand that my insurance covers all my loss and I pay no excess nor suffer a loss of my no-claims bonus.

No insurance company covers this risk out of the goodness of their heart which surely means that it is INCLUDED in my premiums. I.e., I am paying a higher premium to account for the risk of all the un-insured drivers out there.

I would therefore have expected that were compulsory third party insurance to be introduced to see a reduction from my current premium levels.

I honestly can think of no reason why insurance should not be compulsory.

@Sam

The main reason is that if it's compulsory, the insurance companies hike the premiums because thay know you can't walk away. My premiums in the UK (which has compulsory insurance) were 3-4 times my premium here.

And as noted above - it STILL works out that the beggar who hits you doesn't have insurance, so life is no simpler.

Compulsory insurance will put your premiums up, not down. Guaranteed. This is turkeys voting for Christmas!!

My German experience.
You can't register a car without proof of insurance, if you cancel your insurance the insurance company informs the registration authority and your car is de-registered.
All made very simple due to the fact that as you're legally required to register your current place of residence with the local authority and the fact that both the registration stickers (front and rear) and the WoF equivalent sticker (rear) are affixed to the numberplate, it's fairly easy for the police to locate you/your vehicle and scrape off the registration sticker.

I can't follow the causality argument of compulsory insurance increasing insurance premiums. If an uninsured driver causes damage to another person's property and the costs are covered by the damaged party's insurance, then compulsory insurance simply transfers the risk and its associated premium to the previously uninsured.

The process?
Initial registration requires proof of insurance (in Germany, it's a card issued by the insurance company, with a portion returned to the issuing company, indicating date of coverage commencement), change of ownership requires proof of insurance and continued insurance cover is validated at every WoF appointment via the Transport NZ vehicle database. The periodicity of the latter isn't ideal, but a 6 monthly check is better than none at all, the alternative being ID card and compulsory address registration, neither of which is politically or socially acceptable in New Zealand.

Sanctions for abuse?
Turn up at a WoF testing centre without proof of uninterrupted insurance? WoF certificate is withheld for the period of time corresponding with that of the uninsured period (unless it matches a registration exemption) Means no registration. means can't drive.

Insurance premiums - if they don't do so already - need reflect the age/vehicle/location risk combination. An 18 year old driving a turbocharged whatever and living in Christchurch will pay more than a 60 year old retiree living in Blenheim and driving a Honda CRV.
It might mean that the premium is so high that it's unaffordable. It might mean that no insurance company is prepared to assume the risk.

It could be that that's no bad thing...

"Police there are seizing 400 uninsured vehicles a day."
Maybe this is what will make any new system work? No if, buts or maybes...And contract this job out to private enterprise, not the police etc, to add that extra incentive.

@Gail M
In theory, EVERYONE has insurance.In practice, stolen vehicles are (logically) uninsured, but if you're the victim of an accident with an uninsured vehicle (or a hit and run) a central fund jumps in to compensate you as if the other party had the legally minimum 3rd party insurance (€25m)

Difficult to make comparisons - Saab 9.3 130HP costs me €135 pa for 3rd party coverage up to €100m/€8m per person/€5m for environmental damage.
9.3 convertible 150HP €280 fully comprehensive with €500 excess.
That said, I'm low risk with an extremely high no claims bonus, garaged vehicles, low annual mileage and living in a region with low property theft rates.
Also factor in that the average disposable income here is probably twice that of NZ.

"those I regularly see driving without WOF, Rego and numberplates"

Sloppy enforcement. If the police don't have THAT under control, then compulsory insurance hasn't got a chance. And that in a country that subjectively rivals the UK and the USA for police presence.

@Robert

"You get sued if you cause the problem. Being sued cost you heaps"

Flawed argument. If you have nothing, how does that help the victim?

@ Harriett
Tell me about it.
OE, 24 years old, MGB, no insurance history in the UK. The only company that accepted me was "Cloverleaf"
A truck tail-ended me with the traffic lights on red and his insurance company LAUGHED at me......

Gail M

The main reason is that if it's compulsory, the insurance companies hike the premiums because thay know you can't walk away. My premiums in the UK (which has compulsory insurance) were 3-4 times my premium here.

And as noted above - it STILL works out that the beggar who hits you doesn't have insurance, so life is no simpler.

Compulsory insurance will put your premiums up, not down. Guaranteed. This is turkeys voting for Christmas!!

I agree with you 100%. Compulsory third party insurance is a rort by the insurance industry. Most of the insurance industry is probably insolvent, and rates have been increased so much that it is now better to self insure.

So the industry trying to spin a real winner in compulsory 3rd party insurance is no surprise. It follows on from media releases months back telling us that in recessions people increase insurance. Both suggest to me the industry is in trouble.

PeterR, GailM - I agree.

I'm interested in the observation that it is becoming better to self-insure. I would say this is especially true if you drive a vehicle which has a value at a level which you are prepared to lose - and I think many drivers these days on low/no regular income with no assets and no savings take that perspective. In other words, if you have assets to protect - you insure - if you have no assets to protect - you don't insure.

