Naked, the AI-driven insurance provider, has welcomed new guidelines from the Competition Commission that aim to promote more competition in the automotive aftermarket, including manufacturing, repairs, insurance, and financing. The company says that the guidelines could bring more transparency into pricing practices and give consumers more choice if they are widely supported by the automotive industry.
The guidelines were developed to promote economic access, inclusion and greater spread of ownership for historically disadvantaged individuals. They will be effective from 1 July 2021. While they do not have the force of regulations, the guidelines will set new benchmarks for the consumer experience with the automotive aftermarket sector.
Says Ernest North, co-founder of Naked: “South Africa has a well-regulated insurance sector, underpinned by rules and practices that help to protect consumers. These new guidelines from the Competition Commission are a good example of how our regulators are advancing the rights of consumers, while also creating growth opportunities for the insurance industry.”
North says that Naked supports new guidelines that aim to ensure the fair allocation of aftermarket repair work by insurers to service providers on insurance panels. “The Guidelines signal a determination to encourage competition and the emergence of new entrants, which will be good for the economy,” he adds.
“It’s interesting to note that the need for accrediting service providers on a regular basis will place a greater reliance on user feedback in evaluating service providers and harsher consequences for service providers that deliver inferior service. This echoes the shift we have seen towards consumer power on digital platforms, where consumers have a real voice through ratings and reviews.”
To turn user feedback into an effective mechanism for driving better service levels and more competition, it will need to be scaled through easy-to-use digital interfaces rather than be based on paper-based or phone call review systems, says North.
“We also note the commission’s recommendation that maintenance plans and service plans should be unbundled from the purchase price of the vehicle at the point of sale,” he adds. “This will make it far easier for consumers to get competitive quotes for these offerings, based on an informed view of the price of the vehicle and of the value-added products and services.”
North says bundling is commonplace in vehicle financing and insurance—many people go along with the financial products proposed by the automotive dealer. “We’re seeing this trend already starting to change thanks to digital platforms,” says North. “Consumers can now get a quote for car insurance from an app or website while they’re sitting with the dealer. It’s thus easier to shop around than it was when you needed to get quotes from the insurer’s call centre.”
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