This article is from the February 1998 The Mexico File
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Recent Changes in Mexican Automobile Insurance
by Mike Overcast
Mike Overcast leads the Baja Safari Mexico Club in San Diego, and he is also involved in ecological efforts in Baja California. He offers insurance through the club at discount rates and can be reached at888-411-BAJA.
Over the past five months there has been a widespread crisis in companies that provide Mexican automobile insurance and it has affected their coverage of American auto travelers into Mexico. Starting in September of 1997, several major Mexican insurers began closing loopholes and restricting coverages for their customers of Mexican automobile insurance.
Losses in the tourist insurance sector and downward movement in the stock prices of these companies have been cited as the reasons for these changes, but it was clear at the time that simply addressing loopholes and restricting coverages was not the entire answer to what in Mexico was turning out to be a major re-evaluation in covering American tourists in Mexico with auto insurance.
Most sources in Mexico City insurance circles quoted losses as the major reason for increasing their rates (most increased by 15% during the recent changes). Mary Burgess of Metropolitana Insurance stated, "We are simply trying to keep up with our losses in this sector." As time passed, however, further restrictions were placed on who would even qualify for insurance. Employees of non-profit companies, as well as the self employed who commonly used tourist insurance coverage, found themselves eliminated from coverage while traveling in Mexico.
Metropolitana cited a rogue broker for his misuse of "tourist" insurance coverage by using this designation for heavy commercial users, thus increasing the risks the entire pool was covering. The company cracked down on this practice and warned the broker to cease the operations. When the broker failed to adjust his actions, he was cut off from writing any new policies. Shortly thereafter Metropolitana decided to remove itself from the tourist market in 1998.
This was a huge shock to thousands of honest rate payers who trusted this broker with their tourist insurance policies. Several other companies then began to re-evaluate their relationships with American brokers who sold tourist insurance.
The traveling public requires good insurance coverage for its automobile forays into Mexico. A solid broker with real travel services is the key to knowing that you'll have an insurance policy that can protect you from loss during your travels in Mexico. Services like tourist telecommunications and emergency assistance are what customers of Mexican insurance see as crucial to their travels.
Tourist based telecommunications are now a leading component of travel to Mexico. The ability of a traveler to communicate with family, friends and business is now as important as insurance coverage. Giving the traveler the ability to accomplish this task with ease enhances any travel experience in Mexico.
The ease of the access to communication is very important. Imagine being able to call the US from any pay or hotel phone in Mexico without the use of money or a calling card. You simply enter a code and you reach an English speaker in the USA full time, twenty-four hours a day. You can relay messages to family, locate a good hotel or find out tomorrows weather. Such a system reduces losses for insurers by providing the traveler with better tools to focus on their travel.
Emergency services are the next step sought in assistance for travelers who drive into Mexico. No one likes to think about experiencing a serious health threat while traveling in a third world country. As long as long as you can communicate with ease to the US, why not have the same peace of mind in case of an emergency? Such a system exists. It has been reported that of 6000 evacuations from Mexico, 2000 had their lives saved.
Travel services like tourist cards, reports on fishing conditions, hotel reservations and general information are what the insured traveler to Mexico expects, and these services are available with a toll-free call around the clock.
Buying auto insurance for travel into Mexico is being enhanced with services which make travel into Mexico safer and more informed. Using modern telecommunications to keep you aware of the details of your travel makes you a smarter traveler, so that you can go where you want to go and avoid potential trouble.
Insurance companies can't afford to offer such services, but they are available at prices far below what you might imagine.
Editors Note: Mexican auto insurance is mandatory for tourists driving in Mexico. The services described above are supplemental to a good auto insurance policy.