©2012InsuranceBootcampAllRightsReserved · Pointsofdiscussion 1. Thefundamentalsofprivatetypemotorinsurance Presented)by)Christelle)Fourie)from)MUA)Insurance)Acceptances. 2. Heavycommercialvehicleinsurance

© 2012 Insurance Bootcamp All Rights Reserved





Points of discussion 1.   The fundamentals of private-‐type motor insurance

Presented by Christelle Fourie from MUA Insurance Acceptances.

2.   Heavy commercial vehicle insurance Presented by Chris Smit from CBC Fleet Insurance Solu?ons.

3. Sasria motor cover Presented by Mokgadi Sebola from Sasria SOC Limited.

4. The sustainability of motor insurance Presented by Viviene Pearson from SAIA.

5. QuesBons and answers


The fundamentals of private-‐type motor insurance

Warwick ScoF-‐Rodger (Jhb), Christelle Fourie (Cape Town) and Lynda Brown (Durban)

MUA Insurance Acceptances


InteresBng motor insurance stats… •  Almost 10 million cars on SA roads

•  Only 35% or just over 3 million cars are insured

•  40% of all insurance premiums in SA come from the motor insurance account

•  Before 2002, 70% of all motor insurance claims paid were crime related – this has reduced by 50%


•  In 2011 local insurers paid out in the region of R16 billion on parts alone.

•  That's not coun?ng the R43 billion borne by the country due to 10 000 fatal crashes and 13 000 road accident deaths each year.

•  It is es?mated the cost of motor vehicle accidents to the South African economy exceeds R100 billion.

•  The industry could reduce costs by taking greater control over the management (from

towing to repair) of each claim event. It is hoped that by working together the industry can reduce both the frequency and cost associated with accidents.

•  Which is why the SAIA is suppor?ng (in some cases) and driving (in others) a number of interlinked projects in the vehicle insurance space.


AutomaBc Number Plate RecogniBon (ANPR) project •  The ANPR project is a BACSA and SAP collabora?on aimed at preven?ng stolen vehicles from

exi?ng South Africa via road.

•  Approximately 88 000 vehicles are stolen in South Africa each year. The sta?s?cs suggest 45% of these vehicles are recovered. The remaining 48 000 stolen vehicles are either re-‐registered locally (50%), smuggled to neighbouring African countries (30%) or chopped for parts (20%).

•  In each case the impact on the insurance sector extends beyond the ini?al insured loss. Re-‐registered vehicles are o_en cloned (resul?ng in mul?ple insurance covers on a single vehicle) while chopped parts are o_en subs?tuted for OE spares during accident repairs.

Three SAIA projects to tackle spiralling short-‐term motor claims


Compulsory third party motor property insurance •  Only 35% of the vehicles on our roads are insured.

•  If we consider there are upward of 6.5 million vehicles that need insurance we are immediately faced with resource constraints. Stakeholders would also have to agree on distribu?on models, mechanisms to collect premiums, administra?on of the system, levels of cover, price – the list is endless.

•  How much would it cost? We don’t know yet. One of the possibili?es is for government to administer the scheme and collect premiums by way of an addi?onal fuel levy or add-‐on to the annual vehicle license fee. But this isn’t a foregone conclusion given the hard lessons learnt at the Road Accident Fund (RAF).

•  A compulsory third party insurance solu?on won’t be introduced overnight. But SAIA is hard at work to make sure all the industry stakeholders put the concept on their respec?ve agendas.


Cost of parts project •  A simple model suggest 70% of motor claims stem from accidents – with 70% of that figure

linked to repairs – and 70% of the repair figure due to the cost of replacement parts.

•  That means around R34 in every R100 paid out by motor vehicle insurers for motor claims goes to parts.

•  SAIA’s cost of parts project would address cost and quality issues in the parts space. It is very disturbing to know that insurers pay for parts, but o_en do not have knowledge of what is eventually fieed.


Fully comprehensive motor insurance •  Fully comprehensive car insurance covers preey much everything in the event of an accident,

the_ or fire.

•  If the vehicle is involved in an accident, stolen or set alight it will be fully repaired or wrieen off and the insurer will pay out the current market value of the car. The car will also be covered against accidental damage caused by yourself or another party.

•  As with all types of cover it depends on the actual insurance policy as to what is covered.


