Do we need car insurance? South Africa is a unique market when it comes to car insurance. The average South African consumer has experienced change from a social and economic perspective. This means that service providing companies need to stay ahead of the change to offer relevant, worthwhile product offerings. This is particularly obvious in the motoring industry and specifically the car insurance industry. Cars, SUVs and other types of vehicles are often seen as costly necessities and unfortunately car insurance cover is often seen as too expensive and not taken out. South African consumers should consider getting quotes from various insurance companies - they may be surprised to know that affordable cover for their vehicles does exist.
How much does car insurance cost? Car insurance, many motorists believe it is too expensive, but what could be the underlying reason for the general South African car insurance industry to have such a consumer perception? It's no secret that South Africa's roads are amongst the most dangerous in the world. One of the cited reasons for this is that South African motorists appear to have blatant disregard for the rules of the road and ostensible immunity from punishment for serious offences. Serious road traffic violations like speeding, driving through red lights, overtaking on solid barrier lines and driving under the influence of drugs and alcohol are commonplace and go unpunished more often than not.
It's little wonder then that only one third of SA motorists can afford the cost of car insurance. In order to cope with the enormous quantum of claims caused as a result of this lawlessness - SA has more than 18,000 fatal road accidents each year, not to mention tens of thousands of smaller non-fatal but costly accidents - SA motor insurers have had little choice under such financial pressure but to push up their premium rates almost to the point of excessiveness. What is of interest is the fact that car insurance providers in South Africa appear to have apparently shied away from taking an appropriately firm stance on this rampant lawlessness.
When should car insurance pay out? According to Arrive Alive statistics, the clear majority of road accidents are as a result of a deliberate violation of a basic road traffic law. If this is indeed true and all insurance is inherently prohibited from insuring events that are contra bonus mores (contrary to the law and to the public interest), then surely a vast number of motor insurance claims should be excluded even before they reach finality? Imagine the positive impact on claims reserves and car insurance pricing if this were true in SA. Sadly, this doesn’t appear to be the case. In a recent Wheels24 article entitled “Industry leaders: SA car insurance in crisis”, Seamus Casserly director of First Equity Risk Management is quoted as saying “Why don’t we have a motor insurance policy (in South Africa) that only pays if you stay within the rules, and are legally compliant? If you speed or go through a red traffic light, no cover. This as a simple way to bring down the costs of insurance and to reward legal drivers.” The payment of claims under dubious circumstances or for those that have been poorly investigated, has become a leading cause of excessive premium rate escalations. When one considers the very customer-centric goals of National Treasury, the Financial Services Board (FSB) and the Office of the Short-Term Insurance Ombudsman, all of whom appear to hold the view that higher volumes of rejected claims and customer complaint are indicators of “poor customer outcomes”, it is understandable that motor insurers are often reluctant to insist that motorists always abide firmly by to the law.
Can car insurance be cheap? Prime Meridian Direct (“PMD”) is one of the few South African car insurance businesses that is making a genuine attempt to meet the appeal of National Treasury for the car insurance industry to provide “innovative and cheaper solutions to ensure penetration of a greater percentage of the motor pool.” Through industry leading innovation, PMD has virtually pioneered a new class of cheap car insurance products that achieves premium rates up to 50% less than traditional comprehensive motor insurance, yet still provides meaningful benefits that really pack a punch. How have they done this? One of the key differences with car insurance businesses like PMD is that they, as Casserly suggests, expect their policyholders to be honest and to abide by the rules of the road. Imagine that! Thousands of South African motorists are choosing PMD every month to reduce their insurance costs whilst agreeing to be held to a high standard of motoring morality.
South African companies that offer car insurance companies like PMD support of government bodies like National Treasury and the FSB in establishing a new South African culture of motoring lawfulness. It is probably inevitable that if applied successfully, next generation motor insurance products like those now provided by PMD will initially have slightly higher claims rejection rates and therefore higher complaints volumes than their traditional (and much more expensive) comprehensive car insurance counterparts. But just imagine the ensuing benefits of such a praiseworthy endeavour to South Africa of lives saved, destruction reduced and inclusive, affordable car insurance premiums for all!
Companies like Prime Meridian Direct have developed innovative, cheap car insurance solutions that can fit a wide range of pockets. With some options starting from as little as R99 a month with a guarantee of no claims excesses and fixed premiums for the life of the policy, it certainly seems they’re switched on to solving the problem. Perhaps there is hope yet for South Africa’s car insurance crisis. It will, however, take government support for a return to stringent adherence to the law and the encouragement.
How do insurance company’s deal with complaints? PMD values customer feedback when it comes to all our products, such as our range of car insurance products. We strive to always deliver the highest level of customer satisfaction. Feel free to contact us with any complaints you may have and we will do our utmost to resolve it quickly. Should you have positive feedback, please feel free to let us know directly or via our HelloPeter page, we do appreciate it. You’re welcome to share your complaints on HelloPeter too, however you will receive a quicker response from us if you contact us directly.
