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Last Updated: Wednesday, 2 July, 2003, 15:40 GMT 16:40 UK
Insurance rule drives Russia to distraction
By Nikolai Gorshkov
BBC, Moscow

Moscow traffic
The scheme is intended to discipline unruly drivers
There have been protests in parts of Russia against the introduction of compulsory car insurance.

Up to now, car insurance was voluntary, with only about 10% of Russians taking out policies.

Car ownership has recently soared, as have road accidents.

The government has introduced mandatory third party insurance from 1 July, but Russian motorists say it is a rip-off.

Car insurance is a novel concept in Russia, with car owners driving their Ladas or Volgas for decades without it.

When they crashed into other cars they simply paid for damage on the spot - provided they accepted responsibility and agreed the price.

Acrimonious arguments and fist fights were not uncommon. With the advent of capitalism the fights degenerated into shoot-outs.

An unlucky owner of an old battered Lada who drove into a flashy Mercedes had to part with his only flat to pay for repairs.

Voluntary contributions

The government says it is introducing mandatory third party insurance to protect the poor owners of old bangers.

Critics say the premiums are hardly affordable and the sum insured under the scheme will not cover any serious damage to a foreign motor.

Top it up, says the government, with voluntary contributions.

That could make a lot of cars worth less than the premiums.

Protesters in Russia's Far East have highlighted this discrepancy by publicly burning an old Lada.

They argue the scheme is a rip-off intended to line the pockets of insurance companies that have mushroomed in Russia in recent years.

State exemption

But the government says it is not just about money. It hopes the premiums would discipline the notoriously unruly Russian drivers.

Deaths on the roads in Russia are at a rate eight times higher than in the worst-affected areas of Europe or the United States.

The carrot-and-stick system of premiums and discounts is intended to reverse the trend.

But as any Russian will know the most brash drivers are those behind the wheel of a state-owned car.

And the government has exempted itself from the scheme as there are no funds in the budget.

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