Who/what Covered Not covered

The insured X

Own damage X

Fire X

The_ X

Other person X

Other person’s vehicle X

Other person’s property X

Passengers X


Third party fire and the[ motor insurance

•  Third party fire and the_ car insurance provides the same cover as third party car insurance as well as extra cover for fire and the_.

•  Third party fire and the_ car insurance is some?mes only slightly more expensive than a third party policy, so it is o_en worth considering paying a liele more for the extra protec?on.

•  When to use third party fire and the[ insurance?

Quite o_en there is only a small difference in premium between third party fire and the_ and third party cover.

Please note: Some insurers will not offer third party cover so third party fire and the_ should be their lowest priced policy.



The insured X

Own damage X

Fire X

The_ X

Other person X



Passengers X


Third party motor insurance •  Third party car insurance is generally cheaper than third party fire and the_ car insurance

and fully comprehensive car insurance.

•  Third party insurance is the minimum level of car insurance available. It covers any damage to a third party (not you or your car) and their property.

•  Please note that third party car insurance does not provide any cover in the event of a fire or the_.

•  When to use third party cover?

Third party insurance is suitable for low value cars. You should consider how much it would cost to make a claim against the cost of replacing your vehicle. In some situa?ons the car insurance excess and increased premiums for the next five years are more expensive than replacing a low value vehicle yourself, in this scenario third party car insurance should be considered.



The insured X

Own damage X

Fire X

The_ X

Other person X



Passengers X


Motor insurance policy extensions •  Courtesy car

Courtesy car cover is an excellent insurance extra that should always be considered, especially by people who cannot get to work or manage without their car. Some insurers provide courtesy car cover as standard, whereas most offer it for an extra premium. Courtesy car protec?on can be used in the event of a claim if the car is taken away for repair or is wrieen off. The insurance company will then provide a courtesy car un?l your car is repaired, or in the event of a total loss (wrieen off) a courtesy car will normally be provided for an agreed dura?on or un?l the claim is seeled.

•  Personal accident cover

Personal injury cover is an op?onal extra and generally very cost effec?ve, available on some motor insurance policies. If you are injured as a result of an accident, personal accident cover will pay out depending on your circumstances. It may cover anything from loss of earnings to serious injuries. In light of the obvious shortcomings of the RAF, it is advisable that you promote this cover to your clients to top-‐up the RAF payout.


•  Finance top-‐up protecBon Top-‐up insurance is usually offered to owners of new or recently purchased cars. If the car is a total loss during the cover period, the top-‐up insurance cover will make up the difference between the payout you receive and the outstanding balance on your finance agreement.

•  Driving outside the borders of SA

The ability to drive insured whilst outside SA is o_en included in car insurance policies, however it should always be confirmed with the insurer before travelling. In most cases your insurance company will provide third party cover at no extra charge, even if you have a fully comprehensive policy. For an extra premium your insurer should offer you full cover whilst driving in Africa. Most comprehensive policies will cover the repatria?on costs following an accident up to a limited amount.

•  Replacing the vehicle

Some insurers will replace the insured vehicle with a vehicle of same or similar make and model. There is also specialist cover available where a vehicle can be insured on a new for old basis for up to three years.


Personal lines motor How car insurance premiums are calculated: Car insurance companies and underwriters take many factors into account when calcula?ng a car insurance premium, some of the main factors are detailed here: •  Age -‐ Younger drivers are sta?s?cally a higher insurance risk and therefore receive more

expensive quotes.

•  Gender -‐ Females currently get cheaper car insurance than men, however this could possibly change in near future.

•  Car insurance group – The cost of repairs per vehicle are grouped together in car insurance groups.

•  Level of cover required -‐ Generally fully comprehensive insurance is more expensive than third party insurance.

•  Excess -‐ Increasing your client’s excess can reduce his premium.


•  OccupaBon -‐ Most jobs have liele effect on an insurance premium, however insurers and underwriters consider some jobs a higher risk (e.g. journalists, sportsmen, students, salesmen, etc.) and will increase premiums accordingly.

•  Where the vehicle is kept -‐ It will usually cost less to keep a vehicle in a garage overnight than it will to keep it on the street.

•  Annual mileage -‐ High mileage insurance policies carry an increased cost as you are more likely to be involved in an accident.