Car insurance, do you really need it? When looking at the statistics relating to motor vehicle hijackings and car accidents within South Africa, you will have more than enough evidence which highlights the importance of car insurance.
The cost of repairing your car has increased dramatically over the last couple of years, resulting in significant increases in the average cost of insurance companies processing a claim. Due to the increase in vehicle theft, accidents and rising repair costs, insurance companies are forced to recalculate the risk and cost of insuring our vehicles.
Unfortunately, the SA motorist cannot afford to drive an uninsured car when considering South Africa's high accident and car theft rate. About 65 percent of South African motorists don’t have car insurance, according to the South African Insurance Association (SAIA). This has enormous implications for all road users, irrespective of whether they are insured or not.
The hard reality is that if you are an uninsured driver, you alone will have to cover the costs of repairing your car or even buying a new one if it has been badly damaged. In addition, you will also have to bear any legal costs when trying to claim damages from another uninsured driver without the assistance of an insurer.
Motor vehicle insurance is necessary as its absence affects many people. Regardless if you happen to be the most cautious of motorists, and even if you pay cash for your car, you are still at great financial risk if you drive an uninsured vehicle.
Daily, many South Africans experience the significant loss of losing their cars resulting from either theft, hijacking or accidental write-off: An example of such a situation would be:
Events such as these are often a nasty reality check as we tend to think that this will never happen to me. However, the loss of your car, whether it be because of a motor vehicle accident or theft or hijacking, is extremely difficult to recover from as you suffer a huge financial loss, especially since cars are so expensive?
Car insurance is necessary should you wish to put your mind at ease. As you drive one of your most expensive assets daily, car insurance provides you with the opportunity to have peace of mind that you now have cover for those unforeseen circumstances which often put you under severe financial pressures. This is one of the greatest benefits of having motor vehicle insurance.
The motor vehicle insurance industry in South Africa plays a significant role in the financial well-being of many of its citizens. It is important that we continue to educate all South Africans as to the importance of having motor vehicle insurance.
For many people within South Africa, a barrier to having insurance is often the cost. The current landscape of a high level criminal activities and increasing costs in repairing or replacing motor vehicles have contributed to the high costs in having an insurance policy
Car insurance is unfortunately not compulsory in South Africa, which means that the Government cannot tackle the issue of uninsured vehicles.
Understanding the risk of not having car insurance is important, but we also need to understand what “car insurance” is? One of the biggest challenges facing the insurance industry is that of consumer education. In other words, quite a few consumers don’t know what is going on with the financial service industry and insurance products. In fact, most of the complaints to the Ombudsman for Short Term Insurance are from consumers who are just not familiar with the aspects of motor insurance.
The Arrive Alive website provides some advice to vehicle owners about car insurance and road safety.
Car insurance is a contract in which an insurance company is financially responsible for loss, as described in the insurance company’s policy terms and conditions that the insured person may suffer to the vehicle. The bottom line is that people need to become acquainted with the policy terms and conditions and policy schedule. The clients need to make sure that they clearly understand the wording, terms and conditions, and any exclusion clauses.
This is clearly where car insurance companies can help their clients – by explaining the contract in summary form and in layman’s terms. Clients can be put off by difficult-to- interpret small print covering many pages of the contract. By simplifying and “educating” the client about the essentials of their policy, they will be so much happier as they will understand at long last the product for which they are paying.
So often we hear of people who tell us that they should have read the car insurance policy’s “small print.” Their expectations were that when “X” happens, they will receive benefit “Y”, which unfortunately does not materialise. The more attractive the insurance industry becomes to the motorist in terms of “friendly” policies and companies, the greater the chance that the 65% of uninsured cars can be brought down in South Africa.
There are some golden rules before signing up for car insurance:
Due to the lack of financial literacy, it is the duty of the insurer to ensure that the client understands what they have purchased. This will aid in managing clients’ expectations and provide a better platform for future engagements.
The extent of the cover from a car insurance product provided to the client should be clearly described in the policy’s terms and conditions. The insurance provider, as well as the client, has equal responsibility in ensuring that all details of the policy are in order.
It is important that all persons who are actively driving on the roads of South Africa abide by the National Road Traffic Act (Act 93 of 1996) and any of its regulations including, inter alia, the Road Traffic Regulations of 1999 (as amended).
What do customers think about car insurance? I'd like to commend the service of Lerato Tlhoaele! She was excellent and made sure I understood every aspect of the cover I was looking for. She was very patient over several number of days it took for me to make up my mind. Thank you! Kagiso Korae, via HelloPeter.