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The Actuary The magazine of the Institute & Faculty of Actuaries

Safety gains drive down Middle East motor losses

Transport safety measures reducing accident and casualty rates by between 30% and 50% in some Middle Eastern countries over the last four years have led to reduced motor insurance losses, according to research by Towers Watson.

The study shows that in 2006/07 Dubai, Qatar, Oman and Saudi Arabia had road fatality rates among the worst 10 in the world. But in only four years, measures taken to update traffic enforcement and regulations - up to 2006/07, around a third of accidents that resulted in an insurance claim were found to be primarily the result of traffic violations - have made great headway in tackling this problem.

The consultant estimates that insurance payouts have been reduced by US$160 million in the United Arab Emirates alone.

"At one point, road fatalities in the Middle East region were the second highest cause of death after heart disease, whereas in the United States they don’t even appear in the top 10," said Towers Watson’s Andy Staudt.

"The result of widespread government intervention has been instrumental in saving lives and has led to significant insurance savings over the past several years. The measures introduced by governments are likely to stabilise the percentage of revenues that motor insurers payout in claims at up to 10% below pre-2007 levels."

Actions taken have included harsher regulations and stricter enforcement policies. Fines for most traffic violations have been increased and several police forces have also increased the number of patrols while introducing quotas and incentives to combat lax enforcement. Traffic and speed cameras have become more common, speed limits have been revisited and reduced in many areas, and regulations for the use of hand-held mobile phones and seat belts have been tightened.

The graph below shows the number of deaths per 100,000 population (ie. fatality rate) for Dubai, Kuwait, Oman, Qatar and Saudi Arabia. The worst fatality rates over this period were in the north-eastern African nations of Egypt, Libya and Eritrea with approximately 40 deaths per 100,000 while the lowest fatality rates occurred in Sweden, Switzerland and the United Kingdom with about five deaths per 100,000. In 2006/07, Qatar, Dubai, Oman and Saudi Arabia had fatality rates among the worst 10 in the world and Kuwait was in the bottom 50th percentile.