For nearly three decades, AARTO has been the road traffic reform that always seemed to be just over the horizon. Drivers have heard about demerit points, licence suspensions, and tougher enforcement for years, but after repeated delays, legal challenges, and postponements, many simply stopped paying attention.
That changed on 1 July.
After years of delays and courtroom battles, Phase 2 of the Administrative Adjudication of Road Traffic Offences (AARTO) rollout officially came into effect, extending the administrative traffic enforcement system to 62 participating municipalities. The rollout proceeded after the Gauteng High Court dismissed an urgent application by the South African Local Government Association (SALGA) to halt implementation, clearing the way for Phase 2 to begin as planned.
Although the demerit points system has yet to be introduced, Phase 2 marks AARTO’s most significant milestone since the Act was passed in 1998. Traffic infringements are now processed through AARTO’s administrative framework, with infringement notices expected to reach motorists more reliably through electronic channels and stricter timelines applying to pay, challenge, or transfer liability for an infringement.
The Department of Transport has indicated that AARTO will be expanded to the remaining municipalities in a subsequent phase, before the long-awaited national demerit points system and driver rehabilitation programme are introduced. No commencement date has yet been announced for the demerit system.
Clive Hogarth, head: retail pricing at Old Mutual Insure, says, for now, there isn’t a great deal for motorists to worry about in practical terms.
“What’s changed is that fines will reach you more reliably and quickly, and you’ll be more obligated to pay those fines.”
The bigger change, he says, is still to come.
“Accumulating enough points could result in your licence being suspended, with real implications for your daily life and, potentially, your insurance cover.”
Road safety is the starting point
The demerit points system may not be active yet, but the insurance industry is already looking beyond Phase 2.
If AARTO succeeds in changing driver behaviour and reducing serious crashes, it has the potential to reshape how insurers assess risk, price premiums, and evaluate claims.
That is, after all, what the legislation was designed to achieve.
Once fully implemented, AARTO aims to reduce South Africa’s exceptionally high road fatality rate by encouraging better driving behaviour and removing habitual traffic offenders from the road through the demerit points system. Human error, reckless driving, and speeding contribute to an estimated 90% of crashes. In 2025, South Africa recorded 9 674 fatal crashes in which 11 418 people lost their lives. According to the Department of Transport, the country s high road death toll costs the economy billions of rand each year through lost productivity, pressure on the healthcare system, and the burden placed on the justice system.
Those are precisely the outcomes AARTO is intended to address, and Hogarth says Old Mutual Insure supports the legislation’s broader road safety objectives.
“South Africa has a very high road accident fatality rate, even more so when compared to the standards of more developed countries, and pedestrians bear the brunt of this impact. This has a very real cost for the families who have lost loved ones, as well as a broader economic impact on the country.”
He says anything that genuinely improves road safety deserves support.
“The AARTO regulations are aligned with global trends in road safety. However, there have been valid challenges to the AARTO Act and how it has been implemented, raised by municipalities and various civic organisations.”
There is still an ongoing challenge from SALGA to the AARTO regulations.
SALGA’s challenge centres not on the objective of improving road safety, but on how Phase 2 has been implemented. In its urgent application to halt the rollout, the Association argued that municipalities had not been adequately consulted, questioned whether issuing authorities were operationally ready, and raised concerns about the regulatory framework and funding model, warning that municipalities would be expected to absorb significant implementation costs without adequate financial support.
The Gauteng High Court dismissed SALGA’s application on 30 June, finding that the association had failed to demonstrate the urgency required to stop the rollout on the eve of implementation. The court did not, however, rule on the substantive merits of SALGA’s objections, and the association has indicated that it intends to pursue those issues through the normal court process.
Since then, AARTO’s implementation has faced a fresh legal challenge. The Organisation Undoing Tax Abuse (OUTA) on 15 July launched an urgent High Court application seeking to suspend Phase 2 of the rollout, arguing that the government brought the amended AARTO system into operation before key legal safeguards required by the legislation, including the independent Appeals Tribunal, were in place.
OUTA also contends that the 2026 AARTO Regulations were introduced without meaningful public participation. The organisation says it supports stronger road safety enforcement but argues that the government must first comply with its own legal and constitutional obligations before enforcing the amended system.
Claims, licence suspensions, and a common misconception
Perhaps the biggest question hanging over AARTO is what happens if a motorist is involved in an accident while driving with a licence suspended under the demerit points system. Would an insurer automatically repudiate the claim?
Hogarth cautions against assuming that an AARTO-related licence suspension would automatically result in a rejected claim.
“Motor claims are assessed in accordance with the policy’s terms, conditions, and exclusions.”
He notes that compensation is payable only where the insured has complied with the relevant policy terms and conditions, with the specific policy wording and schedule determining cover, exclusions, and claim outcomes. Although Old Mutual Insure’s current policy wording does not specifically address the AARTO demerit system, each claim would still need to be considered in terms of the policy wording in force at the time.
“The existence of an AARTO suspension would be a material underwriting and claims fact, but not necessarily an automatic claim repudiation unless the wording expressly provides for that result.”
In other words, an AARTO-related licence suspension could become a material underwriting and claims fact, but it would not necessarily result in an automatic repudiation unless the policy expressly provided for that outcome.
