Crashing through the roof

Motor vehicle repair cost are escalating so fast that it seem they are in competition with the latest space shuttle launch at Cape Canaveral in an attempt to reach the international space station first.

Over the past 5 years or so, new motor vehicle prices have increased marginally per year and since the financial crash worldwide, vehicle prices are now set to rocket. Up until now, the cost of spares for these very same vehicles, have outstripped any expected or acceptable increase over the same period, with even higher increases now expected. What has now started to transpire and which will have a profound effect on the already rapidly escalating cost of motor repairs, is that repairers are not willing to quote up-front, but are making their quotes subject to "final landed cost" of the parts required. This new development is as a direct result of the current turmoil in the world financial markets and its impact on the Rand. This has resulted in an ever increasing number of damaged vehicles being written off due to the cost of spares rather than as a result of the extent of the damage incurred. With this in mind, and coupled with the even faster escalating incidents of motor vehicle accidents, you must agree that this combination of events has resulted in an extremely unhappy outlook for motor claims loss ratio's in the future. Furthermore, these considerable delays in obtaining spares, has caused sky rocketing care hire claims against Insurers.

Let's look at some contributing facts over the past years:

• Outgoing chairman of the SAIA Board, Mr. Adam Samie noted that some ten years ago the cost of motor vehicle accidents amounted to less than 50% of the total cost of all motor vehicle claims lodged against Insurers, with crime related claims representing the larger and more significant factor. At this point in time, the cost of motor accident damage claims exceeds 75% of the total cost of motor claims to Insurers, where crime related losses being the lesser factor by far.
• South Africa has seen a dramatic escalation in the number of vehicles on our roads, both new and (significantly) un-roadworthy.
• Our road infrastructures have increasingly come under more and more pressure to cope with the increasing volume of vehicles.
• The deteriorating surface condition of our roads where potholes are common place and road markings are virtually invisible.
• The Rands' continuing depreciation.
• The current rate of inflation.
• And lastly, but probably the most significant contributory factor being the dramatic increase in the incident of vehicle accidents taking place due to many drivers believing that they can drive under the influence, use unnecessary speed, ignore traffic signs and brag to their friends how they have bribed their way out of a fine.

No wonder South Africa ranks near the bottom of the pile as worst traffic violator in the world!

This is supported by world-wide statistical analysis recently conducted in the USA where it was found that more than 80% of the American population own a motor vehicle with fewer than 15% being involved in a fatal accident. In contrast to this, South Africa has less than15% of its population owning a motor vehicle, but more than 26% are involved in a fatal accident. We are worse drivers than those in Cuba, Sierra Leone, Libya and Columbia and only marginally better than Belize (Where ever that may be) and Swaziland who rank last. We can blame the weather, the bad condition of our roads, the many cars travelling in the yellow lane with hazards flashing or whatever else you wish to include in this pot. But one constant remains - drivers must change their attitude relating to all aspects of the privilege and responsibility of owning and driving a motor vehicle. Until that driver attitude change takes place, the insuring public will carry the cost thereof by way of ever increasing premiums.

I believe that the Insurance Industry has the professional expertise to assist in the education of drivers. By using their risk management skills in conjunction with selected business partners, Insurers can bring a responsible driving programme to the public which will reduce claims and ultimately keep premiums down.