•  No claims bonus -‐ A maximum no claims bonus (usually up to seven years) can mean discounts as high as 70%.

•  ExisBng claims -‐ Claims in the last five years can push up car insurance quotes.

How car insurance premiums are calculated, conBnued:


Men vs women -‐ Why do women get cheaper car insurance? •  Women tend to get cheaper car insurance than men as they o_en drive less kilometres

annually and they maker fewer, less expensive claims.

•  They tend to be involved in minor prangs, of which many don't end up being claimed for on insurance.

•  Men, on the other hand, have more serious accidents and as a result cost their insurance company more money.


Isn't it discriminaBon to calculate car insurance based on gender? •  Yes, apparently so. At the start of 2011 the European Court of Jus?ce ruled that car insurance companies

will no longer be able to use gender when calcula?ng insurance premiums. •  This is bad news for women in Europe who can expect to see insurance costs shoot up by around 25%,

whilst men can expect a modest decrease of around 10%.

•  Car insurance companies have un?l the end of 2012 to introduce the changes so don't expect your premiums to change too much before then. Will this happen in SA?

Who decides how much car insurance premiums cost?

Insurance costs are set by insurance underwriters. These underwriters develop pricing algorithms based on historical data to allow them to accurately balance risk with cost. In effect this means the car insurance premium is based on how other people with similar criteria have performed in the past.


What is telemaBcs?

•  Simply, it is the sending, receiving and storing of data

•  Enables us to gain a more accurate picture of our clients driving behaviour

•  Allows us to tailor our client’s premium, based on their individual risk behaviour.


How does it work? •  Informa?on is collected from a clever, liele box we fit out of sight in the clients car.

•  Informa?on is then sent from this box to the clients web portal

•  The data collected includes:

• Aggressive driving • Night-‐?me driving

• Excessive speed

• Hard breaking • Trips for the week

• Total distance

• Total ?me • Total events


What is the purpose of telemaBcs?

•  To make our roads safer

•  To make our clients beFer drivers and more conscious of their driving behaviour

•  Monitor young adult driving behaviour


How can telemaBcs help the client?

1.   Encourages safer driving for our clients and their family

2.   Starter discount -‐ 15%

3.   Low mileage discount

4.   Young driver benefits

5.   AutomaBc crash noBficaBon


Fact 1 -‐ Credit history does affect motor insurance rates •  Despite popular belief, insurers do take into account the credit-‐based insurance score -‐

which is a measure of how well the insured manages their financial affairs, not their financial assets -‐ when it comes to determining motor insurance premiums.

•  Most insurance companies also use the insurance score when the insured wants to purchase, change or renew their motor insurance coverage. Those consumers with a good credit history are more likely to pay less for their motor insurance when these insurance scores are entered into the pricing equa?on.

•  However, recent economic pressures may have adversely affected many consumers’ insurance premiums if they did not manage their credit records in an acceptable manner.

Motor insurance: Get your facts straight


Fact 2 – Colour choice does not play a major role in premium costs

•  Some consumers believe that the colour of a vehicle plays a significant part in calcula?ng insurance premium fees, with red or black cars cos?ng the most to insure as they are linked to aggressive driving or speeding.

•  The truth is, most insurers have liele interest in the colour of a car, but they are more interested in knowing if the driver has had any previous car accidents, the number of kilometres to be driven annually and where the insured lives.

•  At MUA Insurance Acceptances, it is not the colour, but the type of car that most affects motor insurance premiums.

•  Therefore, it is crucial to check the insurance costs ahead of purchasing a new or used car as motor insurance premiums are largely based on the car make, model, body type, engine size, and the age of the vehicle, as well as the age and driving record of the driver.

•  Premiums are also based, in part, on the vehicles’ retail value, the cost to repair it, its overall safety record, and the likelihood of the_.

•  Many insurers offer discounts for features that reduce the risk of the_ such as tracking devices and applica?on of microdot technology.


Fact 3 – Older people pay less for car insurance

•  One of the benefits of geong older is that most insurance providers offer drivers over the age of 55 years the opportunity to qualify for a significant reduc?on in motor insurance premiums and reduced excesses.

•  Some insurance companies offer a discount of up to a 25% on car insurance, but as each insurance provider differs in its unique offerings, it is best to check this with a broker before signing up.