I believe we have a growing generation of individuals with no assets to protect - people who have never had any significant period of permanent, on-going employment. Much of the work available these days is under temporary, casual and/or contract (self-employed) contract. And this has been going on for roughly 20 years - so it's not just confined to youth (i.e. under 25s).

Without the security of on-going employment - there is a big sector of the working age population who no longer aspire to asset accumulation - rather they live in the immediate timeframe. The cost of compliance with regulations (and indeed the cost of non-compliance... i.e. potential fines) for this part of the population is the least of their worries.

Compulsory insurance won't change any of that. It is an insurance rort - and for that matter, insurance generally has become a rort. Those with assets to protect buy the services - those without, don't - and as there is a dwindling number of those with assets - that means fewer customers for insurance companies, and hence higher premiums for those with assets to protect.

Should have been done years ago. Allow for several years of inquiries and time wasting stupidity, followed by a trial period and then some more inquiries. Finally we will get the most idiotic system they can devise and because of that, it won't work.

Oh yeah, could apply to both, well spotted Roger.

The problem is those that intend or have to dodge it (eg no licence) will just continue to do so. What or how would it be enforced? if the driver has no assets, eg young or un-employed the insurance company cant get money off them or its at $0.50 a week...however if it gives the Police powers to take the car and the licence to get the stupid off the road, on balance I am for it.

@Sharonv anybody sensible should be insured, those that are not and work, have no insurance, have an accident will end up in court will see a pay deduction. Insurance in NZ is quite cheap by comparison to many countries, eg ACC covers injury...the young are hit hard because they are a big risk...not because they are affluent and can afford to pay. I work in Cannons Creek part time giving up some of my time to help kids get some music....so I see the cars there, Hummers, 7 litre Chrysler "vans", Ford Falcon's are quite common....these ppl are in a decile 1 school FFS...for $6~10 a week they would save on gas they could get insurance on a 1300~1600c car (which I drive btw), let alone the finance amounts they must be paying on such big expensive cars....like duh.

Steven I don't doubt that many people of all ages have a serious addiction to cars - there seems little alternative in NZ. An unfortunate cultural thing. The fact remains that insurance companies are there for a profit and they will marginalise and profit from any category that most people do not want to appear to fall in to. That said there are many people that are happy to rip-off their insurance providers. The suckers are the people that still beleive there is a concept such as 'peace of mind'. They will pay ever increasing premiums as the rest of us begin to accept that a) we will probably die some day, b) we might have a car accident one day (unless we embrace public transport), c) life is full of surpises and shocks so we might be better off investing/saving for that possibilty/probabilty than buying insurance.

Compulsory insurance would send a price signal that it is unwise for an 18 year old to drive an EVO (considering an EVO's acceleration is similar to a Ferrari). It would also solve much of the boy racer problems we have particularly the nastier end of it. Males under 25 find in the UK that insurance on modified/powerful/ fast cars are either uninsurable or it is more expensive than the car.
The insurance industry would have to expand rapidly to administer it but its hard to pick the downside to it.
The insurance industries comparisons with the UK are somewhat spurious as we have ACC to cover personal injuries and we cant sue either. Car theft in the UK is chronic too, the car park I used at the train station was loosing 3 cars a day until cameras were installed.

@Sam Smith : I agree with your sentiment 100%. But if you have ever tried to get any restitution from a debtor through the courts, well all I can say is "Good Luck!". You can win all the judgements you like, and pay for that priveledge, but ' the bad guys' know that given all the time and costs invloved, one day you will just go away...unpaid. The young clerk at the court that I have just finished with said ( in 2005!) " Here's the forms. Good luck. It will cost you $20k and 5 years and you'll still get nothing" How right he was! ( Sorry to vent me spleen at your post, Sam !)

I can't understand why we don't have it in the first place - Australia had it built into their car registration cost. I had someone ran into my car and I ened up covering the insurance excess because the nit wit didn't have any insurance. For those against regulations - wait until someone smacked your car without insurance - you'll know what it likes having to fork out the repair costs.

ctnz
Maybe liabilty insurance should be compulsary that is or should be a seperate product. But their are many silly and irresponsible people that spend lots of money on things they think are assets but in reality these things fall in value rapidly each year. Yet the cost of repairing them doesn't.

Look, compulsory insurance makes sense in theory, but I can guarantee we'll all end up paying massively inflated premiums and the hoons will keep killing themselves and others to boot.

Firstly, the insurance industry will have to expand massively to cope. That carries a cost, which will be passed straight through to the consumer, plus a bit.

Then they'll swiftly realise that because we all HAVE to purchase insurance, they can get away with cranking the premiums up even further, year on year, citing "record claims last year, increased level of risk blah blah" to justify it. I'm from the UK and have lived in that environment, where my insurance often cost significantly more than my car was worth. Honestly, insurance was one of my major costs every month along with my mortgage, it's a killer. We don't want that here.

We need to change the legal driving age from 15 to 18 and put some regulation around what cars are legal for those in the 18 to 25 bracket. It's been done for motorbikes in a number of places, there's no reason why it can't be done for cars. Say nothing over 1600cc from 18 to 21, 2000cc from 21 to 25 and it must be naturally aspirated.

