In­surance com­pa­nies los­ing

Weekend Witness - - Scene Around -

DRAS­TIC steps are re­quired to en­sure that mo­tor in­surance re­mains af­ford­able for con­sumers and that their in­surance com­pa­nies can con­tinue of­fer­ing mo­tor ve­hi­cle cover.

South Africans are pay­ing more for mo­tor in­surance here than in any other coun­try and in­surance com­pa­nies have for the past two years or more been show­ing bur­geon­ing losses in their mo­tor book.

Be­cause many peo­ple find the premi­ums for mo­tor in­surance un­af­ford­able, only about 35% of the just over 9,5 mil­lion ve­hi­cles on the roads are in­sured.

Nev­er­the­less, the num­ber of ac­ci­dent claims re­ceived by in­surance com­pa­nies keeps ris­ing and the cost of re­pairs is ex­tremely high.

The South African In­surance As­so­ci­a­tion (SAIA) has now launched a com­pre­hen­sive strat­egy to en­sure that af­ford­able and sus­tain­able cover will be­come avail­able to South Africans in fu­ture.

Viviene Pearson, who was ap­pointed head of mo­tor in­surance at SAIA in April, says the costs of re­pair work and the in­ci­dence of ac­ci­dents are soar­ing and push­ing up both in­sur­ers’ and con­sumers’ costs.

Crime and road safety also play a role in the high num­ber of ve­hi­cle-re­lated claims.

Pearson says some of the smaller in­sur­ers have al­ready in­di­cated that they can no longer of­fer mo­tor cover. The premi­ums that they col­lect are not enough to pay the claims.

In 2008, short-term in­sur­ers, ac­cord­ing to the lat­est avail­able statis­tics, col­lected R20,8 bil­lion in premi­ums for mo­tor in­surance and paid out R14,8 bil­lion on claims.

Crime is no longer the biggest prob­lem, al­though it still oc­curs.

Pearson says that in 2002, be­fore the in­surance in­dus­try and the SAIA took steps to com­bat hi­jack­ing and ve­hi­cle theft, crime-re­lated claims rep­re­sented 60% to 70% of mo­tor ve­hi­cle claims.

Cur­rently claims for ac­ci­dent dam­age com­prise 70% to 80% of the claims.

If in­surance com­pa­nies can no longer of­fer ve­hi­cle in­surance, this will rip­ple out to the en­tire econ­omy and those pro­vid­ing fi­nance.

Fi­nan­cial in­sti­tu­tions will no longer pro­vide fi­nance and peo­ple will no longer buy cars, which would se­ri­ously im­pact the mo­tor in­dus­try.

The SAIA, in col­lab­o­ra­tion with in­dus­try, has drawn up an ac­tion plan that was ac­cepted in Fe­bru­ary.

Com­mit­tees are be­ing ap­pointed to at­tend to the var­i­ous prob­lems.

One of the ma­jor prob­lems is the be­hav­iour of driv­ers, says Pearson.

There are many prob­lems re­gard­ing fraud­u­lent driv­ing li­cences, the lack of driv­ing skills and cor­rup­tion in the li­cens­ing di­vi­sions. Driv­ing un­der the in­flu­ence of al­co­hol is also a se­ri­ous is­sue.

Ac­cord­ing to fig­ures from Ar­rive Alive, cas- es of driv­ing un­der the in­flu­ence of al­co­hol soared by 336% for all cat­e­gories of ve­hi­cle be­tween 2004 and 2008.

The SAIA is go­ing to at­tempt to make driv­ing skills and gen­eral road safety part of the school cur­ricu­lum. Part of the SAIA’s plan is also to in­tro­duce reg­u­lar road­wor­thi­ness tests for all ve­hi­cles. A road­wor­thi­ness test is cur­rently done only when a ve­hi­cle is rereg­is­tered.

The cost of re­pairs is a mas­sive prob­lem for in­sur­ers. San­tam per­sonal in­surance un­der­writer At­tie Blaauw says re­pair costs are an even greater prob­lem than mo­tor car theft. Blaauw says as the ve­hi­cle be­comes older the in­surance pre­mium de­clines, de­spite re­pair costs re­main­ing high.

Pearson notes that in the new strat­egy, ways to make spare parts and com­po­nents cheaper are be­ing in­ves­ti­gated. This would be done in close co-op­er­a­tion with the mo­tor in­dus­try.

In­surance com­pa­nies are haem­or­rhag­ing. They don’t wish to get rich from mo­tor in­surance, but only make a profit and keep premi­ums af­ford­able, says Pearson.

The poor con­di­tion of roads and mo­tor ve­hi­cles also con­trib­utes to the high ac­ci­dent and claim statis­tics.

The av­er­age mo­tor ve­hi­cle on South African roads is 10 years old and taxis are on av­er­age 13 years old.

This means that manyve­hi­cles are not road­wor­thy, even though they are li­censed.

— Fin24.

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