•  Those who are re?red, or not employed full ?me, but are under the age of 55, may also be eligible for a discount. However, age requirements for this type of discount vary depending on the insurance carrier so it is always best to ask a broker.

•  It is also a good idea to ask the broker whether defensive driving courses are approved by the insurer, because par?cipa?on in an approved advanced driving course could also assist in reducing premiums.


Fact 4 – If another person drives the insured’s car, the other person’s motor insurance will not cover them in the event of an accident •  It must always be remembered that the motor insurance policy covering the vehicle involved is considered

the primary insurance, which means that the vehicle owner’s insurance company must pay for damages caused by an accident.

•  Due to the fact that policies and cover differ depending on each insurer it is crucial that the insured is familiar with these differences when allowing another person to drive their car.

•  There might also be specific driver limita?ons in respect of age and nominated of regular drivers noted on the policy schedule. It is impera?ve to speak to a broker to fully understand all the terms and condi?ons in the policy to best avoid an insurance claim repudia?on.

Fact 5 – Personal motor insurance does not cover business use of the car •  For those consumers who are self-‐employed and use their vehicle for business purposes, personal motor

insurance is unlikely to fully protect them in the event of a claim, so they do need to s?pulate the exact use of the motor vehicle when taking out insurance cover.

•  Even though motor insurance geared for business use can be more costly than a personal policy, one of the best ways to keep motor insurance premiums down is by having a good driving record.

•  In addi?on, if other people, for example employees, make use of the car, it is vital to ensure they also have good driving records. It is good prac?ce to check the driving records of employee drivers at least twice a year to ensure they maintain a clean driving record.


Fact 6 – Every motor vehicle owner should have personal accident insurance •  Amendments to the RAF legisla?on, which came into effect in August 2008, now restricts

injured par?es to claim only against the RAF, limi?ng the claim for loss and support to R160 000 per year, irrespec?ve of the actual income loss, and subject to a quarterly infla?on adjustment.

•  A claim for general damages is limited to serious injuries as described in the regula?ons of the amended Act. However, most importantly, injured par?es had their common law right to claim against the driver removed.

•  When it comes to the right to claim for more than the restricted cover provided by the RAF, the responsibility to look for other avenues to obtain adequate personal accident, disability, health and life insurance cover now lies with the consumer.


Heavy commercial vehicle insurance

Michael Rossouw (Jhb), Chris Smit (Cape Town) and Bryan Eybers (Durban)

CBC Fleet Insurance SoluBons


Background

•  New truck sales in 2011 -‐ 26 248 •  < 8 500 kg – 9 110 •  < 16 500 kg – 4 664 •  > 16 500 kg – 11 503

Compared to •  Light commercial vehicle – 149 261 •  Passenger vehicle – 394 503


Background

•  Motor industry contributes 6.6% of SA economy

•  Mining industry contributes 43.8% of SA economy


Where to start

•  Familiarise yourself with the heavy commercial market

•  Know your client’s product

•  Heavy commercial vehicle •  Rigid, truck, tractor

•  Trailers •  Flat decks, interlinks, ?ppers,

tankers, reefers


Your first HCV quote

•  Essen?al informa?on required to obtain a quote from the industry:

• Fleet composi?on • Minimum three years claims experience • Commodi?es carried


Type of quote opBons available

•  Fully comprehensive – Accounts paying less than R120K

•  Aggregate excess – Accounts paying more than R120K

•  Profit share – Accounts paying more than R50K

•  Burner – Accounts paying more than R100K

•  Self funding – Corporate accounts e.g. Unitrans, Imperial


What next?

•  A_er you have placed the business you wait for the claim and a lot of amendments and changes in between.





An average heavy commercial vehicle claim is approximately R273 000


An average heavy commercial vehicle claim is approximately R273 000


Standard documentaBon required to submit a claim

•  Fully completed claim form •  Repair quote •  Driver’s licence •  Cer?ficate of fitness •  Load document

•  Third party details •  Witness statements •  Fleet management report


CASE STUDY

•  Insurers do not just accept write-‐offs and will re-‐inves?gate

•  Two major costs are the engine and chassis:

• Insurers will establish damage to engine and chassis • Repairer must ensure that manufacturer’s warranty is honoured a_er

repairs are completed


Example of a write-‐off T/T R1,400,000 + TR R700,000


Repairs authorised at R785 000


Repaired vehicle


Future of trucking


Sasria motor cover

Mokgadi Sebola

Sasria SOC Limited


Sasria perils

•  Any act (whether on behalf of any organisa?on, body or person, or group of persons) calculated or directed to overthrow or influence any state or government, or any provincial, local or tribal authority with force, or by means of fear, terrorism or violence.

