More than 46% of Bhutanese vehicles are plying on road without mandatory insurance required, which can be third party or comprehensive. According to the Royal Insurance Corporation of Bhutan Limited (RICB) and Bhutan Insurance Ltd (BIL). There are about 40,100 uninsured vehicles on the road, leading to a loss of about Nu. 44 million to the insurance companies.
As of 31 December 2022, there were 125, 535 registered vehicles as per the Bhutan Construction and Transport Authority (BCTA). From this, 31,384 are old unusable vehicles (25% as thumb rule) as per the BCTA. 8,046 are government, BHT and diplomat vehicles. Therefore, there are a total of 86,105 insurable vehicles.
36,074 vehicles are insured with RICB and 9,931 vehicles with BIL. This indicates that many insurable vehicles are uninsured.
Insurance companies provides two insurance policies; Motor Comprehensive Insurance and Motor Third Party Insurance.
Motor Comprehensive Insurance protects a vehicle against any damage or loss. One can also improve the coverage with payment of an extra premium to cover additional coverage.
Motor Third Party Insurance is mandatory under the Road Safety and Transport Act to protect third party damage. The policy also provides coverage to both the driver and passengers during the accidents.
The third-party policy also covers vehicles from damages caused by accidents and others. The maximum limit for this scheme is Nu 0.5 million.
It is observed that Motor Comprehensive Insurance are bought by vehicles with loan or high-end vehicles and by responsible citizens while it’s mandatory for taxis.
Commenting on the insurance trend and adoption among Bhutanese vehicle owners, the manager for Claim, RICB, Sonam Darjay, said that public need to change mindset of understanding insurance policies. He said, “Not reflecting the benefit, people think that if nothing happens, they get back nothing.”
Insurance is a way of safeguarding people from monetary problems when something bad happens to the people or belongings. People pay a certain amount of money to someone who promises to pay you back if you suffer a specific kind of loss, harm, or accident. It is a method of managing risk, mainly to protect yourself from the possibility of a loss that you are not sure about.
RICBL’s manager for claim said that public should not understand insurance as premium collection or taxation but something to “cover loss incurred during an accident or damage.”
The manager for underwriting, RICB, Sonam Choden said that people should understand the benefits of insurance. “Insurance is for public protection/safety and it is important to get insured,” she added.
Meanwhile, the General Manager of the General Insurance Department, Kinga Thinley, said that there is no strong act or penalties for those not insuring. He said this could be the factor leading to people not insuring vehicles.
The General Manager of BIL, Yeshi Lotay shared that as per international law, all the vehicles should have third party insurance. However, he said, “In Bhutan, people lack sense of insurance.” Hence, people are not in a position to repair or cover the cost during an accident or other damages.
Meanwhile, untapped premium for the 2022 amounted to more than 413 million for the comprehensive insurance. Average premium per vehicle for Motor Comprehensive Insurance is Nu 10,307.
From the uninsured vehicle, insurance industries lost about more than Nu 44 million of premium collection in 2022. Meanwhile, as of June 2023, there are 126,501 vehicles according to latest data of the BCTA.
Sangay Rabten from Thimphu