Abstract:
The importance of equal information in the motor insurance business is unquestionable, as it helps facilitate
the efficient operation of the business. However, practical challenges ensuing from information asymmetry
in motor insurance can disable the function of the sector and lead to its failure. To tackle the impact of
information asymmetry in motor insurance, the legal framework and insurance policies should be designed
efficiently to attain the goal of reducing social costs resulting from car accidents. This thesis is devoted to the
analysis of the efficiency of legal frameworks that regulate motor insurance in tackling practical challenges
ensuing from information asymmetry, focusing on the Global Insurance Company (S.C.). A combination of
doctrinal and empirical legal research methodologies was employed. Both qualitative and quantitative
analyses of relevant data collected from the key respondents of Global Insurance Company, including car
drivers and the traffic police, and cases were collected to identify the practical challenges in the sector. The
main objective of the thesis is to test the efficiency of motor insurance legal frameworks against practical
challenges ensuing from information asymmetry. The key findings reveal that the legal frameworks
regulating motor insurance, particularly provisions dealing with the time frame within which accidents
should be reported to the insurance company, paved the way for the policyholder, who has an information
advantage over the insurance company, to manufacture false claims to get unmerited payment. Moreover, the
third-party risk policy and commercial vehicle policy of the GIC are not efficient in tackling the problem of
information asymmetry in the sector. Practical challenges like the trends of corruption, over speed, and
negligence are the fruits of information inequality in one way or another. Some recommendations were made
to re-design laws regulating motor insurance in an efficient way to tackle information asymmetry and extra legal measures to curb the rate of car accidents like changing the time frame within which the insured should
notify the occurrence of accidents, issuing directive that allow the insurance company to apply different tariff
premium to drivers with repetitive accident record and others etc.
