The South African Insurance & Motor industry is in a state of crisis due to high cost levels.
Cost of ownership is higher on newer cars, largely because they are more capable, far cleaner, fuel-efficient and far safer. With the increase of computers and electronics, taking a car to the shop is more expensive than ever.
Despite the market value of vehicles declining annually many insurers are unable to reduce the premiums due to repair costs remaining high and in many cases even increasing.
With the increasing cost of repairs more vehicles are being written-off owing to the cost of repairs well exceeding the value of vehicle. The write-off point for a vehicle is generally 70 percent of the value of the vehicle – and the value is not what you paid for the vehicle, but rather what you would get if you sold it.
Cost of repairs 2014 : R35,000
Cost of repairs 2015 : R42,000
Cost increase : ± 21%
(Repair costs obtained from an independent assessor)
Due to currency fluctuations the cost of parts have increased ±20% in the last year and with parts making up 70% of the total repair bill this has resulted in an average 14% increase in accident costs.
The cost of vehicles repairs is being much debated due to the prices of parts varying dramatically between similar models. A few examples of how the part prices differ between various manufacturers / models :
1. The Hyundai Sonata’s spark plugs cost R130 each and those of the Honda Accord cost R560.
2. Rear windscreen of the Ford Figo costs R378, and the same part for a Kia Picanto costs R4200.
3. The Nissan NP200’s tailgate costs R1382, and that of the Chevrolet Utility costs R9440.
4. The Toyota Fortuner’s bonnet costs R2819, while the Landrover Discovery’s costs R13 928.
(Details obtained from the 2014 Kinsey report)
The cost of insurance is further compounded by :
• Inadequate road conditions – Potholes, traffic congestion, un-roadworthy vehicles, unlicensed drivers, etc.
• Uninsured vehicles - approximately only 35% of the ± 11 million vehicles on the South African roads are insured.
• Ageing railway infrastructure - causing an increase of commercial / overloaded vehicles on our roads.
• The increased use of cellphones whilst driving - drivers who text and drive are 23% more likely to be involved in a crash.
Barkers together with Hollard are on a mission to reduce the cost of repairs without negatively impacting on our valued clients. We are continually negotiating with tow operators, parts manufacturers / suppliers, repairers, car hire companies, etc to try bring costs down & consequently premiums.
(References: iol motoring, moneyweb, wheels24, fin24, FANews)