Although the Aarto implementation date is still tentative for 1 December, one thing that is certain is that your insurance will not cover you or your car if you are involved in an accident and don’t have a valid licence.
When Aarto is implemented, traffic offences will earn you demerit points against your licence and eventually it could be suspended. What will this mean for your insurance?
Ernest North, co-founder of Naked Insurance, says driving without a valid licence is unlawful and most policies will not pay out for accidents if you drive while your licence is suspended.
Londiwe Mataga, head of governance at Miway Insurance points out that at the point of sale, it is both responsible and ethical not to offer insurance to people whose driver’s licences have been suspended or cancelled under the Aarto system.
“Insurance exists to provide financial protection in the event of a valid claim. However, if a person drives without a valid licence, any resulting claim may be lawfully rejected.
“At Miway, treating customers fairly is a core principle. Offering cover to someone if we know he cannot legally drive and whose claims we would not be able to honour would be contrary to that principle.”
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Will your car insurance premium increase as your demerit points increase?
Even before your licence is suspended, will insurers load the premiums of people based on the number of demerit points they have? North says a history of fines, infringements or suspensions could flag you as a higher risk driver, which may in time affect your premiums.
“In many other countries with similar penalty or demerit systems, insurance providers will treat drivers with demerit points as higher risk and adjust their premiums accordingly. However, it is still early days for Aarto and insurers will first need to see how the system works in practice before they start using the data to assess your risks.
“Insurers are unlikely to start using demerit points as a factor in calculating premiums straight away. In the longer term, however, careful law-abiding drivers could benefit from lower premiums. So, it will not necessarily only be a case of penalising those who keep infringing the traffic laws.”
Mataga says an insurance premium is made up of several components, including risk assessment factors, cost structures and strategic business considerations. Demerit points under the Aarto system can influence the risk profile of a driver, as they reflect driving behaviour and the likelihood of future claims.
“This in turn may affect the premium charged. The positive aspect is that drivers with clean records and fewer or no demerit points may benefit from lower premiums, as they represent a lower risk to the insurer.”
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What happens to your insurance if you cannot renew your car or driver’s licences?
While many people fail to pay their fines currently, this will have repercussions when Aarto is implemented. Then if you ignore a fine and it goes to the “enforcement” stage, you will be unable to renew your driver’s licence or car licences. What will insurance companies do in this case?
North says people must remember that driving with an expired, suspended or blocked licence is a criminal offence. “Therefore, if you drive with an expired or blocked licence and you are involved in an accident, your insurer may reject the claim on the basis that you were not legally allowed to drive.”
His advice for consumers is to treat Aarto like a “credit score” and stay on top of fines, make payments on time and ensure your licence remain valid to protect your insurance coverage.
Mataga says when a driver is unable to renew a vehicle licence due to an enforcement order, it is important to reach out to your insurer for clear guidance on how this may affect your cover. Persistently driving without a valid licence may also result in policy cancellation or refusal to renew.
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Will the Aarto system finally make our roads safer?
North says the intention to strengthen the enforcement of penalties for bad driving is certainly aligned with making roads safer. “The success of Aarto will depend on how effectively it is implemented and managed and how long it takes for user behaviour to change.
According to Mataga, Miway is optimistic about the potential of Aarto to make South African roads safer. “The system is designed to positively influence driver behaviour through measures such as demerit points, licence suspensions and administrative fines.
“Given that human behaviour contributes to most road accidents, Aarto’s focus on accountability could play a key role in reducing reckless driving. Its centralised enforcement and real-time tracking of offences also promises more consistent application of traffic laws across provinces.
“While we acknowledge concerns around implementation readiness, legal challenges and the need for greater public awareness, we remain committed to supporting our customers through these changes. We also recognise the risk of increased uninsured driving due to licence suspensions.”
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