Micro-dots promise to reduce vehicle theft - though not vehicle cover

Gari Dombo, managing Director, Alexander Forbes Insurance

From September 2012 it became compulsory for all new vehicles requiring a South African Police Services clearance to be installed with micro-dots. While this is expected to reduce theft of new vehicles, theft of older vehicles may well increase. Micro-dot

Micro-dotting involves printing miniature silicone chips with unique identification numbers, legible only when magnified – and then spraying these chips onto the underside of a vehicle and into the engine compartment. Since it is impossible to find and remove all the dots, police will use them to identify vehicle owners by cross-checking numbers on the National Information System (NATIS) data base. The process is expected to deter thieves and illegal auto-parts receivers as vehicles, or even their parts, can at any stage be traced back to their correct owner.

“The advantage of this system is that since the tiny micro-dots are practically undetectable and are sprayed so broadly within the vehicle they will allow police to trace a vehicle even if the engine number is defaced or destroyed” says Gari Dombo, managing Director, Alexander Forbes Insurance.

While micro-dotting is expected to reduce vehicle theft amongst new vehicles, theft of older, un-dotted, vehicles may well increase. Old vehicles will not be micro-dotted until they are sold on and re-registered. As such, it is anticipated that theft of older vehicles may well, initially, increase.

That said, “there is nothing to stop owners of older vehicles personally installing micro-dots and, if the vehicle is stolen, informing the police of the un-registered micro-dots on the vehicle” advises Dombo.

Either way, “from now on it will be much more difficult to clone vehicles. Chop shops will also find it harder to distribute parts since each part can now be easily linked to its NATIS-registered vehicle of origin” says Dombo.

Under these circumstances, simply placing a sticker on a vehicle, indicating that it has been micro-dotted may well act as a powerful deterrent to theft.

The upshot is that in future, vehicle theft and auto-parts crime is expected to become less of a factor - until the fraudsters improve their ways, that is. “One only has to consider how the security features of our bank notes are constantly improved to see that it might just be a question of time before criminals circumvent current micro-dotting technology” adds Dombo.

For the meantime, however, since the bulk of premium costs are driven by vehicle accidents - not theft or crime - micro-dotting is not expected to reduce insurers’ premiums. In fact, vehicle theft currently contributes less than10% of overall premium costs.

“One only has to compare the number of accidents, fender benders and scratches that your vehicle has sustained over the last few years - compared with the number of times is has been stolen” explains Dombo.

That said, “micro-dotting may well contribute to reduce the rate of future premium increases” adds Dombo.

Also, while micro-dots are a good security measure adopted in many countries, “consumers should not expect rapid premium changes because vehicle theft costs will only reduce gradually as newer vehicles replace old ones” cautions Dombo.

And even if vehicle theft and auto-parts crime reduces significantly, “any inflation increases may wipe out any positive effect that a reduction in vehicle crime might have on premiums” adds Dombo.

This is not to say that some insurers will not use micro-dotting in advertising to attract new vehicles to their books, much as they offer to beat any quote - or pay you R300! That is the nature of competition and advertising.

Also, since it is currently understood that manufacturers will be responsible for installing the micro-dots “we imagine that the insurance industry will not take a hard line on innocent insurance clients who may be unaware of non compliance, or have older vehicles” suggests Dombo.

In time, however, as all new vehicles are registered, or older vehicles re-registered at sale, requiring that they go through roadworthy processes including micro-dotting compliance, micro-dots will become the norm, rather than the exception” predicts Dombo.