Uninsured motorists push up insurance premiums - 10 Aug 2009 11:16
Current motoring trends may mean that insurance premiums may escalate, and could be a result of more uninsured motorists on the road.
According to the South African Insurance Association (SAIA) only 30% of vehicles on our roads are insured. This combined with the fact that 70% of all claims made to insurers are accident-related, indicates that insurers and other financial institutions who grant loans for vehicles, are put under pressure. The consumers however are ultimately the ones who will pay.
Currently the banks are writing off R500m a year as a result of damage to uninsured vehicles. Often people cancel their insurance when it becomes too expensive. They then get involved in an accident, writing off the financed vehicles, stopping their payments. While financiers try and reclaim the money, they rarely make up the full amount.
Those who maintain their insurance reduce their premiums by pushing up the excess to unaffordable rates says Marcel de Klerk, chief executive of Absa Vehicle and Asset Finance. This also puts pressure on financiers, as vehicle owners can’t afford to repair their vehicles and stop making insurance payments.
According to De Klerk, the best solution for this problem is, like the US and Australia, to make insurance compulsory for all vehicle owners - whether vehicles are financed or not. This would prevent owners from putting themselves into poor financial situations and would alleviate the financial pressure of financiers and insurers.
Current motoring trends may mean that insurance premiums may escalate, and could be a result of more uninsured motorists on the road.
According to the South African Insurance Association (SAIA) only 30% of vehicles on our roads are insured. This combined with the fact that 70% of all claims made to insurers are accident-related, indicates that insurers and other financial institutions who grant loans for vehicles, are put under pressure. The consumers however are ultimately the ones who will pay.
Currently the banks are writing off R500m a year as a result of damage to uninsured vehicles. Often people cancel their insurance when it becomes too expensive. They then get involved in an accident, writing off the financed vehicles, stopping their payments. While financiers try and reclaim the money, they rarely make up the full amount.
Those who maintain their insurance reduce their premiums by pushing up the excess to unaffordable rates says Marcel de Klerk, chief executive of Absa Vehicle and Asset Finance. This also puts pressure on financiers, as vehicle owners can’t afford to repair their vehicles and stop making insurance payments.
According to De Klerk, the best solution for this problem is, like the US and Australia, to make insurance compulsory for all vehicle owners - whether vehicles are financed or not. This would prevent owners from putting themselves into poor financial situations and would alleviate the financial pressure of financiers and insurers.