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COMPULSORY MOTOR INSURANCE: MACRO PERSPECTIVE

COMPULSORY MOTOR INSURANCE: MACRO PERSPECTIVE. A reminder of its importance. Ian Kirk The Insurance Conference 12 June 2012. THE PRINCIPLES FOR SUSTAINABLE INSURANCE (PSI). THE PSI: TO BE LAUNCHED SOON!. A sustainability framework for insurers to collectively address ESG issues.

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COMPULSORY MOTOR INSURANCE: MACRO PERSPECTIVE

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  1. COMPULSORY MOTOR INSURANCE: MACRO PERSPECTIVE A reminder of its importance Ian Kirk The Insurance Conference 12 June 2012

  2. THE PRINCIPLES FOR SUSTAINABLE INSURANCE (PSI) THE PSI: TO BE LAUNCHED SOON! A sustainability framework for insurers to collectively address ESG issues Sustainable insurance is about: • Improving business performance • Reducing risk • Developing innovative solutions • Contributing to environmental, social and economic sustainability

  3. SUSTAINABILITY OF MOTOR INSURANCE IN SOUTH AFRICAWhy is it important? • Sustainable insurance promotes healthy socio-economic development • Motor insurance = over 40% of the SA STI market • Growing number of vehicle ownerships in SA – a need for us as an industry to manage our risk exposure and capitaliseon new opportunities

  4. A SYSTEMIC ISSUE IN MOTOR INSURANCE • Can we continue to provide sustainable and affordable motor insurance in future? +/- 65% of vehicles = uninsured High number of car accidents Increasing cost of repairs Vehicle-related crime

  5. THE IMPLICATIONS Increase in risk= increase in premium OUR INDUSTRY Consumers can’t afford the premium Negative impact Negativeimpact Unintended consequences The motor industry and the economy • Impacting on: • New car sales • MBR industry development and transformation • Overall risk exposure • Unsecured debt levels • Jobs (potential losses) • Financial inclusion

  6. WHAT NEEDS TO BE DONE?Support SAIA’s efforts in motor sustainability and promote the PSI SAIA’s vision Create an environment where all South African motorists have access to affordable and sustainable motor insurance and to increase road safety and decrease vehicle crime Compulsory 3rd party motor insurancecan play a strong role in this – it also makes business sense PSI: Principle 3 We will work together with government, regulators and other key stakeholders to promote collective action in managing environmental, social and governance issues

  7. COMPULSORY 3rd PARTY MOTOR INSURANCEThe journey has started • SAIA’s motivation developed for this and supported by industry players • Continuous engagement with the relevant government departments • STRIDE (sharing of data) WHAT’S NEXT? The prioritisation of this in the relevant government departments= a key component for us to move forward

  8. IF TAKEN FORWARDThere will be a need tounpack the practical implications for us • What would be the impact on the current number and pricing of comprehensive motor insurance? • Clarifying the roles: who will take ownership and manage this? • What are the mechanisms we need to put in place (e.g. premium collection)? • Do we have the resources and capacity (e.g. technology) to accommodate potential new businesses?

  9. THIS IS WHY WE NEED TO PUSH THIS FORWARD • For the society, economy & government • Offers basic protection through insurance cover for all motorists • Promotes financial inclusion and the principle of equity • Supports motor, repair and related industries’ growth and transformation(job creation) • Reduces pressure on the judicial system and litigation resource • For the industry • Supports sustainable growth and profitability of the industry • Healthy industry growth also means more jobs and opportunities And more…

  10. THINK ABOUT THIS… If we don’t complete this journey, then what does it mean for the long-term sustainability of our industry, the economy, and the uninsured in our society?

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