SAIA Motor Update July 2013 Published 2013 Mon 12 Aug By Viviene Pearson South African Insurance Association The Regular Assessment of the Value of Motor Vehicles The wording for the regular assessment of the value of motor vehicles to be included in the SAIA Code of Conduct under a new section for Motor Insurance was approved by the SAIA Board during the month of July after it was approved by the SAIA Board Committee: Motor on 1 July 2013. This new section will be added to the SAIA Code of Conduct by the end of July 2013. Background The industry, under the leadership of the SAIA Board, agreed with National Treasury that motor values need to be adjusted regularly and the adjusted values used to calculate premiums. This agreement was announced in the media in a joint statement by National Treasury and SAIA. The wording was written to include the requirements of National Treasury on the one hand, and the practicalities of members on the other hand. The objective of this provision is transparency and disclosure with regard to motor premiums, and the impact of the total value of the vehicle on the premium. Timelines Due to input received from our members and other stakeholders, the timelines for implementation are as follows: · 1 January 2014 for personal lines vehicles. · 1 January 2015 for commercial vehicles included in the wording. Perceptions and expectations The SAIA is aware of the potential image and reputational risks with regards to possible perceptions and expectations that a decrease in total value will always result in a decrease in premium, which would be incorrect. This will be included in awareness creation campaigns in future. In addition, the SAIA Board Committee and SAIA Exco have agreed that the SAIA should appoint Towers Watson SA to do an independent study on how motor premiums are calculated, and the impact of the total value on motor premiums. We will be able to use this study in future to assist in managing perceptions in this regard. This study will also be shared with National Treasury (NT), as agreed with NT. The wording All SAIA members that offer motor insurance will reassess the basis value of all motor vehicles insured regularly without any prompting from the policyholder. The following are relevant in this regard: · SAIA members must reassess the basis value of motor vehicles at least annually, at renewal or anniversary date. · The limits of indemnity or sums insured of such motor vehicles must be readjusted according to the revised values of the motor vehicles insured, where appropriate. · This revised value must be taken into account when recalculating the premium. · SAIA members must take the necessary action/s in terms of their individual business models to ensure that this requirement is met, whether it is an automatic adjustment on their systems, a contractual requirement of their agents (including brokers, underwriting managers, administration agents, or any other relevant third party), or any other relevant requirement. · SAIA members and/or their contracted agents may use any appropriate method to determine the value of the vehicle, but must disclose the method used to policyholders at point of sale. · Where the value of a motor vehicle is not readily available (for example in the case of older and/or imported vehicles), an agreed value or valuation method must be disclosed to the policyholder on a regular basis, i.e. annually at renewal or anniversary date. This requirement applies to motor vehicles insured in terms of personal lines polices, as well as to motor vehicles insured in terms of commercial policies where vehicles are specified with their own sums insured noted, and where this is practically possible. · For the purposes of this provision, motor vehicles include motor cars and light delivery vehicles but exclude other items such as boats, trailers, caravans, etc. · SAIA members are encouraged to, together with the communication with regard to the updated total value insured as well as the updated premium, include an explanation of what the contributory factors used in the premium calculation were in general, in order to ensure that policyholders understand why the premium may not have decreased if the total value insured decreased. This is encouraged to ensure that policyholders do not have unrealistic expectations in this regard. · Policyholders should be advised/requested in this process to inform the insurer should they wish to include additional cover for any additional extras that may have an impact on the total value of the vehicle. · SAIA members are encouraged to, in addition to this process, regularly communicate with their policy holders in order to remind them of the importance of communicating any material changes to the insurer in order to ensure that they are appropriately insured in exchange for an appropriate premium. · In addition, customers may still be able to obtain discounts in some instances on their motor premium should they phone in to cancel cover. This does not mean that the depreciated value was not taken into account at renewal as these retention discounts tend to relate to a deliberate reduction in the target profit margin in order to retain a customer. In closing The SAIA is aware of the fact that a small number of our members, as well as some brokers, may have difficulty in complying fully with the timelines of this new provision. The SAIA invites all members and/or related parties to come and talk to us about any such challenges. Department of Trade and Industry (DTI) Motor Body Repairer (MBR) Insurance Forum The SAIA Board Committee: Motor mandated the SAIA negotiating team to present a proposal to the DTI/MBR/Insurer Forum which could pave the way to a sustainable solution for many of the issues in the motor body repair industry. This proposal was sent to the DTI which in turn forwarded the proposal to the motor body repair industry for their consideration. The SAIA has requested that this proposal forms the framework of the discussions of the DTI/MBR/Insurer Forum at the next two day meeting on 22 and 23 August 2013. Proposed Amendment of the National Road Traffic Regulations Regarding the use of Second Hand Parts on Code 4 Vehicles The SAIA met with the Department of Transport to discuss the concerns of the short-term insurance industry with regards to the proposed amendment of the National Road Traffic Regulations regarding the use of second hand parts on Code 4 vehicles, and to discuss the way forward on this important topic. The SAIA believes that the proposed regulation that the parts of a Code 4 vehicle may not be used to build or repair other motor vehicles, will have severe unintended consequences to both the insurance industry and its customers. The Department of Transport (DOT) confirmed that their intention with this regulation was to assist with the fight against vehicle crime, and to contribute to safer roads through making sure that the vehicles that go back onto the roads are safe and roadworthy. The SAIA and its members support these two goals. However, the SAIA has conveyed our belief to the DOT that since this proposed regulation was considered by the Department of Transport (pre-July 2012), the landscape has changed in the following ways: Crime fighting area: 1. The SAIA put the Code of Motor Salvage in place. This Code was approved by the SAIA Board at the end of July 2012. This is a joint Code with the banks and the financing houses and seeks to close all the gaps from the insurers’ side, as well as the banks and the financing houses. 2. The Second Hand Goods Act came into effect. This Act effectively regulates the salvage dealers/agents, the second hand parts dealers, the scrapyards, etc. All these entities need to comply with this Act and this effectively addresses the possible gaps that may have existed in this environment. Road safety area: 1. The proposed new regulations include roadworthy testing of older vehicles periodically, which effectively addresses this area. By Dawie Buys South African Insurance Association Vehicle Damage Quantification Body– Qualification for Motor Assessors and Estimators The latest on the above matter is that the Vehicle Damage Quantification Body of South Africa (VDQBSA) has been successfully registered as a Non-Profit Organisation and that the Steering Committee is in the process of preparing a Business Case which will be presented to the relevant stakeholders as financial support has now become essential to continue with the process. Merseta has accepted the appointment of Assessment Quality Partner (AQP) and a Memorandum of Understanding will be finalised in due course. The Occupational Profile has been signed off by the Committee and will now be published for general/public comment. A meeting is also being scheduled with Inseta to discuss the designations, Recognition of Prior Learning (RPL) and Continuous Professional Development (CPD) models which will have to be developed together with Inseta and presented to the Quality Council of Trade and Occupations (QCTO). Gauteng Provincial Tow Truck Regulations At the last Gauteng Tow Truck Steering Committee meeting the “Tow Truck Services and Regulations” was discussed and the final version will be published for approval by the committee at the next meeting in August 2013. Thereafter the Regulations together with the “Tow Truck Policy” will be published for public comments and then submitted to the MEC for Roads and Transport of the Gauteng Province for sign off. In the meantime the technical sub-committee has met with the South African Bureau of Standards (SABS) and they are in the process of drafting the Standards and Specifications for the tow truck industry which will be introduced as part of the regulations when this is finalised. Source: South African Insurance Association
Posted on: Mon, 12 Aug 2013 14:07:58 +0000
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