Short Term Car Insurance Industry Unsustainable

March 17 - The current state of the short term motor insurance industry is "unsustainable", according to Ian Labram, the Manager of Aura Motor at Guardrisk.

Labram said that deteriorating underwriting results drove poor loss ratios on motor books.

Insurers who rely on other insurance categories are barely floating their motor books, according to Labram, and those who are standalone outfits are the worst hit as they do not have income from other categories to offset the losses.

"These days net premium alone is insufficient to generate corporate profits," he said.

There are several reasons for this state of affairs in the car insurance market, said Labram.

These include inexperienced drivers who dominate South Africa's roads, a large percentage of new license holders and those who hold fraudulent licenses.

Another big problem on our roads concerns drivers who are uninsured, so that the brunt of the costs of motor accidents falls on insurance drivers.

The cost of repairing imported cars seems to be rising all the time, and time is also wasted waiting for expensive parts to reach the country as they need to be specially ordered.

One of the major problems facing the industry is the poor state of the roads, so that it becomes inevitable that accidents occur.

"These factors threaten the sustainability of the motor insurance industry in its current form, and certainly at current premiums, over the longer term," said Labram.