That gets rid of all the 15 year olds in twin-turbo Legacy's and boosted Silvia's and doesn't come at a cost to the rest of us. I don't know why it hasn't already been done.

Just wondering (I guess I should ask my insurance company) - Is there insurance that covers me as a cyclist if I accidently hit a car?

"The previous Labour Government through their Transport Minister Harry Duynhoven had shown enthusiasm for the idea. He had called for submissions but this seems now to be part of a wider look at various transport initiatives."

Now how often have we heard that over the last 40 odd yrs?

And those people against it, have you ever been hit, not your fault by a dunger, and gone thru the routine..either with or without yoiur insurance company?
After filling out the 1st forms you will change your mind, instantly.

And the argument it is just a rort for insurance companies, I ask, you you have any insurance policies, and if so why? the reason is is just the same...dont be hypocritical.

I can't believe how many people on this site have no faith in the ability of markets to respond to incentives!

I thought that the whole concept of the free market was that if the current crop of providers was charging more than the marginal cost of a service, then a new competitor would enter to achieve those above-normal profits and prices would be suppressed.

This site does seem rather bi-polar at times.

I also think there is a mis-conception (in my view) that driving is a right and not a privilege. I really think that before someone should be allowed to take a hunk of steel weighing several hundred kilograms onto a public space and move it around at speeds up to (and in some cases, exceeding) 100km/hr, it is perfectly reasonable to expect them to have put in place arrangements to deal with the financial consequences of any damage they cause to other people.

Finally, I don't think that enforcement concerns are a valid reason for not doing it. If it is worth doing, then it should be done and enforced as best as possible.

Paul Mc. No need for the classification system, the insurance companies already take this into consideration in the risk assessment... high risk = high premium.

Compulsory insurance should be coupled with tough penalties for non-compliance in order for it to be effective.

Terry Jordan, shame on you, not believing in fairies. There'll be no visits by JK and BE to your place!

How often has this subject come up in the last 40 odd yrs....at the end of the day it will be another 40 odd yrs and it will still be tossed around...

Its not an issue of If it will stop boy racers and loonies on our roads...if it does help it is just a bonus...
Most responsible people have cover, it is a simple matter of making everyone be responsible.

One cant register a car without a current WoF...so why not have proof of 3 party... and insurance companies work of a centralised DB as to which cars they cover, accessible to the land transport register desks.

If a person goes to registers a car and they dont have a 3rd party cover, they can opt for a company at the time of registration, or organise before registration...same as a WoF is organised before registration.

Better still, they have to organise 3rd party before registration...It then gives the companies the option not to accept the policy, maybe due to the person holding the policy is high risk.....or put another way, if you a high risk you cant register a car....which in effect means dont bother owning one.

Sounds tuff?
Not really, theres a lot of talk about getting tuff...so do it.
Owning and driving a car is a privilege not a bloody right....walking down a footpath is a right.

Why should ACC and 3rd party be linked to registration?
Is that not illogical?
The risk is not the car, but the driver....
If 3rd party is implemented each driver would have not only a accident 'record' but also an infringement record.....ACC and 3rd party premiums would be adjusted accordingly...or a no claims bonus.

Then there is the other anomaly that already exists with the ACC levey...
EG we have a 'collection' of cars, ranging from high powered classic muscle cars, to 10 hp vintage, the shopping Toyota and the 1980s these all have full comprehensive cover. AND the 'runner' spare car . 3rd party
Currently that is 2 drivers and only 1 car can be driven by each driver at a time...often with all drivers in the one car...
So why pay the same ACC Levy on the big powerful and the little vintage cars when they dont travel anywhere the same distances as the daily cars?
The Insurance company recognises this....the combined premiums of the muscle and vintage cars is less than 1/2 that of the daily shopper and spare car, yet the total value is some 12x greater..
The same principle should be applied to compulsory 3rd party and ACC (which is ineffect a 3rd party personal accident if the driver has correct attitude of responsible driving habits.
3rd party and ACC should therefore be linked to the driver risk rather than an inanimate object that at the end of the day it is the foot on the pedal, not the pedal that controls the car.

We have a mentality that is screwed....A news report "the modified car hit a power pole and killed the passenger" I have yet to see a car do anything of the sort. It is an inanimate object, it will only do what the driver makes it do or the owner has not maintained it to WoF standards.
We need to take the responsibility off the lump of steel and put it into the drivers seat.
Putting ACC and 3rd party with no claims onto the driver....this would be a big step in promoting driver responsabilty...
ie take a couple 18 yr olds one with a runner car the other with 300hp under the bonnet.
300hp guy "I pay $400 for ACC and 3rd party"
Runner guy " I pay $1200"
Who has the most accidents and traffic tickets...the idiot runner.

This would not mean renewing ones drivers licence every yr, just paying the 3rd party and ACC component, making the licence valid for 12 months or whatever.
And if a driver has comprehensive cover on his cars, just proof of the 3rd party part.

Good stuff steps...mind you, how do you stop unlicenced drivers using the roads? The licence and reg systems have become govt cash cows. My guess is, plenty drive unreg vehicles with no licence and no wof.

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