The motor book
FOR NEARLY all short-term insurers the motor book is a big problem area, especially in personal lines business. It’s not hard to see why. In many areas road conditions are deteriorating, imported spare parts are increasingly expensive, the technical sophistication of vehicles is increasing and there are more vehicles, often driven by relatively inexperienced drivers, on the roads. But perhaps most alarming is the statistic from Minister of Transport Sbu Ndebele that 65% of the 8,5m cars on the road are uninsured.
For Denise Shaw, MD of Standard Bank Insurance Services, this means that if one of her clients is involved in an accident there’s a two-in-three chance the other vehicle will not be insured. “It’s a major problem for the industry. The number of unlicensed, unroadworthy and uninsured vehicles on our roads – together with the lawlessness: ie, drinking and driving, combined with fraud and corruption in the supply chain – needs a collaborative effort from the industry and Government to do something about it: no single company can do it alone.”
The South African Insurance Association is leading initiatives to try and deal with motor insurance, but Shaw says it needs the whole industry – including intermediaries and suppliers – behind it. Standard Bank Insurance Services has turned its motor book around, partly through more sophisticated rating and increased risk management. “But as an industry, together with Government and other key stakeholders, if we can stand together and turn things around everyone will benefit, including consumers.”
Shaw is very aware that for many clients insurance remains a grudge purchase. “ There’s cynicism about insurance companies – the kind of talk you hear around dinner tables.” But what can be done about that? “Clients must be made aware that we’re here to pay legitimate claims – that’s what we do. We strive to do that with minimum disruption to our clients. Hopefully, then insurance won’t be seen as a grudge buy.”
Shaw believes consumer education, especially in plain language, is a route to making people understand what their insurance is for and what they should get out of it. “ There also needs to be more consumer education in what the clients’ responsibilities are – about looking after their assets.” For many clients insurance remains a grudge purchase