A harder stance needs to be taken on drunk drivers

The number of deaths on South Africa’s roads is so bad that it has prompted the International Transport Forum to rate South Africa as the worst country out of 36 when it comes to road safety. While the official 2013 figures have not yet been released by the Department of Transport, a report by the Automobile Association of South Africa suggests that an estimated 14000 deaths occur on the country’s roads each year. A further report by road awareness website Arrive Alive suggest that half of these deaths are caused by drivers who are under the influence of alcohol.

Impact on the insurance industry

While the deaths related to driving under the influence (DUI) does not directly affect the insurance short-term insurance industry, those involved in accidents where DUI is a major factor, will lodge claims with their insurers in attempt to recover some of the incurred losses. Where does the insurer stand in this regard? Surely the insurer has the right to repudiate claims where DUI played a role in the accident, but at what level does DUI need to be proven before it can be used as grounds for repudiation?

A recent case was highlighted in the latest version of the newsletter of the Office of the Ombudsman for Short-Term Insurance (OSTI). After the insurer was alerted to the complaint, it pointed out to OSTI that a typical policy excluded cover where the loss or damage occurred while the driver of the insured vehicle was driving under the influence of alcohol or drugs, or while the alcohol content of the driver’s blood was above the legal limit.

In the court case following the accident, OSTI points out that the court ruled that the instrument used to measure the blood alcohol content had been declared inadmissible. There were also issues regarding other evidence which included the chain of evidence regarding the blood kit, the forensic report and the fact that the blood kit had been left lying around the police station for approximately nine days – during summer - before being processed.

The policyholder argued that because the court had dismissed the state’s case against the insured driver for driving while his blood alcohol content was in excess of the statutory limit or driving while under the influence of alcohol, the insurer could not rely on these two grounds to reject the claim.

The criminal case was therefore dismissed on technical grounds. The policyholder presented the case before OSTI that as a South African citizen, he has the right to be innocent until proven guilty and that because the court never proved his guilt, the insurer cannot repudiate the claim.

Educate yourself on exclusions

Although all of the information given to OSTI by the policyholder is technically correct, the fact that the court did not find the policyholder guilty of DUI, does not mean that the insurer has no grounds to repudiate the claim.

OSTI pointed out to the policyholder that the insured driver had admitted to having consumed alcohol prior to the accident. Therefore, the manner in which the accident had occurred would be sufficient to lead to the conclusion that the driver had, on a balance of probabilities, been driving while under the influence of alcohol.

OSTI ruled that the insurer’s stance on the claim was correct and that the insurer could not be compelled to settle the claim under such circumstances.

Are all role players pulling their weight?

While this case does have a happy ending, from an insurer’s point of view, one cannot help but feel that the insurer was lucky in this case. The basis of OSTI’s ruling was that the insured driver freely admitted to either the police or the insurer that he/she did consume alcohol prior to the accident. How many insured drivers or policyholders would freely admit the same?

Given the high level of insurance fraud in the country, it must be assumed that while all South Africans are innocent until proven guilty in the eyes of the law, they will in most cases not be honest with insurers when it comes to the events leading up to the accident. It is then the role of Government and the legal system to prove guilt in these instances.

After reading cases such as this, one questions whether Government is unintentionally playing a role in complicating the fraud which is rife in the industry. While we don’t know the circumstances leading up to the technical difficulties with the equipment used to measure the insured drivers blood alcohol level, the fact that a blood sample was allowed to stand for nine days in summer heat conditions before being processed is simply unacceptable. If the insured driver had misled the police by saying that he had not consumed any alcohol before the accident, the insurer would have no grounds to repudiate the case in this instance.

As pointed out in a previous newsletter, Government and industry regulators were quick to implement laws which would offer the consumer better protection within the financial services industry. It is now time that they act in a manner whereby similar protection is offered to insurers.

These incompetencies come at a high cost. The International Transport Forum report also estimated that the economic cost of South Africa's road crashes is estimated to be R307 billion each year, which is more than what Transnet has budgeted to fund its seven-year infrastructure build programme.

Perhaps this is the wakeup call that Government needs to eliminate poor practices within its departments and to implement laws which would be in line with those from the US, the UK and Australia which truly punishes offenders.

Editor’s Thoughts:
South Africa does have its own challenges, and it is often unfair to suggest that the country should be living up to international benchmarks. However, this is an easier plan to implement than the maintenance of roadworthy vehicles which we covered in a previous newsletter. If there are no challenges presented, what is stopping Government from aligning itself with these benchmarks? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].

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