Will mooted compulsory third party insurance rescue indebted Road Accident Fund?
What would the benefits be of implementing compulsory third party insurance for vehicles in South Africa? The idea was mooted by Finance Minister Tito Mboweni during his 2020 budget speech.
He offered the suggestion as a way of alleviating the Road Accident Fund debt but no clear plans have been proposed yet.
Refilwe Moloto speaks to Christelle Colman of Old Mutual Insure to look at how it could work.
It is currently estimated that between 65 and 70% of the 12 million registered vehicles in South Arica are not insured.
It's quite unusual not to have compulsory third party insurance in place.Christelle Colman - Old Mutual Insure
Colman says most countries in Africa and around the world have such a scheme in place.
With 70% of road users uninsured, it means that for those of us that are insured, being involved in an accident where an uninsured person drives into you, you still have to claim from your policy which affects our premiums. We carry the losses of the uninsured as well as ourselves.Christelle Colman - Old Mutual Insure
But of course, those people who don't have insurance are financially ruined....so it is really not a good space to be in.Christelle Colman - Old Mutual Insure
Mboweni said the Road Accident Fund is in distress and we need to look at some compulsory third party insurance to fix it. We don't understand what that means because it doesn't really make sense.Christelle Colman - Old Mutual Insure
She says the challenge in South Africa is the price point.
What can people afford? Because already we under so much pressure as a nation so even R50 a month...could be unaffordable to someone who has a car on the road.Christelle Colman - Old Mutual Insure
Listen to the interview below:
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