“Motor values need to be adjusted regularly and at least annually, at renewal or anniversary date, and the adjusted values used to calculate premiums. The wording for this requirement was written to include the requirements of National Treasury expressed to the SAIA on the one hand, and the practicalities of the SAIA members on the other hand,” said Ms Viviene Pearson, General Manager responsible for Motor Insurance at the SAIA.
“The objective of this provision is transparency and disclosure with regard to motor premiums, including the impact of the total value of the vehicle on the premium,” Ms Pearson added.
This requirement will become effective from 1 January 2014 for personal lines vehicles, and from 1 January 2015 for commercial vehicles included in the requirement.
Although many SAIA members have been following this practice for some time, some insurers and/or their contracted parties may need some time to implement this requirement because systems and other changes may be needed, Ms Pearson added.
The SAIA emphasized that a decrease in the total value of the vehicle will not always lead to a decrease in premium as a number of factors are taken into consideration when premiums are calculated. The total value of a vehicle has a relatively insignificant impact on a motor insurance premium as it only comes into play when a total loss had occurred, that is when a vehicle was stolen and not recovered or written off in an accident, Ms Pearson added.
The new requirement does include an encouragement to SAIA members to explain the contributory factors when calculating premiums in general.
The SAIA Code of Conduct and The Code of Motor Salvage - amended section 12 Motor Values, is now available on the homepage of the SAIA website or under the Focus Areas/ Motor icon: