Complaints uncover problems with car insurance in Hong Kong

If you have ever been in an auto accident in countries like Canada or the UK, you know that small accidents that do not lead to injury are handled by insurers directly, with the party not at fault receiving payment in a relatively short amount of time - usually under two weeks. Here in Hong Kong, this is not the case. In fact, many parties will end up waiting six months to a year or more to receive payment from an insurance agent even if the accident is as inconsequential as a fender bender. This, along with a number of other common complaints, including one that was highlighted in our last article, point to a claims system that needs a massive overhaul.

Complaints with the claims system in Hong Kong

When looking at the claims process used by car insurance providers in Hong Kong, there are five common complaints that point to issues that need to be fixed in order to make the claims process better for all parties involved.

1. It is highly inefficient

In Hong Kong, all accidents - if there is damage suffered by any party involved - need to go to court. You can imagine that in a city with roughly 7.2 million people, 17,000+ cabs, 11,000+ busses, and 486,000+ private vehicles (according to the Hong Kong Government’s Fact Sheet) on the road, there is a high number of accidents. In fact, according to the Hong Kong Police’s Annual Traffic Report - 2013, there were 16,089 traffic accidents in Hong Kong in 2013 - just over 46 a day.  

Each and every one of these 16,000+ accidents will likely need to go to court. Even if the accident is as minor as, say, a small fender-bender where damage is minimal, but repairs are required. The sheer volume of cases can lead to an extreme backlog, which, in turn, means you may not see a judge for six or more months for any accident.

What’s more is that insurers in Hong Kong will not pay out, or even consider paying out, for any claims, regardless of size, until there has been a court judgement. Even if it is already known who was at fault and the total damage or repair bill that needs to be covered. This is a highly inefficient system that is not found in many other countries.   

2. The current claims process takes up a tremendous amount of resources and time

As we mentioned above, when you are in a car accident in Hong Kong, you are going to have to go to court. But, because of the backlog you are going to have to wait at least six months in order to see the judge. Because this is a drawn out legal process, all parties involved are spending an exorbitant amount of time and resources on car insurance claims.

Firstly, the police need to respond to, and investigate, each and every accident. Because there are so many accidents, they take an average of three months to process, submit their reports, and officially determine who is at fault - even if they know who is guilty from the time of the accident. This, combined with the man-hours needed to write the reports, and investigate the accidents puts a strain on resources (and taxpayers who need to pay for this) and means many officers are taken off the streets where they could be dealing with more serious issues.

Secondly, insurance companies are involved in the claims process pretty much from the beginning. As such, they manage the claims process and need to invest in more resources than are necessary in order to do so. This drawn out process can be costly, with many insurers passing the cost along to customers in the form of higher premiums.

Thirdly, this ties up the courts. Magistrates and possibly lawyers (if the accident is serious enough) need to spend time researching and hearing cases when they could be focusing on more serious cases.

Finally, this takes up a considerable amount of your time and money. You will need to spend time talking to the police to file a report, filing paperwork with an insurance agent, and talking to a mechanic about repair costs. If your insurance provider insists that you hold off on getting your car repaired you will have to spend more time getting to and from work, etc. Beyond that, you will need to go to court. All of this can be costly and frustrating, even if the accident is not your fault.  

3. Some unscrupulous insurance companies drag their heels after judgement

There are a number of excellent car insurance companies in Hong Kong. Unfortuantly, there are also a number of unscrupulous providers who employ fraudulent processes (see Part 1 for an example). Once the court has rendered a verdict, some lower quality insurers have adopted the practice of haggling with the party who is supposed to receive payment. For example, say the court finds that you are not at fault and therefore eligible for coverage, which the insurance company deems to be HKD 50,000. Some of the unscrupulous providers will offer you say HKD 40,000 if you take the money right away. When you say no to this amount, they will usually not return calls or drag the process out long enough where you may get frustrated and just accept the HKD 40,000. You may be able to get an amount closer to what was decided by the court, but chances of getting 100% are slim to none with these insurers.  

Unfortunately, haggling on the amount to be paid and not responding to calls or emails in the hopes of people just giving in and accepting a lower payment has become far too common of a practice in Hong Kong, and has led to a harmful cycle which is having a negative impact on the overall claims process.   

4. If you are at fault, you are guaranteed to get demerit points

In the eyes of the court system, there is a party that is at fault and a party that isn’t. When it comes to motor accidents, the party at fault will always get demerits in Hong Kong, even if the accident was technically out of their control, or a small fender bender that police in other countries would normally not deem worthy of a demerit.

If this happens to you, your premiums will go up. Not to mention the fact that you will be forced to submit a claim to the insurance provider which will result in any No Claims Discount being wiped out - obviously something that many would like to avoid.

5. The process has led to the police, and insurance agents, pushing for a solution that could open you to future liability

With the amount of paperwork needed in an accident, the time it takes to actually see a judge and receive payment, the strain on resources, and common fraudulent practices, the police and some insurance providers will often push people who are in small accidents to settle out of court.

While settling may seem like a good idea at the time - the police don’t have to do as much paper work, you don’t get demerits on your drivers, you don’t have to deal with possibly fraudulent insurance providers - it can open you up to future liability.

The reason for this is because when you settle, you likely won’t file an insurance claim thereby making the accident official. If you do this, the other party could come back in the future saying that the accident led to personal injury. If this happens, you won’t be able to go to your insurance company because they will have no knowledge of the original accident and will therefore exclude your claim, leaving you 100% liable for all costs.

In Hong Kong, the injured party has up to three years to file a personal injury claim and five for physical damage. If you are in an accident and settle, there is a very real chance that the other party may try to claim injury in the future, and because of this long time limit, this could pose a serious and costly issue.  

So, what can be done?

The problems with the current claims process have become large enough that Kwiksure believes a major overhaul to the system is necessary. In fact, we cover this in Part 3 of this article. Keep a watch on the blog for it in the near future.

If you are looking for an insurance provider that offers the best plans out there, please contact us today. Kwiksure’s experts know the industry inside and out, and can help you find a plan that offers safe coverage.