Why is car insurance so expensive in South Africa?
Approximately 65% of South African cars are not insured. The rest are not insured.
According to Motor Industry experts, South Africa is one of the few countries in the Southern African Development Community that does not enforce compulsory comprehensive insurance on motor vehicle owners. This means that South Africans are often not willing to pay for car insurance- mainly because they find it too costly.
According to Alexander Forbes Insurance (AFI) managing director Gari Dombo, a reduction in motor insurance premiums is possible as more vehicles will be covered with a bigger pool of contributors.
Head of Public Affairs at the AA, Gary Ronald told Wheels24 that the hindrance for compulsory third party in South Africa is affordability with regards to insurance plans.
Government has discussed introducing mandatory third party insurance.
Owner of Insurance broker First EQUITY risk management services, Seamus Casserly said that as much as 40% of an average motor claim goes towards the cost of towing a vehicle.
The weak Rand drives the costs of imported parts notably higher, adding to the overall cost burden. This is why your insurance provider asks what type of car you drive before you are quoted. If you are driving a high-powered, expensive car, chances are that you will not qualify for cheap car insurance in South Africa.
Low levels of insurance penetration mean that insurers generally cannot recover their costs from third parties responsible for accidents, involving their clients.
According to the CEO of the Road Accident Fund (RAF), Eugene Watson, there are around 11 million cars on South African roads with roughly 24 million daily commuters.
South Africa spends approximately R306 billion annually on costs relating to road fatalities.