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Are we willingly turning our roads into battlefields?

09 December 2015 Jonathan Faurie

As we head into the festive season, we head into a time where there are increased volumes of traffic on our roads. As with the Easter break, this unfortunately brings about a high level of road accidents as some people push the limits of the law and try to be brave on the roads. This has serious repercussions for the insurance industry. Despite the fact that the number of insured vehicles on South Africa’s roads is low, there is a high probability that at least one of the vehicles involved in the accident would be insured.

This has led to calls from the industry to change the way in which drivers behave on the roads. The calls for compulsory third party insurance are still falling on deaf ears for the moment, so telematics systems are the best that the industry can offer at the moment.

Be aware

Up until now, companies that use telematics systems have categorically stated that they will not use telematics information to reject a claim. But how long will this status quo last? It certainly does not give you the licence to go onto the roads thinking you are Mario Andretti.

In a release by the Office of the Short-Term Ombudsman (Osti), we see a drastic example of how telematics information could be used to correct driver behaviour. In a specific complaint referred to the Osti, the insured selected a Driver Behaviour Policy with a particular insurer. The policy required the insured to have an approved driver monitoring tracking device installed in his vehicle.

The policy included specific terms and conditions of cover, for example it stipulated that bad driver behaviour would result in the cancellation of the policy. It also stipulated that information obtained from the tracking device would be used at claim stage which could determine the outcome of the claim.

Among other stipulations, the policy also said that if the insured was found to have exceeded the speed limit by more than 30 km/h in the 60 seconds leading up to an accident, any claim in respect thereof would not be paid. All of these stipulations were made clear by the broker and the insured accepted the terms and conditions of the policy. He subsequently had a driver monitoring tracking device installed in his vehicle.

The costly poor decision

The release from Osti added that following taking out the policy, the insured was involved in a motor vehicle accident and submitted his claim to his insurer.

He reported that he was driving at less than 60 km/h at the time of the collision. However, when the claim was assessed, the insurer obtained a detailed travel report from the tracking company. The report recorded the driver’s behaviour on a daily basis from the time of switching the ignition on to the time of switching it off. On the date of the accident, the report indicated that the insured was travelling between 130 km/h and 140 km/h in a 70km/h zone. The speed recorded immediately before the collision was 109 km/h and at the time of impact was 70 km/h. The insurer concluded that the insured was therefore speeding at the time of the accident and the claim was rejected.

Can we blame the insurer for rejecting the claim? Absolutely not; the insured took out the policy with the knowledge that it was not a conventional policy and that info gathered from the device could possibly be used to reject a claim.

In this case, the broker explicitly told the insured about all of the stipulations in the policy. 

A system doomed for failure?

Recent reports by various media outlets have pointed out that the long delayed driver demerit system looks ready for implementation in April 2016.

According to the system, every driver will start with zero demerit points and points will then be added when the driver commits certain offences. The more serious the offence, the more points get given. After a certain amount of points, the drivers licence will be suspended, and when the driver’s licence is suspended three times, the driver has his/her licence cancelled. They will then need to be retested.

This is a serious red flag for insurers. And the question is this: is there effective communication between Administrative Adjudication of Road Traffic Offences (Aarto) and insurers. If a person has his licence suspended or taken away, surely the insurer will not want to take on that risk. Is the eNatis system dependable enough for insurers to look up this information? When FAnews spoke with the South African Insurance Association (SAIA) their answer was a definite no.

I always go back to what the nature of insurance is. It is a product that is sold to a client that protects him/her in the case of an unforeseen circumstance. This is sold in good faith that the client is by-and-large a law abiding citizen. We cannot blame insurers for refusing cover or rejecting claims based on a blatant disregard for the law. 

Editor’s Thoughts:
The question is, are brokers having the relevant discussions with clients? Are they telling them that their driving behaviour could eventually be used against them if insurers take a left turn on their telematics standpoint and use telematics information in the adjudication of claims? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za

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