•  Any act which is calculated or directed to bring about loss or damage in order to further any poli?cal aim, objec?ve or cause, or to bring about any social or economic change, or in protest against any State or government, or any provincial, local or tribal authority, or for the purpose of inspiring fear in the public, or any sec?on thereof.


• any riot, strike or public disorder, or any act or ac?vity which is calculated or directed to bring about a riot, strike or public disorder

• any aeempt to perform any act referred to in clause (i), (ii) or (iii)

Note: In this Policy, the term “Public Disorder” shall be deemed to include civil commoDon, labour disturbances or lockouts

Non poli?cal riots -‐ Student riots, Soccer hooligans, commuter agita?on (Train delays, Bus delays, Price increases) Poli?cal riot – service delivery riots


•  Any riot, strike or public disorder, or any act or ac?vity which is calculated or directed to bring about a riot, strike or public disorder

Note: In this policy, the term “public disorder” shall be deemed to include civil commoDon, labour disturbances or lockouts

•  Strikes -‐ bus drivers’ strike, truck drivers’ strike, security guards’ strike, Metrorail strike, Shoprite strike, Taxi drivers’ strike, Municipal workers strike

•  Civil commo?on – bigger than a riot but not total insurrec?on

•  Public disorder – bigger than civil commo?on but it is not war

•  Labour disturbance – riot in the workplace

•  Lockouts – mainly factories


•  the act of any lawfully established authority in controlling, preven?ng, suppressing or in any other way dealing with any occurrence referred to in clause (i), (ii), (iii) and (iv) above


Zandspruit service delivery protest, 2011 (Source: News24)

Motor section Applies to motor cars, LDV, commercial vehicles, trailers, buses, motor fleets, and motor traders Policy – ME Territorial limits •  Vehicles registered in the RSA may travel temporarily in Namibia without the need

for separate cover by virtue of a reciprocal arrangement with NASRIA. This is permissible notwithstanding the territorial limits as contained in the Sasria policy.


Motor secBon Period of insurance

• 12 consecu?ve months

Motor categories M1 – private cars – this category includes micro-‐buses, sta?on wagons, caravans and

domes?c trailers, where such vehicles are not used for the conveyance of good for trade purposes

M2 – commercial cars – this category includes LDV’S, micro-‐buses, sta?on wagons, caravans

and trailers, where such vehicles are used for the conveyance of goods for trade purposes M3 – taxis – this sec?on covers taxis (having a sea?ng capacity between seven and 19,

including the driver) used for the carrying of fare paying passengers


Motor SecBon

M4 – motor traders – this sec?on covers car/ vehicle ferrying companies and/ or auto carrying

M5 – buses – a bus can be specified as any vehicle with a sea?ng capacity of 20 or

more M6 – mobile plants – this category in only available for mobile plant (construc?on

plant) registered for road use M7 – BRT – bus rapid transport system (reya vaya)


• Single vehicle policies • Fleets

•  Four or more vehicles •  Issued on a categorised/specifica?on basis •  Based on all vehicles owned by, or in the custody and control of, the

insured •  Declara?on made at end of the period and premium adjusted

accordingly


RaBng •  Sasria rates according to use rather than type of vehicle •  Other than busses, motor traders and mobile plant, vehicles are rated per

vehicle and not on value •  Minimum premium is the premium per vehicle iro category 1, 2 and 3 •  Minimum premium on M4 is R100, on M5 and M6 it is R200 •  Two addi?onal categories M6 (mobile plant) and M7 ( BRT)


Cover provided •  Retail value

•  Replacement value

• Automa?cally included on cat. 1 vehicles where vehicle is less than one year old and traveled less than 30 000kms

•  Reinstatement value

• May be insured on a Sasria material damage coupon and covers vehicles for the reinstatement value whilst parked in a depot. – no road risk


• Credit shorvall

•  Automa?cally included on cat. 1 vehicles

•  Note: Forkli_s may be insured under the motor policy, so as to align the motor policy with the prac?ce of the industry.

