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Increase in motor vehicle claims

05 February 2007 Gareth Stokes

Carnage on SA roads to continue

Short-term insurer Mutual & Federal kicks off the local results season on Thursday this week. The company has already released a trading update to warn shareholder that earnings per share for the year ending 31 December 2006 will be 40% to 50% lower than the preceding period.

One of the main reasons for the poor results is a reduction in short-term underwriting margins. There are many factors contributing to this reduction, with the increase in the number of motor vehicle claims being prominently mentioned. The ratio of claims to vehicles insured is steadily on the rise.

The South African Insurance Assocaitions (SAIA) Chief Executive Barry Scott sums up the situation: "Short-term insurers have been experiencing an increase in motor vehicle claims over the past few years. There are several reasons for this, but we believe that a low standard of driving skills is a significant contributing factor."

A recipe for disaster

The National Association of Automobile Manufacturers of South Africa (Naamsa) revealed that 714,340 new passenger vehicles were sold in 2006. "Calendar 2006 represented another exceptional and record year for the South African new vehicle manufacturing industry, with both domestic sales and industry production rising to all-time highs," the association said.

Consider this number in light of poor driver skills and shocking road conditions and the situation is placed in context.

The number of cars on our roads is on the increase, driver skills are in decline and the road network is deteriorating. The consequence is that short-term insurers will see the number of motor vehicle claims increase even further in the next couple of years.

There have been some initiatives to try and remedy the situation. Recently, the South African Insurance Association (SAIA) launched a defensive driving project. The project will be run by Shayela Approved, headed up by Basil Mann.

"We have negotiated with some insurers to allow policyholders and drivers of insured vehicles who pass the defensive driving courses offered by our accredited training partners, and keep their certification up to date, to get discounts on their motor insurance premiums where appropriate," said Mann.

Authorities must get the basics right

Traffic authorities and municipalities have a lot to answer for too. There is absolute chaos at many of the countrys driver testing stations. A recent Sunday Times Metro article reveals that a reporter made 57 calls (over a period of a month) to the Gauteng call centre without being able to secure a test date. The inevitable consequence of this ineptitude is that individuals simply skip the legal requirements and drive unlicensed and uninsured.

Traffic policing is also a major problem. The emphasis is on maximising turnover rather than preventing accidents by proactive and visible law enforcement. There is absolutely no hope that a speed camera hidden behind two layers of camouflage netting will cause drivers to reduce their speed.

Despite the shambles in the issuing of driver licences, Gauteng traffic proposes to implement and test a driver licence penalty point system in the coming months. This is certainly a worthwhile endeavour - except the basics are not yet in place. You can only implement a system of punishment based on a driver licence when all road users have one.

There are more pressing issues to attend to before pursuing such grandiose plans.
 
Editor's thoughts:
Road accidents cost South Africa a fortune every year. It is time for both authorities and individual road users to make prevention of road accidents their primary concern.

 

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