How the Insurance Industry Can Make Our Roads Safer

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Road crashes are a global health and development challenge with significant human and economic costs, especially in developing countries. The leading cause of death among people aged 15-29, road crashes kill 1.25 million people every year and injure another 50 million—more deaths than from malaria or tuberculosis. In low and middle-income countries, this is estimated to reduce GDP by 3 to 5%. The United Nations recognized the severity of this challenge by adopting specific road safety targets in the Sustainable Development Goals: to halve the number of global deaths and injuries from road crashes by 2020.
Photo: Carlos Felipe Pardo

This ambitious target can only be achieved through a concerted effort that involves all major stakeholders: national and local governments, multilateral development banks, bilateral donors, civil society, and the private sector. The latter, a key stakeholder in this agenda, can contribute the knowledge, resources, and innovations that are required to accelerate progress and decisively change existing trends.

The insurance industry is also a key part of this coalition. Already playing an important, if somewhat hidden, role in the road safety agenda, the industry insures almost 1 billion vehicles globally, helping to reduce the costs of road crashes to society and the economy.

Improvements in road safety benefit the public as well as the insurance industry. Broad-based insurance coverage makes sure that health and property costs for victims of road crashes are protected, but it also benefits insurance companies by expanding their market. In the same vein, reducing the number or severity of crashes benefits all of us, while it also reduces the volume of claims to insurance firms.

In fact a huge motivator to create good road safety practices lies in the sense of personal responsibility. A driver who wants to achieve a safe record is far more likely to avoid accidents than a driver who has no care for safety. If insurance is both well designed and implemented, it can have an enormous impact for improving road safety.

Given this strong alignment, there is an opportunity for the insurance industry to take a leadership role in furthering the cause of safer roads. Specifically, we believe there are five areas where insurance firms can make a significant contribution:

  1. Embed road safety in insurance products and services, such as bonus-penalty mechanisms for insurance. Risk-based pricing is a powerful tool in the promotion of personal responsibility, as it links the causing of an accident to the economics of paying for those consequences, which in turn gradually lead to safer driving and behavior change.
  2. Promote new technologies that inform road users about driving behavior, through apps and other tools. Linked with insurance policies and risk-based pricing, this can be a game-changer.
  3. Provide shared, data-driven knowledge and research to contribute to a better understanding of the causes of road crashes and of safe road behavior. 
  4. Invest in raising public awareness of risk factors for road users (speeding, alcohol use, absence of seatbelts, seasonality), with a focus on vulnerable road users such as children, motorbikes and non-motorized vehicles.
  5. Partner with public authorities and civil society, sharing expertise and developing innovative ways to develop and finance road safety policies and programs.
Many of these contributions are already demonstrating success in specific countries and regions. But what will it take to scale-up successful solutions and roll them out on a large scale in lower and middle-income countries, where the toll of road crashes is the highest? We believe it requires a joint commitment to a public-private partnership process that combines the development of a conducive enabling environment, the building of strong public institutions and programs, and a local private sector that has the capital and knowledge to successfully embed road safety in insurance products.

In this regard it is encouraging to see the pioneering work and commitment of a growing number of insurance companies. During the recent 2 nd Global High Level Conference on Road Safety in Brasilia, for example, at a panel discussion convened by the IFC, the World Bank and AXA, four international insurance firms pledged to reinforce their engagements in road safety, in partnership with public authorities and civil society. This is a step in the right direction, and we need more of these actions and commitments.

Improving road safety is a complex process involving different elements of the economy and society. It is imperative that clear responsibility and authority are assigned to the various entities involved to ensure that all important aspects are adequately covered. It is equally important to have a designated body with clear responsibility for coordination to ensure coherent programs and the effective use of resources for the implementation of road safety measures.

Today, there is a gap between the governments, insurers and the end users. We need to come together to achieve greater synergy between the efforts of these stakeholders to further reduce costly road crashes. Potential changes to legal frameworks, and the implementation of a risk-based approach tariff should be based on reliable statistics, establishing a guarantee fund, a transparent claims management procedure and strong implementation and enforcement.

At the World Bank and IFC, and through our Global Road Safety Facility, we can play the role of catalyst to such efforts and partnerships. Bringing stakeholders around the table, supporting governments, NGOs and private enterprises to develop a conducive environment and implement best practices, in a manner that combines safer roads with business success for the benefit of all, but particularly the poorest.

The road safety challenge needs decisive and concrete contributions of all relevant public and private stakeholders. We look forward to adding more partners to these much needed efforts.


Karla Gonzalez Carvajal

Practice Manager, Transport, Europe

Nathalie Louat

Director of Trade & Supply Chain Finance, Financial Institutions Group, IFC

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