The extras on the motor can be insured on the motor policy, only when the total value is not more than 10% of the value of the vehicle, if the values of the add-‐on exceeds 10% then this should be insured, under the material damage coupon.


Claims update

Claim trends: Claims per class for 3 years

0%

10%

20%

30%

40%

50%

60%

Buses Cars Goods Vehicles

Large taxis

Mobile Plant

Motor ferries & Traders

Busses -‐ Single vehicle policies

Cars -‐ Single vehicle policies

Goods vehicles -‐ Single vehicle policies

Motor Traders -‐ Singke Vehicle Policies

Motor Motor

Motor: Group Scheme Policies Motor: Single Vehicle Policies

2010

2011

2012


• Case study 1.  As an underwriter you get instruc?ons from a broker to issue Sasria cover for

their client’s buses. The broker indicates that the buses must be insured for road and sta?c risk. How would you issue this cover and what rates will apply?

2.  A farmer has tractors that are not registered for road use. The tractors are covered on the motor sec?on of his underlying policy, under special-‐type vehicles.

Where do you think these tractors should be covered in terms of the Sasria cover and why?


Motor SecBon   Case study

3. The insured's employees go on strike for about a week or two. The insured confirms that the strike was peaceful and there were no incidents of violence. One day a_er the strike ended the insured's bus, en route from a trip starts overhea?ng apparently due to a radiator leak. The driver parks it on the side of the road and goes home. The insured sends out a mechanic who does some work on it but doesn’t finish and leaves it there un?l the following day. The next day the bus is found to have been burnt out.

Will this claim fall within the ambit of Sasria or the conven?onal insurer?


Motor secBon

  Case study

5.  The insured was driving past a service delivery protest; where protestors were burning tyres, had blockaded the road with rocks and other objects and debris was lying all over the road. The insured drove over this debris and during this ?me they heard noise as if the vehicle was dragging something. Stopped at a safe place and realised that the vehicle was damaged.

Would the damages to the vehicle be covered by Sasria?


The sustainability of motor insurance

Viviene Pearson

SAIA


Sustainability of motor insurance: agenda •  Importance of motor insurance •  Current status •  Is affordable motor insurance sustainable? •  Road safety: pain?ng the picture

•  Interna?onal •  SA •  How to address?

•  Success stories: •  Vehicle crime •  ANPR

•  SAIA projects •  Way forward


The importance of sustainable and affordable motor insurance: •  For the industry

•  40% •  The market: current and future

•  For individuals

•  For the economy •  Motor manufacturers, financing, enterprise development, job crea?on,

health, cost

•  For society


Current status: •  Many are repor?ng beeer profitability, even drop in premiums

•  Maybe we are doing some things right? •  Awareness •  Beeer controls •  Vehicle crime projects •  Decreasing parts prices •  Rand

•  Normal short-‐term insurance cycle •  However…

•  Big picture: •  How many people have motor insurance? •  Is motor insurance really affordable?


Is motor insurance sustainable? •  Affordable comprehensive motor insurance is not sustainable:

•  Affordability key issue •  High risk:

•  Crime – history since 2002 •  Accident rates – 70% of motor claims accident related

•  Overall traffic offense index increased by 27.84% •  Driving under the influence of alcohol increased by 336%.

•  Claims ra?o

•  Around 70% on motor

•  Cost of claims

•  High cost due to various factors, parts prices, imported vehicles, technological advancement and innova?on, etc.


Is affordable motor insurance sustainable?

•  SAIA strategy to ac?on plan: •  Providing the South African motorist and road user with affordable

insurance cover and safe road prac?ce through a proac?ve, facilita?ve and collabora?ve approach for the long term

•  Two legs: •  Decrease in incidents (road safety) •  Decrease in cost of claims


Is affordable motor insurance sustainable? •  Poten?al impact of this:

•  Can’t price for risk – premiums become unaffordable

•  All indica?ons are that consumers can’t afford premiums any longer (lapse ra?ons increasing)

•  Already only 35% of vehicles on SA roads insured •  Can’t con?nue to offer motor insurance in future at this rate:

•  Loss ra?os high •  Underwri?ng profits low, management and commission expenses high •  Some insurers repor?ng losses on motor business class •  Some profitable, but only stage in cycle

