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Armenians Still Slow To Buy Mandatory Car Insurance


Armenia -- Rush-hour traffic in Yerevan.
Armenia -- Rush-hour traffic in Yerevan.

Less than half of car owners in Armenia have purchased car insurance in time for the January 1 deadline set by the state, a senior official said on Thursday.


A government-drafted law adopted by the National Assembly in May made car insurance mandatory for the owners of all 430,000 or so cars and other civilian vehicles registered in Armenia. The country’s Central Bank was tasked with coordinating the process that will give a massive boost to the country’s fledgling insurance industry.

The nationwide sale of insurance policies began on October 18, ten days after the bank set uniform tariffs, mainly pegged to the size of car engines, for all auto insurers operating in the local market. The policies required by the law cover only damage caused to other cars and the health of their drivers or passengers during accidents.

The process got off to a very slow start, with only 10 percent of motorists covered by the scheme by the end of November. According to Vahe Vartanian, a senior Central Bank official dealing with the matter, the figure has since rinse to at least 40 percent.

“There is a large number of sold policies which insurers are physically unable to calculate,” Vartanian told a news conference. “According to our estimates, after the New Year holidays we will have an insurance rate of at least 50 percent, which is not a bad indicator when compared to international practice.”

Most car owners will have to pay 25,000 drams ($70) or 32,000 drams for an insurance policy each year, a price which government critics claim is arbitrary and too high. Earlier this month, the Zharangutyun (Heritage) party, a major opposition group, launched a public campaign against the scheme, urging Armenians to defy it.

“Fair competition in this area has not been ensured,” Zaruhi Postanjian, a Zharangutyun deputy, told RFE/RL’s Armenian service. “Besides, imposing another financial burden on Armenian citizens who are already in a difficult socioeconomic situation is unacceptable.”

Prime Minister Tigran Sarkisian condemned the Zharangutyun campaign on Thursday, saying that mandatory car insurance is the norm all over the world. “They are spreading populist propaganda without realizing that they are damaging their own reputation with ludicrous statements,” he said.

Government and the Central Bank officials have warned that the January 1 deadline for the introduction of what has until now been a rare practice will not be extended. The chief of the national traffic police, Margar Ohanian, said on Wednesday motorists lacking insurance policies will be fined 50,000 drams in accordance with the law.

The authorities have only agreed to exempt citizens not driving their cars most of the time from the requirement. They will have to deposit their license plates with the road police in order to qualify for the exemption.
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