Even so, Hogarth believes AARTO could become increasingly relevant to insurers once demerit-based licence suspensions are recorded and readily verifiable.
“This could be one of the reasons AARTO may become important, i.e., once demerit-based suspensions are recorded and readily verifiable, insurers may increasingly examine license status both at underwriting and at claim stage.”
A gradual evolution, not an overnight change
Licence status is only one aspect of how AARTO could eventually influence motor insurance. Hogarth expects AARTO’s influence on motor insurance to emerge slowly rather than dramatically.
“The impact is likely to build gradually, and there’s still a lot of uncertainty about how the system will operate going forward.”
For now, he says, the practical consequences are largely administrative. The more significant operational challenges will only emerge once the demerit points system comes into effect.
Fleet operators, in particular, could face practical challenges. They will need reliable systems to ensure traffic infringements are correctly allocated to individual drivers before demerit points are assigned – a process Hogarth says that will be no trivial task.
“Motorbike delivery services, given the informal nature of that part of the economy, present a particularly interesting challenge here.”
If drivers accumulate enough demerit points to have their licences suspended, businesses could find themselves with employees who are legally unable to drive.
The impact on insurance premiums, however, is likely to take considerably longer to emerge.
Could demerit points become another underwriting tool?
Whether demerit points eventually become part of motor insurance underwriting depends on one question: do they genuinely predict insurance risk?
Hogarth believes it is a plausible future rating factor, but not a foregone conclusion.
Before insurers could confidently use demerit points when assessing risk, he says two conditions would need to be met. First, the system would need to generate credible data that demonstrates a meaningful relationship between demerit points and claims experience. Second, the points themselves would need to reflect driver behaviour rather than inconsistencies in enforcement.
“If speed cameras and traps are concentrated in easy, high-yield locations rather than a genuinely high-risk area, the points data reflects enforcement patterns more than driver behaviour.”
He also questions whether every offence currently carries a weighting that reflects actual insurance risk.
“For example, not displaying a licence plate attracts 6 demerit points, whilst mobile phone use currently only attracts 1 demerit point. From an insurance perspective, we care more about the mobile phone use and how it distracts drivers.”
If the data ultimately proves to be a reliable predictor of insurance risk, Old Mutual Insure would consider incorporating verified AARTO information into its underwriting models.
“Our pricing models already use a significant number of rating factors to build an accurate view of underlying risk, each acting as a proxy for the underlying risk. More behavioural data is generally a good thing for risk differentiation and competitiveness, provided it predicts the underlying risk.”
One factor among many
Even if demerit points eventually become part of underwriting, they are unlikely to become the dominant factor in determining premiums.
“There’s a vast array of rating factors that determine a vehicle’s insurance premium.”
Driving behaviour is only one part of the equation. For some vehicles, Hogarth notes, theft risk remains a much stronger driver of premiums than accident risk. Vehicle type, where it is kept overnight, and a policyholder’s previous claims history would all continue to influence pricing.
“If demerit points do prove to correlate with claims behaviour, we could see drivers with fewer points paying somewhat lower premiums than those with more, but demerit points would be one of many differentiating factors, not a standalone determinant of premiums.”
Likewise, a driver with an exemplary demerit record could still face relatively high premiums because of other underlying risks.
“A policyholder with very few demerit points could still end up paying a higher premium overall, because of their vehicle, the area they live in, or their past claims history.”
The proof will be in the data
Whether AARTO ultimately becomes another underwriting tool will depend on more than the legislation itself. For insurers, the real test is whether the demerit points system produces credible behavioural data that translates into fewer accidents and, ultimately, lower claims costs.
Hogarth says that is exactly the outcome insurers would like to see.
If AARTO succeeds in reducing reckless driving, repeat offending, and drink driving, insurers should eventually see lower accident frequency and lower claims costs across the industry.
“But that’s conditional on the successful implementation.”
He cautions, however, that driver behaviour is only one part of the road safety equation. Road design, pedestrian infrastructure, vehicle safety standards, effective enforcement of drink-driving laws, and basic road maintenance all influence accident rates.
South Africa, he says, should treat road deaths as an engineering challenge as much as a behavioural one. Better pedestrian infrastructure and public transport are particularly important in a country where many people have little choice but to walk alongside fast-moving traffic. Poor road markings, inadequate lighting, signage, and potholes also continue to contribute to crashes, while some vehicles on South African roads still carry low independent safety ratings, highlighting the difficult balance between affordability and occupant protection.
For insurers, the long-term value of AARTO will depend on whether the data it generates improves their ability to assess risk.
“We’d expect that AARTO records could eventually form part of our rating framework, augmenting current factors rather than replacing them.”
Telematics, which uses in-vehicle devices or smartphone apps to monitor driving behaviour, potentially offers the most accurate behavioural data available to insurers. Globally, however, Hogarth says consumer adoption has remained limited because many consumers are wary of the monitoring involved.
Like AARTO itself, any underwriting changes are likely to happen gradually rather than overnight.
“This will evolve gradually, driven by data availability and demonstrated predictive value, rather than through any sudden shift in underwriting philosophy.”
