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Third Party Insurance
Thursday, October 9, 2014 - 02:16
Why now

The South African Insurance Association (SAIA) is driving an initiative urging that compulsory third-party motor property insurance for all South Africans be put on the legislative agenda. Such compulsory insurance would cover damage, not just to vehicles, but other collateral property such as to walls or houses affected in a motor vehicle collision.
Jonathan Holden, Managing Executive: Insurance, Innovation Group, says that SAIA has for some years had an initiative under way to have third-party motor property insurance made compulsory – as it is in most developed countries and even in several other African countries. The industry’s faith in the promulgation of legislation sooner rather than later stems from the degree of broad support for such a scheme. The delay is simply because of other priorities until now: there has been e-Tolling, Aarto (Administrative Adjudication of Road Traffic Offences) and the revamp of the Road Accident Fund (RAF) – the latter having replaced what was until 1997 an existing compulsory third-party motor vehicle accident insurance policy, financed through the fuel levy, but covering only death and bodily injury caused by a motor accident.
“An additional spur to the regulation,” says Holden, “comes the process of harmonisation currently under way among Southern African Development Community (SADC) countries, with South Africans travelling to many of these countries already having to get a ‘yellow card’ at borders for third-party cover.”
According to the Future Now Report released 11th September 2014 by Innovation Group this initiative has strong support from business. Without South Africa having in place any compulsory third-party motor property (as opposed to personal injury, which has all along been catered for by the RAF) this country lags much of the rest of the world. As a result of the lack of compulsory insurance, barely one in three cars on our roads are insured, significantly reducing the likelihood of recovery from a guilty third party.
The report outlines the three types of cover that exist:
• Fully Comprehensive: Covers damage to or loss of own vehicle for most eventualities including one’s legal liability where the policyholder is the cause of an accident and another vehicle or other property has been damaged
• Third-Party Fire and Theft: Covers fire and theft to own vehicle and covers one’s legal liability where the policyholder is the cause of an accident and another vehicle or other property has been damaged;
• Third-Party: This is currently voluntary cover for one’s legal liability where the policyholder is the cause of an accident and another vehicle or other property has been damaged.

The report quotes Dawie Buys, motor manager at SAIA who is responsible for the initiative on behalf of SAIA: “The initiative dovetails with what government is trying to achieve in addressing social inequality and broadening access to financial services, and in the discussions we have had there has been a lot of support for such a scheme. The delay is simply because of other priorities until now, but also the large number of government departments and stakeholders that have to be consulted, which include the Department of Transport, Road Traffic Management Corporation, the Financial Services Board, National Treasury and the Department of Trade and Industry.”
The report states: “The motivation document – titled ‘Compulsory Third-Party Motor Property Insurance in South Africa’ - was formalised in October 2010 and covers damage not just to vehicles but other collateral property such as to walls or houses affected in a collision.”
Notes Holden, “The catalyst for progress on third-party motor property insurance is that many of the other initiatives have now more or less been finalised and SAIA intends to become far more focused on this issue.” Business is strongly behind the initiative, and there is a broad consensus that the time has arrived to lift this issue as a national priority given that barely 35% of cars on the road have any form of insurance.
 

Copyright © Insurance Times and Investments® Vol:27.10 1st October, 2014
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