April 1, 2018
In many countries, you cannot own a vehicle or drive one, without having some kind of compulsory car insurance.1 Compulsory third party car insurance would take care of the 65% of uninsured vehicles that are currently traveling on South Africa’s roads, currently posing great stress on the existing car insurance industry.
South Africa should take note of how other countries have implemented compulsory car insurance successfully for many years. In many countries in the world, motorists are not able to register a car or drive it, without first taking out compulsory third party car insurance. 1 In Australia, it is called the Compulsory Third Party or the CTP scheme. If your car is sold, the CTP can be transferred to the new owner. CTP appears to be similar to the Road Accident Fund in South Africa.
In Canada, basic car insurance is compulsory, with provincial governments deciding which benefits are applicable to their particular province. All the federal states of Germany require anyone owning or driving a vehicle to have compulsory car liability / third party personal insurance.
Hungary, India,2 Indonesia, and Italy all have compulsory third party insurance. In some cases, it either covers bodily injury only, or both bodily injury and damage to the third party’s car. In Italy, evidence of the compulsory car insurance is displayed as a disc on the windscreen, similar to the South African car licence disk. The UAE also requires compulsory comprehensive car insurance on all vehicles.3
In the United Kingdom, all vehicles have to be licensed and insured for damage caused to third parties and have to show evidence of insurance at all times.4 Nonetheless, there are still millions of motorists driving on UK roads with no car insurance. US requirements of car insurance varies from state to state, as each state has its own minimum compulsory insurance requirements.1
Different countries fund third party insurance in different ways. For example in Indonesia, funding for the compulsory third party car insurance is recovered from a vehicle registration fee.
South African car insurance is following the lead taken by the rest of the world, where the industry has become a consumer-dominant one.4
the use of technology regarding all aspects of car insurance. This is according to the Innovation Group, who released a Future Now report a few years ago. Through this technological innovation, the insurer-client relationship will change considerably. Technological development has changed the landscape significantly, with car insurance now being largely driven by the consumer.
Technological changes in car manufacture, such as the driverless car, will no doubt change the car insurance industry forever. With the human factor in driving severely reduced, the accompanying risk of accidents will be reduced, resulting in a significant reduction of claims, such as total loss. 4
Because of the huge advance in technology in car design, accidents will not only occur less, but also at slower speeds, meaning that the degree of car damage will be reduced. This will mean that repair, and not replacement of parts, will become prominent.
Telematics is a process used for checking the movement of a car, by using a GPS system in combination with special car diagnostics. Telematics is expected to upset the South African car insurance cart over the next 10 years, and will affect the overall pricing structures. Big Data will enable car insurance companies to tailor-make policies according to the specific needs of each client.
Big Data consists of very large data sets that reveal human trends when analysed by computer. This trend has yet to become established in South Africa. Using Big Data will greatly facilitate the setting up of policies that are unique to clients’ requirements. 4
Currently, client and car data from different insurance companies in South Africa are fragmented, but in future may have to be centrally available for ease of data transfer from one car insurance company to the next. Future policies will be created on a more individual basis, rather than being standard, regardless of who is taking out the policy.
SAIA is engaged in some activities that are involved in revamping, and streamlining the whole insurance process, from start to finish.
Are you looking for car insurance? With PMD you can enjoy affordable car insurance.
July 21, 2019
July 21, 2019