Insurance issues

A couple of weeks ago, I wrote about the impending implementation of the carbon emissions tax — or green tax, as it has become known.

Well, there is good news, and there’s bad news.

The good news is for those of us considering purchasing new double cab 4×4′s.  It seems that the tax on double cabs has been postponed — this is according to the Minister of Finance Pravin Gordhan.

The bad news is for the rest of us — those of us with older vehicles. Initially the tax will be applied to new vehicles sold in South Africa but Government is considering implementing the carbon dioxide (CO₂) vehicle emission tax on ALL cars, both new and old.

Speaking in the National Assembly on the Taxation Laws Amendment Bill and related legislation, he said this would be implemented by reviewing the approach to vehicle licence fees implemented by the provinces.

As public transport was improved, higher fuel levies could also be imposed and “we can also demand better quality of fuel” than was  available in South Africa at present.

“All in all there is a place for all these mechanisms if we want to reduce the emission of greenhouse gases and ensure we leave our children with a better legacy when it comes to air quality and reducing the risks of climate change.”

Gordhan said he had recently met with the CEOs of South Africa’s largest vehicle manufacturers.  He had confirmed to them that the CO₂ emission tax on new passenger vehicles would come into effect on September 1.

However, he had also taken into account some of their concerns, and therefore, the CO₂ tax on double-cab bakkies would be delayed slightly and come into effect on an agreed date “in a few months time”.

“It is the intention that this tax will be extended to all other light commercial vehicles at a later date,” he said.

Editors note:

So we can expect our annual licence fees to increase substantially in future, that is if you have an older vehicle which has not been subject to the CO2 tax from 1 September.   I think this is fair enough, after all, surely it is the older vehicles that are emitting more CO2 into the atmosphere than new vehicles?

However, it makes me wonder how owners of new vehicles, purchased after 1 September, will be taxed when it comes to the annual licensing of the vehicle. If they have already been taxed when purchasing the new vehicle, surely they won’t be taxed again when it comes to renewing the annual license?

And lastly, I find it unfair to be taxing those who drive diesel vehicles, based on the amount of CO2 emissions, since in many cases they are limited by the quality of the diesel available in this country.

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I’m sure you’ve read reports about the increasing numbers of stolen 4×4′s, particularly the Toyota Fortuner as well as Toyota Hiluxes.  

Just recently, here at 4×4-insurance.co.za we posted a warning about these 4×4 thefts and suggested some practical ways in which owners of the affected vehicles could reduce the risk of becoming another 4×4 theft statistic.

For South African 4×4 owners, the future may seem a little brighter now as new technology to recover stolen cars makes its way into the market.

Microdots, which are smaller than 1mm, are laser-printed dots that are superimposed across the body of the car and contain vital vehicle information that can be used to determine if a vehicle is stolen or not.

We support the Business Against Crime South Africa (BACSA) initiative to get the microdot technology rolled out across the country in an attempt to curb the alarming number of hijackings and vehicle thefts.  insurance premiums are likely to decrease if we are able to reduce the number of thefts and hijackings of 4×4′s in South Africa.

Theft of vehicles is big business in South Africa.  Statistics reveal more than 90 000 vehicles worth more than R9-billion are stolen every year.

BCSA’s Microdot project manager, Fouche Burger, told SA-The Good News that the crime-fighting organization is waiting for the government to approve the legislation authorising the use of Microdots by every vehicle manufacturer.

Burger says it won’t be long before police will start using the technology to identify stolen vehicles at road blocks. The microdots are too small to see with the naked eye, and can be identified by police when examining stolen cars using magnifying glasses and specialised equipment to see the microdots.  And the South African Police Service (SAPS) has announced that Microdots will shortly be compulsory for all new vehicles registered.

Already being used

As of 31 May 2009 over 370 000 vehicles in the country where microdotted by the following companies: Nissan, BMW, Avis Rent-a-Car, Toyota (on the Quantum minibus), SAPS, SAVRALA and Vesa, Burger revealed.

How does it work?

The process involves the application of approximately 10 000 tiny polyester or metal dots, each less than 1 mm in diameter and each containing the vehicle’s identification number (VIN) or a unique vehicle PIN etched onto it by a laser-etching process, as repeated lines of text.

The microdots are applied to 88 different locations on a vehicle. Discovering and removing all of them is practically impossible and any attempt to remove them results in the car’s body being severely damaged.

It also helps that the technology used to identify microdots is cheap and easily available, said Deborah Hunt, Media Liaison at BACSA. “Police can use a low-tech magnifying glass, which is cost effective”.

International statistics indicate that Microdot technology leads to a decrease of between 50 and 60 percent in the number of stolen and hijacked vehicles and an improvement of more than 55 percent in recoveries.

It is common knowledge that many of the stolen and hijacked 4×4′s are dismantled in chop shops and the parts sold as second-hand.  Microdots can be used in recovering components sold as used parts and this will certainly be a deterrent for hijackings and motor vehicle theft.

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Government recently announced plans to make third party insurance compulsory for all South African drivers. When this will materialise – nobody knows for sure, but the theory is a very sound one indeed.

Currently, it is estimated that of the 9.5 million vehicles on South African roads, only 35% are insured!  That’s a scary statistic.

At this stage, approximately 70 to 80%  of motor claims are as a result of accidents.

Here is a typical scenario:

• Driver A (who is not insured) drives into the back of Client B’s vehicle (who is insured).
• Client B claims from his insurer, who repairs his car.
• B’s insurer, tries to recover his losses, only to find out that Driver A is not insured, or is unemployed, or lives in a squatter camp with nearly no earthly possessions and so Client B’s insurer gives up on trying to recover his losses.

The nett result? Insurance premiums increase.

Who pays? Client B (along with all those other 34.99 % of vehicle owners who diligently pay their insurance premiums every month).

The situation will be much better if more vehicles are insured, as the burden will be less on insurers who, at this stage, are carrying more than their fair share.  Motor insurance premiums should decrease, and the sustainability of the insurance and even the motor industries will improve.

The idea is great, and well overdue too.  It’s a step in the right direction by our Government and Department of Transport.

The BIG questions are…

1) Who will administer the compulsory Third Party Insurance scheme?

and

2) How will it be implemented?