Ian Kirk CEO of Santam, the country’s biggest short term insurer, admitted today that he was engaging with Treasury over introducing a ‘no frills’ motor insurance product to target the 65% of drivers that are uninsured in South Africa. Kirk, who is set to talk to Treasury again at the end of this month on the issue, said government could put compulsory motor insurance laws back in place in two to three years time if the insurance industry introduced the right products.
“There’s no particular deadline in place [on when the industry would have to deliver such product], but we are engaging with Treasury on a company level and through the South African Insurance Association. Introducing such a product in two to three years time is feasible,” said Kirk.
Kirk added that the industry would have to tackle affordability before a ‘no frills’ compulsory product is introduced. “We can’t introduce a product that will cost around R500-R600 per month in premiums. Premiums would have to be around R250-R300,” he said.
Kirk said that the product would offer more benefits than fire and theft cover but will not be as sophisticated as current comprehensive products. He explained that with premiums at that level a slimmed down version of the comprehensive product offerings available today would have to be offered to consumers. “We will have to slim down the benefits. Customers, for instance, may not be able to fix the car at a fancy repair shop and may only be able to get their cars repaired at certain times of the day.”
When asked if insured customers would trade down to the basic product, Kirk said he was certain consumers would choose the right product for them. “Consumers will choose the product they need. They will know the difference between the no frills product and the comprehensive product.”