The National Treasury is investigating the option of introducing compulsory third party insurance to help reduce the cost of accidents to the South African economy.

The National Treasury is investigating the option of introducing compulsory third party insurance to help reduce the cost of accidents to the South African economy.

The Treasury has asked the South African Insurance Association (SAIA) to draft a report outlining the benefits, difficulties and costing of a compulsory system of insurance for their consideration.

“Treasury is of the opinion that the low levels of motor insurance add substantially to the costs of insurance in this country and this ties in quite closely with the need to provide access to insurance to a much wider segment of the population.

“However, a principal concern of Treasury is also the cost of motor vehicle accidents to the South African economy and they see compulsory third party property insurance as a means to spreading or reducing these costs and thus the impact,” said a bulletin from the SAIA.

SAIA executive Caroline da Silva told CARtoday.com they also needed to look at whether the system will have any impact without the introduction of other road safety measures, such as compulsory roadworthy testing, driver fitness including the introduction of the points demerit system and traffic law enforcement. “Compulsory third party insurance is only viable where it is affordable, but it cannot be affordable in a high-risk environment,” said Da Silva, of the problems of implementing the concept.

But she added: “It can be good for the man in the street because if he causes an accident his liabilities to anyone else will be protected.”

CARtoday.com reported in July that the Road Accident Fund, which has been dogged by legal wrangles, corruption and fraud, will have no more funds to pay accident victims by March next year unless its reserves are augmented by an increase in the fuel levy.

The fund's deficit doubled to R16,7 billion in the past four years. Previously third-party insurance was compulsory in South Africa, but it was stopped and a levy was added to the fuel price. But perhaps with the Road Accident Fund bankrupt the Treasury wants to start with a clean slate?

What do you think?

Original article from Car