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Motor Insurance
Thursday, February 1, 2007
Personal pressure

MUA Insurance Company predicts, “Noticeable increases on all personal lines classes of insurance, in particular the motor class, over the next 12 months.”

Comments Adriaan Louw, operations director of the company, “One of the key reasons for this is that there have been minimal increases in rates over the preceding three-year period during a time the market has changed considerably.
The higher levels of motorcar imports are exposing the insurance market to more exchange rate fluctuations, while replacement parts for such imports are proving very expensive.
Another factor is a rise of 15% in motor vehicle repair costs, compared to an average inflation rate of 5%. “This is a result of the combination of higher labour costs and the cost of the superior technology used in vehicles,” says Mr Louw.
For example, to replace an airbag, it can cost anywhere from R10 000 to R50 000, depending on the model and type of vehicle. Other features that were once the standard only within the luxury vehicle market are now standard on many entry-level vehicles. These include air-conditioning, power steering, electric windows, xenon lights, ABS braking, and electronic ignition systems.
All these factors will obviously put vigorous upward pressure on repair costs and in turn force imposition of higher insurance premiums.
The rise in vehicle ownership, with an estimated 50 000 new cars being sold each month is increasing the pressure and stress on the country’s roads infrastructure. Few motorists have escaped the awful increase in peak hour traffic time just to get to and from work.
Other factors are adding to the higher costs of repairs to vehicles damaged in accidents. “People are travelling at higher speeds, and there is clearly an erosion of road ethics, hardly helped by the insufficient and ineffective policing of our roads and highways,” he says.
“Regarding crime class losses, there are still an unacceptable number of car theft and hijackings, although our statistics do show that there has not been an increase in theft in our market in recent years.
“In fact, theft in the luxury vehicle market in which a specialist company such as MUAI operates, has declined. This is due to an ever increasing sophistication of anti-theft, anti-hijacking and encrypted system technology. MUAI, for this reason, does not see an obvious need to increase premiums due to this type of loss.”
“However,” Mr Louw points out, “as vehicle technology has evolved, so too has the technical abilities and organised structure of thieves.
MUAI has seen a general increase in crime related to vehicle thefts whereby criminals, unable to snatch vehicles at will, accost owners at gunpoint. They also accompany them to their place of residence, ransack the house and make away with both the contents and the vehicle.
Mr Louw recommends that all vehicle owners consider fitting protective film on the glass of their vehicle, either to their existing vehicle or, when purchasing a new one. This method of protection has been proven to decrease the risk of hijack and possible injury to the vehicle occupants.

Copyright © Insurance Times and Investments® Vol:20.1 1st February, 2007
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