South African motorists need innovative, tailored car insurance products that are affordable and cost-effective. However, you describe it, car insurance such as this could help millions of South African motorists. The South African Rand has depreciated by more than 60% in the last three to four years. Consequently, the price of imported vehicle parts has sky rocketed, steeply pushing up the cost of vehicle repairs and the average car insurance claim amount with it. In addition, the price of vehicle recovery and salvage has risen dramatically too with up to 40% of the average R20 000 claim going to the cost of getting the vehicle from the site of the accident to the repairer.
It’s no wonder then that comprehensive car insurance companies have been forced to increase their premiums materially each year just to keep their motor portfolios out of the red. Many are now also shifting their practices away from a “replacement of parts” approach to a “repair what can be repaired” approach.
This is not to mention the regular increases in car insurance excess amounts, meaning that car insurers are expecting their clients to carry an ever-increasing financial burden from their own private funds.
The poor state of South Africa’s roads has further aggravated the car insurance crisis with annual road deaths approaching nearly 20,000 people each year. Enormous potholes, faded road markings and signs, and faulty or broken intersection robots generate an enormous amount of otherwise avoidable car insurance claims.
Ineffectual traffic policing and general impunity to South Africa’s road traffic laws are another major contributor to otherwise avoidable car insurance claims. If only South African consumers could access innovative car insurance products that were affordable yet offered meaningful protection.
The fact that nearly 7 in 10 vehicle owners do not have car insurance is not that surprising. When one carefully considers the colossal cost of vehicle ownership and the princely price of comprehensive car insurance, the answer becomes abundantly clear.
Most of South Africa’s 10 million vehicles are financed by one of the major banks. Therefore, each vehicle owner needs to make a monthly debt repayment on their vehicle unless they wish to have their vehicle repossessed. This repayment often represents a significant percentage of the average South African’s income.
Fuel prices have been steadily rising with the State not passing on the savings from decreasing international crude oil prices to SA consumers. Instead, the fuel levy has been increased to fill this void with bigger taxes.
Vehicle servicing costs can also be high with many motorists not being able to regularly maintain the recommended manufacturer service cycles. This accounts for a large portion of car insurance claims that relate to mechanical or electrical failures.
And then there is the issue of insurance. After finance repayments, fuel and maintenance costs, vehicle owners still need to find room in their strained budgets for car insurance. To make matters worse, comprehensive car insurers apply what is called risk profiling.
What this means is that affluent South Africans living in safer areas with lock-up garages, who drive expensive cars with leading security measures get the best deal on car insurance. Ordinary South Africans living in the real South Africa, driving ordinary cars pay proportionately more for their insurance. It’s understandable then how short term insurance is almost always the first thing to be dropped during a tough month.
Are you looking for affordable car insurance for your car? Car insurance companies need to reinvent the wheel and come up with some new cheap car insurance options for real people with real financial constraints. The old suite of products is just not meeting the current needs.
Whilst the uptake has been slow, it seems that some car insurance businesses have already responded to South Africa’s car insurance crisis with sustainable solutions.
Imagine affordable car insurance that cost as little as half of what comprehensive car insurance costs. Imagine low-cost car insurance that guaranteed you a fixed premium for the life of the policy with no annual increases and no excess to pay when claiming.
Imagine cheap car insurance with no risk profiling and a one size-fits-all approach to policy pricing. Imagine affordable car insurance that could be masterfully flexed according to your needs and budget. Imagine. Sounds almost too good to be true. Strangely enough, all of these things are actually available right now.
Organisations like Prime Meridian Direct have developed innovative, cheap car insurance solutions that can fit just about any budget. With some options starting from as little as R149 a month and a guarantee of “Fixed Premiums for Life”, it certainly seems like they’re switched on to the problem. Perhaps there is hope yet for South Africa’s car insurance crisis.
How has the car insurance industry been affected by South Africa’s junk status, which was announced in April, 2017? “I have just heard that South Africa has been downgraded to junk status, whatever that means – but it doesn’t sound too good. The TV and radio are all going mad about this and I’ve also heard that there are going to be protest marches held around the country!” This was the kind of talk that many South Africans would have engaged in during the first week of April.
In most cases the cost of car insurance will increase. However, that is not the case with all insurance companies. For example, Prime Meridian Direct’s car insurance has fixed premiums for life regardless of any economic changes
According to Herald Live, South Africa’s junk status will increase the cost of your car insurance through possible hikes in car insurance premiums. The South African Insurance Association (SAIA), which represents almost 60 short-term insurers, warned that the downgrade would have a serious impact on consumers. Vivienne Pearson‚ SAIA’s chief executive, said that the downgrade was expected to affect the short-term insurance industry in particular.
The idea of possible premium increases was echoed by Automobile Association spokesman Layton Beard. He said that the likelihood of premium increases could possibly result in the cancellation of car insurance policies.
Nevertheless, policy holders need to seriously weigh up the consequences of cancelling a policy. They need to realise that it is a great risk not to insure their cars, seeing that 65% of all cars on the roads do not have car insurance.
So, although at the time you may think it is too expensive to pay those premiums, just remember that if you are involved in a car accident, where both cars are not insured, the cost of repairing your car could well be beyond your reach.
Through leading innovation in the car insurance industry, PMD has pioneered a new class of affordable car insurance products that is able to achieve premium rates more than 50% less than those of traditional, comprehensive motor insurance. South African’s also don’t have to worry about increasing premiums because PMD’s premiums are fixed for life. That is extra peace of mind when most other household expenses are on the increase.
Prime Meridian Direct offers a wide range of car insurance products to suit all budgets, such as our Prime Motor Thrift and Prime Motor Cover Grow car insurance products; with the cheapest being our Prime Motor Assist car insurance product.
We stand by our car insurance products as a solution to South Africans’ car insurance needs. Don’t just take our word for it, below is a customer review via HelloPeter Samson Samuel Khoza who wants to rate PMD 6 out of 5, had this to say about PMD’s car insurance:
“Had a car accident in March 2017 and I am done with all required steps of my claim. Every single person in the process has been good with me and I am asking myself, "why such a wonderful courtesy to me?". I have mentioned specific and wonderful persons that assisted in my previous reviews but to this end I have to mention Lynette Jacobs and her colleague Anna. The two finalised my claim to my advantage without annoyance. This brings me to a conclusion that it is a culture at PMD to employ people who don't know how to do the wrong job. I wish I could rate PMD and its staff with a 6th star.”
Car insurance policies mentioned are distributed by Prime Meridian Direct (Pty) Ltd, an authorised Financial Services provider. FSP 41040 and policy benefits are underwritten by Santam Structured Insurance Limited. FSP 1027.