70% of cars on South Africa’s roads are uninsured

Until 1986, third-party car insurance was compulsory in South Africa, and now there are calls to reintroduce the system, especially since more than two-thirds of vehicles on the road are uninsured.

The Motor Vehicle Insurance Act 29 of 1942, which came into effect in 1946, legislated compulsory third-party insurance for all vehicles on South Africa’s roads.

By law, all vehicle owners were required to purchase an annual insurance policy from approved private insurers, providing indemnity cover against liability for bodily injury or death caused to a third party.

In 1986, the government enacted the Motor Vehicle Accidents Act 84 of 1986, scrapping the requirement for drivers to purchase individual statutory insurance policies.

Funding shifted to a dedicated fuel levy, automatically extending statutory third-party injury protection to all road users without requiring motorists to pay an upfront private premium.

The system was extended after the Road Accident Fund (RAF) commenced on 1 May 1997 to replace earlier transitional bodies.

Speaking to CapeTalk, South African Insurance Association (SAIA) CEO Viviene Pearson said that the association has advocated to reintroduce the compulsory third-party motor insurance system.

“I just want to also clarify that it was not replaced by the Road Accident Fund. The Road Accident Fund has a different mandate,” she said.

“It compensates victims of road accidents for death and injuries. Whereas motor property insurance covers the vehicle itself.”

According to Pearson, one consideration when scrapping compulsory third-party car insurance may have been cost, as SAIA’s research found the previous provision was unaffordable.

“So if it’s a compulsory premium that one has to pay, you know, that may be unaffordable for some people,” she said.

“That’s one of the issues that we believe is important to look into. Then, of course, it comes with an appropriate enforcement system.”

“So, you know, affordability is one issue. On the other hand, how do you enforce it? And those are the questions, some of the questions that need to be answered.”

The risk of driving uninsured

An estimated 65-70% of vehicles on South Africa’s roads are uninsured, meaning it is likely that at least one vehicle involved in a crash may not be covered.

While Pearson highlighted affordability as one reason South African motorists do not have vehicle insurance, the cost of remaining uninsured can outweigh a monthly premium.

When an uninsured vehicle is involved in a motor collision, the owner or driver becomes the party responsible for covering the cost of replacing or repairing the vehicle out of pocket.

“It is a problem for the insured who may be in an accident or the victim of an accident when an uninsured vehicle is involved,” explained Pearson.

“In addition, if there’s also infrastructure damage, there’s the cost to the fiscus, to municipalities, provincial governments, those public entities that have to look after the transport infrastructure and so on.”

She added that absent compulsory third-party insurance may benefit lower-income households and smaller transport companies; not having insurance at all has a massive socioeconomic impact.

Another factor to consider on our roads is the explosion of the e-commerce sector, driven by drivers who are not considered employees of the various retailers and companies they deliver for.

“It is becoming a new trend and bringing with it increased risks on our roads,” explained Pearson.

“There are also other increases in risks associated with our transport system. Lots of heavy commercial vehicles, cross-border transport, vehicles transporting dangerous goods and so on.”

She said that all of these issues need to be addressed, adding that she believes they can be addressed if the South African government reintroduces compulsory third-party motor vehicle insurance.