•  This will impact banks – credit (vehicles on higher purchase)

•  Current exposure on road to financial ins?tu?ons is in excess of R100 billion (uninsured assets)

•  This will impact motor industry – people won’t be able to buy vehicles •  Loss of jobs •  Impact on greater economy


Road safety: PainBng the picture -‐ InternaBonal •  Global issue (developing countries, low and middle-‐income countries):

•  In the United Na?ons General Assembly report ?tled 2003 Road Traffic Injuries and their Impact on SocieDes, it is stated that, “Road traffic injuries are a global problem affec?ng all sectors of society. To date, road safety has received insufficient aeen?on at the interna?onal and na?onal levels. This has resulted in part from a lack of poli?cal responsibility and mul?disciplinary collabora?on needed to tackle it effec?vely.”

•  Social responsibili?es – limited resources

•  The World Health Organisa?on: "The global burden of disease" :

•  In 2005 health losses from road traffic deaths and injuries were ranked higher than malaria and tuberculosis @ 9th

•  In 2020 projected to be @ 3rd

•  Millennium development goals set by African Transport Minister: •  To halve road fatali?es by 2014

•  Cost to property – Damage only (2011): R71 298 067.00 •  Cost to economy – Damage: R71 billion; loss of lives: 13805 (R19 billion); serious injuries: 55 208 (R30

billion); slight injuries: 124 218 (R37 billion); loss of produc?vity, etc. •  Cost to insurance industry – relates to all of the above


Road safety: painBng the picture -‐ SA

•  No different, in fact SA has one of the highest road traffic death tolls in the world (info from Arrive Alive 2009 and SA DOT Na?onal Road Safety Strategy -‐ 2006 and onwards):

•  The number of unlicensed vehicles on the roads is 481 000 •  The number of un-‐roadworthy vehicles on the roads is 377 000 •  There is a total of 970 000 expired licences •  There is a total of 233 000 expired professional driving permits •  95% of road accidents are preceded by a road traffic offence •  14 000 lives are needlessly lost every year •  7 000 people are permanently disabled every year •  40 000 people are seriously injured every year (latest 55 208)


•  Several factors (From DOT Strategy):

•  Poor driver behaviour and aotude •  A ‘culture of impunity’ results in no change of behaviour (fines) •  Average vehicle age 10 years, average tax age 13 years •  Fraud and corrup?on •  First class high-‐speed roads through informal seelements and rural areas with high

pedestrian ac?vity (almost half of fatali?es are pedestrians)

•  Cost:

•  The cost of crashes leads to the loss of more than R150 billion to the state, communi?es and individuals

•  The cost of insurance claims (consumers) is in the region of R20 billion per annum

Road safety: painBng the picture -‐ SA


Road safety: painBng the picture -‐ SA •  Department of Transport strategy includes:

•  Enforcement •  Educa?on and communica?on •  Engineering •  Evalua?on •  Coopera?on and coordina?on

•  Road Traffic Management Corpora?on:

•  Road Traffic Management Corpora?on Act No 20 of 1999 •  Partnership between na?onal, provincial and local spheres of government


•  Purpose:

•  To enhance overall quality of road traffic management and service provision •  To strengthen coopera?on and coordina?on between three spheres of government •  To maximise the effec?veness of provincial and local government efforts in road traffic

law enforcement •  To create business opportuni?es, par?cularly for the previously disadvantaged sectors,

to supplement public sector capacity •  To guide and sustain the expansion of private sector involvement in road traffic

management


Road safety: how do we address this challenge? •  Importance of public private partnership recognised by the SADC Transport Protocol

(July 1998) – mainly for infrastructure development, opera?on and maintenance, but just as relevant for road safety.

•  Road safety is a huge job and needs different role players for holis?c implementa?on •  Different sectors have different things to offer:

•  Private sector:

•  Exper?se •  Resources (financial, people, skills) •  Training •  Management exper?se •  Innova?on •  Quick and effec?ve response ?me

•  Public sector

•  Look a_er public interest •  Contributes policy and law making ability •  Contributes •  Assist with poli?cal will and assistance – crucial •  Law enforcement – essen?al element


Success story: vehicle crime SAIA vehicle crime drive – 2002 – current

•  Joint effort between insurance industry, Business Against Crime SA, and authori?es including SAPS,

