In many countries, a driver’s conduct on the road doesn’t end with a traffic fine – it can also affect the cost of motor insurance. As AARTO is rolled out more widely across South Africa, the question is whether the same could happen here.
The question is not theoretical. In the United Kingdom, research by Compare the Market found that the addition of just three demerit points could increase a motorist’s insurance premium by as much as 50%. In Australia, policyholders are obliged to disclose their demerit points to insurers, and failing to do so can result in a policy being voided.
The South African Insurance Association (SAIA) says these examples demonstrate that there is established international precedent for driving records to form part of insurance underwriting. However, whether South Africa ultimately follows the same path will depend on how AARTO is implemented over the coming years.
“International experience suggests that there is ample precedent for demerit points being factored into risk profiles, and South Africa can learn from these examples,” says Pam Ramagaga, general manager: insurance risks at SAIA.
A rollout nearly three decades in the making
Introduced to improve road safety through an administrative process for dealing with traffic infringements and, ultimately, a national demerit points system, the AARTO (Administrative Adjudication of Road Traffic Offences) Act has been almost three decades in the making.
Since the Act was passed in 1998, its rollout has been delayed by legal challenges, legislative amendments, and repeated implementation postponements. The Constitutional Court cleared the way for national implementation in 2023 after overturning an earlier Supreme Court of Appeal ruling, while a recent application by the South African Local Government Association (SALGA) to halt the latest rollout was dismissed shortly before Phase 2 came into effect on 1 July.
The latest phase extends AARTO’s administrative framework to 60 additional municipalities, while the AARTO Amendment Act now also applies in Johannesburg and Tshwane, bringing the number of participating municipalities to 62.
Importantly, while the administrative rollout has expanded significantly, the national demerit points system has not yet been implemented, and no commencement date has been announced.
Road safety comes before underwriting
Motor insurers already assess risk using established underwriting criteria, including claims history and, increasingly, telematics. AARTO could eventually provide another source of underwriting information through traffic infringements and, ultimately, demerit records.
“It is essential to bear in mind that insurers already have underwriting rules and policy conditions in place that are aligned with the law and may jeopardise the policyholder’s claim due to a cancelled driver’s licence or evidence of driver behaviour such as drinking and driving,” Ramagaga says.
SAIA hopes the full implementation of AARTO will reduce South Africa’s high number of road accident deaths by encouraging safer driving. Ramagaga says sustained and consistent implementation across all jurisdictions, together with greater public awareness and compliance, will be essential to changing bad driving habits, “especially if such bad behaviour is not consistently punished”.
She says the extent of AARTO’s impact will depend on the effectiveness and consistency of its implementation, as well as the extent to which it reinforces every driver’s duty of care to comply with road traffic laws and contribute to safer roads. Ramagaga adds that road accidents are often predictable and preventable and are mostly caused by driver error or a lack of duty of care.
Over time, she says, that could result in a steady decline in road crashes and fatalities, with reduced claims frequency and severity having the potential to change motorists’ risk profiles and the risk-adjusted cost of motor insurance.
What would need to happen first?
While there is “a logical relationship between persistent traffic infringement and driving behaviour”, Ramagaga says it is still too early to determine whether a poor AARTO record will become a reliable indicator of insurance risk in South Africa because “insurers typically require a few years’ worth of data in order properly to assess whether the level of AARTO demerits is correlated with insurance risk”.
Ramagaga says SAIA members with substantial motor books continuously monitor claims experience to identify trends that may require a response. Any future consideration of AARTO data, she says, would need to be supported by evidence, comply with applicable legal and regulatory requirements, and ensure the fair treatment of consumers.
Ramagaga describes it as “a hypothetical possibility”, saying several legal, regulatory, data privacy and related issues would first need to be resolved before a person’s AARTO record could become part of risk assessment alongside the criteria insurers already use.
Beyond lawful access to the information, insurers would need confidence that the data is accurate, current, verified, and applied consistently across all jurisdictions. Any future use would also need to align with fair and responsible underwriting practices, supported by appropriate governance and dispute resolution processes.
She notes that the current AARTO regulations already contain an important safeguard, requiring the consent of the vehicle owner or Identity Document holder before personal information may be shared with an insurer.
Success would extend beyond insurers
If AARTO succeeds in changing driver behaviour over time, SAIA believes the benefits could extend beyond insurers and policyholders.
Ramagaga says fewer crashes could improve the affordability of motor insurance and encourage insurers to develop further innovative motor insurance solutions that broaden coverage. She also says businesses that depend on accident-related repairs should be anticipating how their business models may need to adapt as claims volumes evolve in the years ahead.
“AARTO must be seen as part of a sustained campaign to discourage bad driving behaviour and incentivise safe and responsible driving,” Ramagaga says.
She notes that every motorist has a duty of care to obey the rules of the road and protect all road users.
“All of the offences covered by AARTO represent the way that things should be on South African roads,” she says. “It is most regrettable that it requires stricter law enforcement to reduce drunk driving and speeding, which are the prime causes of road crashes and fatalities.”
