The AARTO Act will not only impact how the insurance industry underwrites and issues policies, but the Claims processes may also change. So, unfortunately, the AARTO Act could potentially impact the insurance sector negatively. Among other impacts,:
There are some infringements, among others, which come close to the maximum of 12 demerits and significantly affect insurance cover:
Top tips for policyholders if their licence gets suspended.
It is perhaps alarmist to say in policy underwriting: No licence! No insurance! However, the new AARTO Act will no doubt impact the underwriting and wording of insurance policies in future. AARTO has a profound effect on how insurers may view new applications.
How so?
Firstly, clients must disclose suspended licenses. Insurers consider this as material information and non-disclosure could lead to rejection of claims. However, such disclosure can be an advantage to the insurance industry as it may lead to a reduction in fraudulent claims.
Secondly, we predict it to be conditional before the issue of any insurance policy to obtain the client’s consent to access their AARTO information to make sure that their licence has not been suspended. Also, the insurer can then better determine whether they can sign on a client, especially if their licence has been suspended several times. Besides, the insurer must then investigate the reasons for the suspension of the licence. For example, several small speeding or parking fines will probably not be considered as dangerous as driving under the influence.
However, if a client’s licence gets suspended and they must retake it, there may be no or less cover until due process is complete. The driver may have no cover until due process has been completed to reinstate their licence.
From a claims perspective, insurers may implement a verification system to ensure that licences get checked quickly and accurately. The cost to verify licences in all likelihood to be costed towards the insurer’s account.
Yes, indeed! AARTO also holds many benefits for the insurance sector:
The AARTO is a reminder that the world keeps changing and to stay in the game; it is essential to adapt with ease and agility to new legislation and other disruptions. Instead of fighting the old, it is more fruitful to embrace the new. To do so, insurers must find out how new legislation will impact the insurance sector.
As for the insured, open disclosure to their insurers enables a mutually beneficial resolution to AARTO related implications.