Department of Logistics

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Browsing Department of Logistics by browse.metadata.advisor "Du Plessis, Sophia"

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    Usage-based insurance : nudging towards responsible driving
    (Stellenbosch : Stellenbosch University, 2022-04) Coetzer, Brandon Alexander; Krygsman, Stephan C.; Du Plessis, Sophia; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Logistics.
    ENGLISH SUMMARY: The ramifications of South Africa’s poor road safety record extend far beyond physical- and emotional trauma by piercing a proverbial puncture of considerable consequence in the nation’s economy. Each year, road accidents impose a socio-economic burden equivalent to more than three percent of the country’s gross domestic product. As such, there is little doubt that priority should be placed on interventions that may mitigate accident risks. The research presented in this document investigated one such intervention—usage-based vehicle insurance. Two research avenues were pursued; (1) a market segment assessment survey that probed young motorists’ perceptions of usage-based insurance policies and (2) a case study analysis that explored the compulsory insurance arrangement of South Africa as well as that of some of the country’s international counterparts. The results of the survey revealed three sub-segments in the broader market segment of young drivers—each with different levels of interest in- and perceptions of usage-based insurance policies. Among the sub-segment dubbed Forerunners, respondents typically showed greater receptivity towards usage-based insurance and shared a stronger belief in its potential benefits. Those dubbed Laggards were generally more cynical towards these policies, while Non-Partisans often expressed sentiment somewhere between that of the other sub-segments. Despite most respondents regularly using insured vehicles, prior awareness of the existence of usage-based insurance was modest. Most respondents believed in the potential of usage-based insurance to encourage speed limit compliance and engender positive road safety outcomes, however, the curtailment of vehicle-kilometres travelled appeared to be a tall order for much of the sample. High levels of digital competence suggested that the segment as a whole would have little difficulty in adopting the hardware and software typically associated with modern usage-based insurance policies. Many respondents were, however, somewhat hesitant towards location monitoring—especially when fulfilled using mobile applications. Nearly half of all respondents shared an inclination towards flat-rate tariffs over variable tariffs, even when the latter would be cheaper over the long-term—a somewhat surprising stance that spanned across all three sub-segments. In the second research avenue, the perspective shifted to that of the state and the focus was broadened to explore national compulsory insurance arrangements. South Africa’s Road Accident Fund finds itself in dire need of restructuring if it is to escape its liability-ridden financial position. This, combined with the recent binning of the scheme’s proposed replacement, raises uncertainty over the state’s plans for its insurance arrangement. With an eye towards highlighting the challenges that South Africa may face if it were to adopt an alternative arrangement, this research avenue introduced the compulsory insurance arrangements of a collection of nations and considered their core challenges. The case study also explored these nations’ efforts to better reflect the user-pays principle by allowing a greater degree of risk-based tariff differentiation in their compulsory insurance arrangements. This drew attention to the diverse nature of nations’ insurance arrangements and, in doing so, exhibited that no single approach should necessarily be seen as a panacea.