Alexander Forbes Insurance (AFI) has come up in support of compulsory basic third party damage insurance, saying this could potentially reduce insurance premiums while affording much-needed additional protection to road users.
AFI MD, Gari Dombo says a reduction in motor insurance premiums is possible as more vehicles will be covered with a bigger pool of contributors. As a result, motor insurance will become more affordable and attractive to vehicle owners in South Africa. Dombo says this will also result in an increase in the number of roadworthy vehicles on South Africa’s roads as more funds become available for Third Party vehicle damage repairs. Currently, it is estimated that less than 35 percent of vehicles on South African roads are insured, according to statistics from the SA Insurance Association (SAIA).
Motor industry experts also say that South Africa is one of the few countries in the Southern African Development Community that does not enforce compulsory comprehensive insurance on motor vehicle owners.
Although the government has discussed introducing mandatory third party insurance, there is still much debate around the best way to collect third party payments. Amongst the options being considered are the introduction of a fuel price levy, annual premiums when renewing ones vehicle licence, and/or an arrangement when you purchase your vehicle.
The introduction of third party property damage insurance is in the best interest of all South African road users and in order to ensure that it is effectively managed we should learn from those countries such as the United Kingdom, United Arab Emirates and Italy that have already successfully implemented it.
“Knowing that South African roads are safer will provide road users with greater peace of mind and ensure that the insurance industry as a whole remains sustainable,” concludes Dombo.