The South African Insurance Association (Saia) continues to lobby for the compulsory purchase of third-party motor insurance by vehicle owners, taking its fight to the Road Accident Fund and National Treasury.

Speaking at a media breakfast on Thursday, financial services firm Santam CEO Ian Kirk said only around 35% of vehicles on South Africa’s roads were insured, placing further pressure on an industry that was “already not in great shape”, and placing the financial burden of vehicle repair or replacement costs on the minority of drivers that held comprehensive insurance.

“We can’t continue to have a situation where 35% of drivers are [subsidising] the remaining 65%; it’s simply not sustainable. It is also a worry that the number of insured drivers may decrease,” he commented.

Indicating that it would pursue “further research on this topic”, the insurance body argued that compulsory third-party insurance would enable greater risk-sharing among drivers, as well as enhance financial inclusion by creating the critical mass required to lower premiums and enable previously uninsured drivers to enter the insurance market.

This would further provide all drivers with basic vehicle protection and would ensure greater vehicle roadworthiness, consequently improving overall road safety.

However, Saia GM Vivienne Pearson conceded that, while there had been “some good conversations” with Treasury and the National Department of Roads and Transport, progress in this regard had been slow, citing several challenges that first needed to be dealt with before government would consider making it compulsory to have third-party insurance.

“This is not at the top of government’s priority list, and there are some issues that first need to be ironed out before they will think about legislating third-party cover. These include concerns around the price and collection of premiums, as well as empowerment and transformation considerations,” she held, adding that Saia was in the process of initiating a study into the benefits of mandatory insurance to further bolster its position.

The national insurance body contended that compulsory cover would decrease the number of domestic road accidents, which currently comprised 70% of all claims to insurance firms.

The cost of premiums in South Africa reflected the high number of claims emanating from road accidents, which resulted in “huge” repair costs.

“We have been asked by government why we are not able to offer lower motor premiums to lower-income groups, but the figures speak for themselves. If we can substantially reduce the number and extent of accidents on our roads, premiums can be reduced,” Saia chairperson Ronnie Napier stated in the association’s yearly report.

According to Saia, the total economic cost of fatal accidents increased from R150-billion in 2010 to R157-billion in 2011. Figures for 2012/13 were not yet available.