DOT, local traffic authori?es •  Dona?ons between R1 – 2.5 million per annum •  Results:

•  Vehicle crime down an average of 62% during this period of ?me •  Motor insurance claims, only 30% as a result of crime •  Hijacking

•  Na?onal vehicle crime project -‐ includes projects such as:

•  Licensing – best prac?ce model •  Hijacking efforts •  Automa?c number plate recogni?on •  Resources, skills, management, research input


AutomaBc number plate recogniBon project

•  Two-‐pronged purpose:

•  Road safety •  Crime preven?on

•  Business Against Crime SA with financial and other assistance from several business and public role players:

•  SAIA as part of our annual dona?on •  Shopping centers and casinos •  Retail groups (Spar) •  IT solu?on companies (Syntell) •  SAPS •  Local traffic authori?es

Success story: ANPR


•  Project involved the taking of a picture of a license plate with specialised camera, within seconds linking to several databases including vehicle registra?on, stolen vehicle database, databases of tracking companies, local traffic authori?es databases, etc.

•  Informa?on comes back within seconds, verified by the relevant authori?es, and the relevant authori?es know if there are traffic offences outstanding, or if it is a cloned, stolen or wanted vehicle. The traffic authori?es deal with the traffic offences, the SAPS with the crime offences.

•  Different types of implementa?ons:

•  Smart road blocks, fixed cameras (eg. speed over distance measuring), roaming vehicles (currently 11, more planned), at businesses, planned for border posts

•  Examples of successes:

•  9.5 million records checked from December 2007 (equals 900 000 man days). •  2 roaming vehicles sponsored by retail group has read almost 600 000 vehicles and found:

•  Hundreds of viola?ons, some vehicles impounded for un-‐roadworthiness •  Hundreds of wanted vehicles iden?fied, hundreds impounded, almost two hundred false number

plates picked up •  Benefits:

•  Improve road safety, reduce fraud and corrup?on, decrease in vehicle crime, decrease in house robberies

Success story: ANPR


The SAIA projects for addressing road safety & vehicle crime (sustainability) in SA •  Collabora?on with all relevant stakeholders, especially public sector:

•  Department of Transport •  RTMC:

•  MOU and non-‐disclosure agreement •  Sharing of strategies •  Iden?fying poten?al joint projects, e.g wellness of drivers of heavy and

commercial vehicles

•  Local authori?es

•  ANPR, alcohol tes?ng centres, etc and other projects

•  Any other relevant role players including SAPS, SAICB, BACSA

•  Possible joint projects such as those examples we have men?oned


•  Driver and other road users:

•  Revision driver’s license educa?on programme •  Possibly school project •  Current driver training •  Driving schools environment •  Driver licensing issues (BPM) •  Awareness and driver and pedestrian educa?on (to follow enforcement) •  Road safety projects such as drunk driving, etc, projects •  Enforcement projects such as ANPR, EVI, AARTO, etc to drive change in behaviour •  Assistance from insurance industry – access to demerit points, etc

The SAIA projects for addressing road safety and vehicle crime (sustainability) in SA


•  Vehicle crime •  Vehicle

•  Vehicle roadworthiness projects •  Compulsory third party motor property insurance •  Vehicle iden?ty projects •  Vehicle licensing projects (BPM, electronic op?on for registra?on,

deregistra?on, etc.) •  Supply chain, e.g. towing regula?ons, MBRs •  Indemnifica?on project – more affordable vehicle parts



•  Informa?on sharing, access to appropriate informa?on, facili?es to have direct access to informa?on (on-‐line transac?ons), etc.

•  Road infrastructure •  Vehicle iden?fica?on projects •  Salvage management •  Microdoong •  Warranty issues •  Assessors’ qualifica?ons body •  Third party recovery – knock for knock, etc. •  Common terminology •  Market conduct – revision of values and premiums



Way forward •  Collabora?on with all stakeholders •  Industry to work together •  Contribu?on of insurers: • 

•  Industry projects •  Responsible underwri?ng •  Sustainable methods to reduce cost of insurance •  Grow market in size



Documents

©2012InsuranceBootcampAllRightsReserved · Pointsofdiscussion 1. Thefundamentalsofprivatetypemotorinsurance Presented)by)Christelle)Fourie)from)MUA)Insurance)Acceptances. 2. Heavycommercialvehicleinsurance