Only A Fifth of Vehicles in Mexico are Insured
The Chamber of Deputies recently approved the General Law for Mobility and Road Safety, which will strengthen regulation for insurance requirements for Mexican drivers to increase coverage rates in the country. Currently, out of 35 million cars, only 7 million have auto insurance.
Since 2014, all vehicles must be insured to circulate in the country and Jalisco, Morelos, Queretaro, Baja California, Chihuahua, Estado de Mexico, Mexico City, Nayarit, Nuevo Leon, San Luis Potosi, Tamaulipas, Sinaloa, Tabasco, Veracruz and Yucatan also require third party liability coverage. Currently, driving without insurance can result in fines ranging from MX$1,400 (US$66.9) to MX$2,800 (US$133.8), depending on the state.
The new law, which aims to increase sanctions for uninsured drivers, was unanimously approved by the Chamber of Deputies and adds Mexico to the second Decade of Road Safety 2021-2030, a UN-backed global initiative. Additionally, the law looks to limit driving speed in federal highways, strengthen the data registration in the Public Vehicle Registry, mandate riding in the backseat for minors under 12 years of age, implement new technology for tickets and increase the use of breathalyzers.
Only 20 percent of Mexico’s vehicles are insured, which can be attributed to high coverage prices or lack of information as to how to access insurance or the benefits it brings. However, insurance is becoming increasingly user friendly through digitalization. The auto insurance segment is transforming due to shifting client expectations and the myriad of digital solutions arising. Insurance companies, such as Geico and Online Seguros, offer citizens and tourists online services readily accessible through smart phones as more companies invest in becoming app-friendly. One company launched the first online insurance marketplace in the country: Mexico WOOW, in which customers can access coverage instantly through real-time assistance.
“Today’s drivers have the necessity of finding what they need in a single platform, with easy to comprehend insurance options and accessible prices where they are accompanied in the process from beginning to end. Through a 100 percent digital experience, it is no longer necessary to look for the policy or insurance numbers in the vehicle’s glove compartment. The entire solution is available at the palm of your hand,” said Margarita Zepeda, CEO, WOOW.
However, only 60 percent of the Mexican population as of 2020 has access to smartphones with which to access these solutions, limiting their reach. But as only 20 percent of vehicles are insured, there is a large gap that can be filled by smartphone solutions.