Mandatory insurance of motor vehicles to come into force in 2011

YEREVAN, February 12, /ARKA/. After the first parliamentary hearing of
a Central Bank-designed draft law on mandatory insurance of motor
vehicles today, Gagik Minasian, chairman of a parliament committee on
finance, budget and credit issues, said before sending the bill to
lawmakers, it had been discussed by the commission and experts.

`We have in Armenia some 400,000 motor vehicles, which not only
promote the country’s economic development, but also pose danger to
people’s life,’ he said. He said the proposed bill provides protection
against losses incurred as a result of traffic accidents and against
liability that could be incurred in an accident. According to Gagik
Minasian, with the passage of this law Armenia will make another step
towards the civilized world.

Vache Gabrielian, a deputy chairman of the Central Bank Council, said
mandatory car insurance operates successfully in all European
countries. He cited also the increasing number of vehicles and road
accidents, saying these two factors make auto insurance mandatory.
According to Vache Gabrielian, the bill is expected to come into force
in 2011.

He said in 2013 the so-called bonus-malus system will be introduced,
which is a system that adjusts the premium paid by a customer
according to his individual claim history. Bonus usually is a discount
in the premium which is given on the renewal of the policy if no claim
is made in the previous year. Malus is an increase in the premium if
there is a claim in the previous year. Bonus-malus systems are very
common in vehicle insurance.

Vache Gabrielian said the insurance payment amount in Armenia will be
between 31,000 to 38,000 Drams. ($1 – 381.26 Drams). -0-