AA: Companies take insurance lead

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Commercial companies should take the lead on compulsory third party insurance for motorists, the Automobile Association (AA) suggested last Tuesday.

The AA had a long standing public policy stressing the necessity of third party insurance to mitigate damages incurred by vehicle crashes, AA public affairs head Gary Ronald said.

In response to a parliamentary question last week, Transport Minister S'bu Ndebele agreed that third party insurance needed to be looked at in a South African context, especially considering that only about 35% of cars on South African roads were 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," Ronald said.

"There then begs the question of where this fund would originate, from the government or from commercial industry bodies.

"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," he said.

The South African Insurance Association was 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," Ronald said.