The AA has had a long standing public policy stressing the necessity of third party insurance to mitigate damages incurred by vehicle crashes. In response to a parliamentary question last week, Minister S’bu Ndebele agreed that third party insurance is something that needs to be looked at in a South African context, especially considering that only approximately 35% of cars on our South African roads are actually insured.
“The hindrance for compulsory third party in South Africa is affordability with regards to insurance plans as we would first need to accumulate a fund to pay out third party claims, a fund which at this stage does not exist. There then begs the question of where this fund would originate, from the government or from commercial industry bodies,” says Gary Ronald, Head of Public Affairs at the AA.
“If all motorists were to pay a compulsory fee of say R50 per month, of the 960 000 crashes we have per year, the fund would be bankrupt before we began, hence the need for seed capital to the fund to make third party payouts viable,” adds Ronald.
The South African Insurance Association are currently doing research into how compulsory third party insurance could be initiated. At this stage, the AA would recommend letting the commercial companies take the lead on the issue, possibly looking at capping the claim amount on third party for the initial roll out phases.