News Article : Bridging the uninsured gap
|Category:|| Short-Term Insurance : Motor Vehicle|
|Author:||Edited by ITInews|
|Posted:||23 Feb 2016|
South African insurers have called on the government to start compulsory motor cover
Jonathan Holden, Managing Executive: Insurance at Innovation Group South Africa, delves into the issue of uninsured vehicles within South Africa, as well as how to bridge this gap.
Vehicle insurance offers peace of mind and, more importantly, restores assets that will otherwise be destroyed or lost because of the great cost of replacement or restoration.
It is crucial for motorists, who are in the process of creating wealth and a lifestyle for their families, to realise that insurance is the safety net, keeping them from being knocked back to square one in the face of an unfortunate event.
With that said why is it that the majority of South African motorists have neglected to insure their vehicles?
Figures indicate that approximately 70% of the vehicles on our roads are uninsured, which has a significant impact on the insurance industry.
Innovation Group believes that the current state of the South African economy could be the reason motorists neglect this insurance.
As the economy constricts and disposable income comes under pressure, the average consumer places vehicle insurance lower on their list of priorities.
Insurance is about numbers - the greater the pool of contributors, the less the contribution is likely to be.
Given the current situation, the premium pool is shallow, as only 30% of motorists are paying premiums on a monthly basis. In order to deal with this issue, premiums are hiked.
Notably, the ability of insurers to recover losses of their policy holders, where incidents involving uninsured vehicles occur, is severely diminished.
In order to reduce the cost to motorists and companies, South African insurers have called on the government to start compulsory motor cover.
This is suggested as a way to create more value for insurers and insured drivers, as they currently face the country’s millions of drivers taking to the roads without protection.
Although some progress has been made in this regard, it is still some way off.
Bridging the gap
Innovation Group believes that insurance products should be tailored more uniquely to meet specific consumer needs and demands.
Some products, like “Pay As You Drive”, are perfect when it comes to catering to various risk profiles.
Another crucial point to consider is to improve the ability to develop, price and deliver a service in a short space of time, using mobile technology – this will ensure that the industry remains relevant in a digital world.
Consumer education should also be a major focus of insurers, as an awareness of risk might sway people’s decisions and guarantee that insurance is a priority for them.
This could come down to education about the importance of insurance from as early as primary education.
The key focus should be to drill down into the root cause of the insurance gap – whether it has to do with education or financial situation.
Finding ways to ensure that all demographic groups are covered by the products on offer needs to be a goal for all insurance companies.