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THE CAR INSURANCE INDUSTRY NEEDS STRINGENT COST MANAGEMENT FOR CHEAP QUOTES

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 motor industry and specifically the car insurance industry. Cars, SUVs and other types of vehicles are often seen as costly necessities, and unfortunately, vehicle insurance cover is often seen as too expensive and is typically not taken out. Read on further and discover why this is so, and also how South African consumers can find cheap cover for their vehicles– through Prime Meridian Direct (“PMD”).

DANGEROUS SOUTH AFRICAN ROADS

Many motorists believe car insurance 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 a blatant disregard for the rules of the road and so-called 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.

WHAT PUSHES UP COST OF CAR INSURANCE?

It's little wonder then that only one-third of SA motorists can afford the cost of car insurance. SA has more than 18,000 fatal road accidents each year, not to mention tens of thousands of smaller non-fatal but costly accidents. In order to cope with the enormous quantum of claims caused as a result of this lawlessness, 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.

SHOULD EVERY INSURANCE CLAIM BE PAID OUT?

According to Arrive Alive statistics, the vast 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 rejected 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 2015 Wheels24 article entitled “Industry leaders: SA car insurance in crisis,” Seamus Casserly, the 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 is a simple way to bring down the costs of insurance and to reward legal drivers.”

HOW CAN CHEAP CAR INSURANCE BE MADE SUSTAINABLE?

Prime Meridian Direct (“PMD”) is one of the few SA 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 of up to 50% less than those from traditional comprehensive motor insurance.
Yet PMD 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 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.

STRINGENT CLAIMS MANAGEMENT NEEDS SUPPORT OF EFFECTIVE LAW ENFORCEMENT

Organisations like PMD are to be commended for their efforts to curb an industry-wide challenge of paying out unnecessary claims. They need the support of government bodies like National Treasury and the FSB in establishing a new South African culture of motoring lawfulness. The Minister of Transport was recently mentioned that the Road Traffic Management Corporation (RTMC) shareholder committee, together with representatives from the South African Local Government Association made a resolution to review law enforcement across the country. It is only through serious implementation of law enforcement that motorists become aware that they can no longer get away with murder. The 2013 World Health Organisation’s Global Status Report on Road Safety4 revealed that South Africa, together with India, had a rating of about 2.6 out of 10 on the quality of law enforcement among 100 randomly selected countries. The report further found that there was a strong correlation between the quality of law enforcement and fatality rates -- the lower the quality of enforcement the higher the fatality rates.

Let’s face it, a law is only as good as its enforcement – no enforcement, no law.

IS CHEAP CAR INSURANCE POSSIBLE?

Corporations like Prime Meridian Direct have developed innovative, affordable car insurance solutions that can fit a wide range of pockets. With some options starting from as little as R165 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, nevertheless, take government support for a return to stringent adherence to the law through law enforcement.

PRIME MERIDIAN COMPLAINTS

PMD values customer feedback when it comes to all their products, such as their range of car insurance products. They strive to deliver at all times the highest level of customer satisfaction. Feel free to contact them with any complaints you may have and they will do their utmost to resolve them quickly. That being said, should you have positive feedback, please feel free to let PMD know directly or via HelloPeter/PMD’s page5 – they will appreciate it. You’re welcome to share your complaints on HelloPeter6 itself too, but you will receive a quicker response from PMD if you contact them directly or telephonically at 011 745 7800.

Sources:

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