Driving your way to a lower premium

Better driving behavious means lower insurane premiumsA sobering thought before we all climb behind the wheel of our cars this holiday: South Africa’s roads are among the most dangerous in the world! According to the World Health Organisation, the number of road deaths in South Africa per 100 000 people is 31.9. In comparison, the US is around 11 per 100 000; even compared to other developing countries our figures are bad, with Brazil fatalities at 23 per 100 000 and Malaysia at 25 per 100 000. The best drivers in the world appear to be in Australia and Canada with 9 and 7 road deaths per 100 000 respectively.

The cost to the South African economy for these high fatalities is around 10% of GDP and it also has a huge impact on insurance premiums due to higher claims ratios.

Moreover, only about one-third of the cars on the road are insured, so there is a two out of three chance that the person who crashes into you is uninsured. This means your insurer is unlikely to be able to claim from the other motorist, which has a further impact on the cost of your insurance.

In the current environment, insurers have two options: either to keep increasing premiums, or to find a way to lower the accident rate.

Rewarding good driving behaviour

Discovery Insure has been using Vitality Drive for six years as a driver behaviour programme that rewards clients for driving well. After each drive, the client gets immediate feedback about that drive with a star rating from 1 to 5. At the end of the month, all clients receive a detailed summary about their driving. The kind of driving behaviour Discovery Insure monitors is harsh braking, harsh acceleration and speeding.

Over the last six years, the company has collected millions of kilometres of driving data which has given them a unique insight into driving behaviour. Not surprisingly, what they found was that better drivers have fewer accidents, which means for Discovery Insure, these drivers make fewer claims. They have seen a nearly 11% reduction in the number of accidents as drivers become more aware of their driving behaviour.

By being able to track a driver’s behaviour, Discovery Insure is able to reduce premiums for better drivers as a reward for driving well and therefore reducing the accident rate. What is interesting is that the proportion of good drivers insured by Discovery Insure has increased from 38% to 70% over the six years. Anton Ossip, CEO of Discovery Insure attributes this not only to awareness of their driving habits, but the fact that good drivers benefit by joining Discovery Insure, while bad drivers find it more expensive than other insurers.

Next year Discovery Insure is adding to their reward offering to further encourage good driving. This includes a Diamond Vitality drive status whereby members who drive well get a guaranteed zero renewal increase on their comprehensive vehicle insurance. There is also an Excess Funder Account where members can earn money which can go towards any excesses in the case of an accident, or can be used to buy new tyres.

Cheaper insurance for young drivers

If you are a driver under the age of 26 or have a child who is, you will know that insurance premiums for this age group are extremely high. According to Discovery Insure, an 18 year-old will pay a premium 50% higher than a 30 year-old – and there is a good reason for this. On average young drivers have worse driving scores – they are more likely to speed and use their phones while driving, and they drive more at night. Statistically driving at night is almost seven times more dangerous than at any other time of the day. However, according to Anton Ossip, averages hide the fact that the bad driving statistics are due to the actions of a few and that many good young drivers are paying far too much for their insurance.

In 2018 Discovery Insure is introducing Smart Insurance for young drivers between the ages of 18 and 30. If they take out a Discovery Insure plan with the Vitality Drive programme, they will receive 20% off their car insurance. They will also earn weekly active rewards for driving well. However, if they drive between 9.30pm and 5am, they will be penalised by paying an additional rand rate per kilometre which is added to their monthly premium. In order to encourage young drivers to stay off the road, they receive a 25% discount off Uber during these hours.

This article first appeared in City Press.

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