The rise of self-driving and electric vehicles (EVs) will impact the vehicle insurance industry, despite the fact that personal use cars will remain an aspirational consumer asset in South Africa for the foreseeable future, says Absa Vehicle and Asset Finance managing executive Faisal Mkhize.

“The growth in ride-hailing or shared ownership start-up services. such as Uber or lift club app Lifti, could lead to a reduction in private car ownership,” he notes.

“However, we expect there to be an increase in ride-hailing and shared ownership startup services. Increased online shopping also requires delivery services, such as Takealot, Superbalist, Mr. Delivery and Uber Eats, and so forth, and these trends will see more people generating an income from these services by utilising vehicles.”

Mkhize says lower entry barriers ensured by the rise of autonomous vehicles and EVs should also stimulate the vehicle market, as it will allow for more innovative mobility-as-a-service business models to be created.

Would ‘drivers’ need drivers’ licences when using an autonomous vehicle, for example?

The benefit of increased autonomous driving technology – such as adaptive cruise control, automatic emergency braking, lane keep assist – will also reduce the number of accident claims, adds Mkhize.

“When accidents do happen it is expected to be less severe, which will have an impact on the insurance premiums customers ultimately pay.”

Mkhize says Absa does not expect autonomous vehicles to take away the role of a driver, but believes that their use will improve accident avoidance.

Global insurance group Lloyds notes in a report that 93% of all road traffic accidents worldwide are caused by human error, with 1.3-million fatalities every year.

A long-term view of how EVs are scaling up in the rest of the world suggests that the benefit of lower maintenance and energy cost per kilometre will also, ultimately, filter down to the South African consumer, notes Mkhize.

International research shows it is significantly cheaper to maintain an EV compared with a vehicle with an internal combustion engine (ICE).

It should also cost less to recharge an EV than to fill the tank of an ICE car.

Mkhize believes South Africa will eventually have to follow the global trend towards EV use.

“Currently, there are still concerns with the capital outlay required from the public and private sector to offer EVs at full scale.

“It is estimated that 90% of EV charging will occur at a customer’s home, whilst the remainder would be in public spaces – proving that this is not a significant hurdle to overcome in the future.

“South Africa faced a similar challenge in the past. It had no cell phone infrastructure but managed to develop it, which proves that South Africa can establish and keep up with modern infrastructure.”