The Rising Costs of Car Insurance

September 4 - If car insurance companies want to continue making a profit, they have no choice but to keep pushing their prices up. This is the general consensus in the insurance industry today, as consumers are faced with the rising costs of car insurance premiums.

Insurance experts point out that changes in lifestyle and production costs have forced companies to put up their prices in order to cover their own risks.

One of the biggest reasons for higher premiums is the evolving driving landscape in South Africa. "Traditionally we have viewed younger drivers from the age of 18 and in their early 20s, as having the greatest chance of being involved in an accident," said Adam Samie, the Chief Executive Officer of Lion of Africa Insurance. "Normally these risks tend to diminish by the age of 30 as most drivers obtain stable employment, and a relatively safer and more familiar routine."

"Claims patterns tend to climb again as people hit their 40s and 50s," continued Samie, "with children growing up and 'mom's taxi' frequently being used to transport them to school and other calendar events, with a commensurate number of visits to the local panel beater."

However, Samie says that as demographics and lifestyles change, so to do the traditional stereotypes of drivers. Today, he says, there are many older, inexperienced drivers on the road who cause a high number of accidents and push up insurance policy prices in the long run.

Another cost factor is that of spare parts for today's cars. Insurance experts show the astronomical price to replace spare parts on many vehicles, including fancy gadgets, many of which were the cause of the car being stolen in the first place. "Air conditioning, leather seats and onboard computers and sensors can be absurdly expensive, and are often easily damaged," said Samie. "Outside of the higher cost of all the new technology, older vehicles are often stolen for their parts, so it becomes increasingly expensive to insure them."