Question

Sam has been diagnosed with stage 2 colon cancer and will probably not be able to pay the medical bills for his treatment.

3.2 Assume that Sam is also looking to get home car insurance; advise him on the TWO (2) types of insurance contracts that exist in South African law. You are required to provide examples of each type of insurance.

Answer 1

SOUTH AFIRCAN INSURANCE LAW

Insurance in South Africa describes a mechanism in that country for the reduction or minimisation of loss, owing to the constant exposure of people and assets to risks (be they natural or financial or personal). The kinds of loss which arise if such risks eventuate may be either patrimonial or non-patrimonial.

With a higher crime rate than most countries, you can expect to pay more for insurance in South Africa, whether it be life, pet, car or travel insurance.

Overview of insurance in South Africa

South Africa has around 170 active insurance companies, however not many forms of insurance in the country are mandatory. Consequently, many South African residents have little or no insurance.

The South African insurance sector is regulated by the Prudential Authority, which is an arm of the South African Reserve Bank. The South African Insurance Association (SAIA) is the main representative body of non-life insurance companies, with 58 members.

The new Insurance Act 2017 (Insurance Act) came into force on 1 July 2018. All insurers and reinsurers previously registered in South Africa and Lloyd's underwriters previously operating in South Africa must be relicensed under the new Insurance Act 2017 by 30 June 2020 (or an extended date). There has not been much progress in this regard. There has also not been much progress in the licensing of overseas reinsurers as branches in South Africa.

i personally provide home insurance and car insurance to SAM beacuse south africa is the country where the crime rate is higher than any other country in this world. if he is not able to pay for his medical bills then how can he efford another car or home ?

Home insurance

Home insurance isn’t compulsory for everyone living in South Africa. However, if you take out a mortgage, your mortgage lender will usually insist on you taking out buildings insurance when buying a home.

When you buy a home in South Africa, it makes sense to shop around for buildings insurance. This will cover the costs of rebuilding your property should the worst happen. It also covers any permanent fittings inside your house.

car insurance

why car insurance so important in south africa?

Vehicles worth 8.5 billion rand were stolen in South Africa in the year through February 2013, the South African Insurance Crime Bureau said in a statement. Car hijackings made up 15 percent of the 66,360 cases of vehicle theft in the year.

SA's high rate of car theft and hijacking, makes motor vehicle insurance an absolute necessity.

South African Insurers Urge Mandatory Auto Insurance

South African insurers have called on the government to start compulsory motor cover to reduce the cost to motorists and companies from the country’s millions of drivers taking to the roads without protection.

In South Africa “up to 60 percent of cars aren’t insured, so with 12 million vehicles, only 4 million are insured,” Gari Dombo, managing director of the insurance unit of Johannesburg- based Alexander Forbes Group Holdings Ltd., told reporters in the city. “Those who are insured are heavily subsidizing the uninsured.”

“Insurance is about numbers: if you bring in numbers, premiums should go down,” Dombo said. “It may cost about 100 rand ($9) to 130 rand a month for third party. It would also help panel beaters and assessors to come into the mainstream industry. We’re talking with National Treasury about compulsory insurance.”