The government plans a new measure that it says will help drivers save money on emergency costs and stimulate growth in the banking sphere. Under the bill on compulsory car insurance, which is on the agenda of the National Assembly’s spring session, starting next year the owners of 400,000 or so vehicles in Armenia will be required to get insurance on their transport. But many car owners, especially private taxi drivers, appear unimpressed by the planned legislation as they expect it to create an additional financial burden for them.

“Road accident increase simultaneously with the increase in the number of vehicles. More than 1,000 road accidents are reported annually, immense property damage is done, citizens’ life and health are put in danger and their property is damaged. This package is aimed at social protection,” said chairman of the parliamentary standing committee on finance-credit and budgetary affairs Gagik Minasyan.

An average driver will have to make a yearly insurance payment of 30,000-38,000 ($80-$100) subject to terms and conditions. In the event of an accident a driver may count on a compensation of a minimum of 4 million drams ($11,000) if he or she incurred damage, and 2 million drams ($5,500) if his or her property is damaged. These figures are still subject to revision.

Griar Insurance Co. Executive Director Armen Petrosyan tells ArmeniaNow that the law is long overdue.

Many drivers, meanwhile, express their dissatisfaction with the new bill.

Pensioner Stepan Petrosyan from Echmiadzin owns a car and uses it as a taxi says: “I don’t remember getting into an accident, and now I don’t know why I should pay $100 every year. What’s in it for me?”

Armen Petrosyan, meanwhile, thinks that insurance culture is absent in Armenia.

“We do not yet realize that it is better to make a one-time insurance payment and feel secure. And if they cause damage to someone else in the future, the insurance company will compensate for that damage. Or is it better when they cause damage and then think how to pay for it when they don’t have such a financial opportunity?” Petrosyan tells ArmeniaNow.

Head of the Achilles Union for the Defense of Drivers’ Rights Eduard Hovhannisyan thinks that this law will finally attach true value to human life.

“At long last they start talking about a person’s life, health and damage to it and that it should be compensated regardless of whether a person is wrong,” Hovhannisyan told ArmeniaNow.

Only 8,941 insurance contracts were signed in 2009 under the current voluntary car insurance system. A total of 200 insurance cases were registered. Armenia today has 13 registered insurance companies.

Artsvik Minasyan, a member of the Armenian Revolutionary Federation’s parliamentary faction, thinks that the system should be introduced gradually and that it should place a lower burden on those with lower incomes.

And Petrosyan says that the number of customers seeking insurance of their own will has increased in the past two years. In 2008, 171 people got car insurance policies at Griar Insurance, in 2009 – 326.

Griar Insurance registered four car insurance cases in 2008, compensating a total of 126,300 drams (about $340) and in 2009 – five cases (with compensation amounting to 846,900 drams/about $2,280).

“All this needs time. I assure you people will appreciate the benefit of it,” says Petrosyan.