Lifestyle

New driving licence points system could be a big problem for South Africans with car insurance

Caitlyn Hilliard-Lomas

 ·28 Jun 2026

Traffic accidents in South Africa cost around R180 billion annually, with many uninsured drivers putting the insured motorists at risk.

Insurance experts warn that the upcoming demerit point system may worsen this issue by increasing the number of unlicensed drivers on the roads.

Nearly 70% of all cars on South Africa’s roads are uninsured, which means that if a driver hits another vehicle, there is a two-in-three chance the driver will not be able to pay for the damages.

“We’re looking at over 2,000 accidents a day on roads where an estimated 65% to 70% of vehicles aren’t insured, according to data from the Automobile Association (AA) and the South African Insurance Association,” said Van Deventer Dowlath & Marx Inc Associate Director Tanya De Villiers.

The Administrative Adjudication of Road Traffic Offences (AARTO), which will expand to additional municipalities from 1 July 2026, will also introduce a driver’s license demerit system, similar to those in the UK and Australia. 

Under this new system, when a driver commits traffic offences, they lose points on their license. If they accumulate too many penalties, their license may be suspended or cancelled.

In South Africa, vehicle insurance policies require drivers to hold a valid driver’s license. If AARTO cancels the license of a reckless driver, their insurance policy becomes void immediately.

As a result, the number of uninsured, legally unauthorised drivers on the road is expected to increase significantly.

“With the AARTO demerit system scheduled to begin penalising bad drivers with point deductions later this year, the chaos could escalate because drivers who lose their licences due to accumulated fines will automatically lose their insurance coverage,” said De Villiers.

New AARTO system

De Villiers said most people assume that an insurance claim ends when their car comes back from the panel beater; however, she said that is where the “real” legal process begins.

“Imagine you’ve stopped at a red light and a reckless driver smashes into the back of your car,” she explained.

“You report the accident, pay your excess, your insurer pays for the repairs, and then as far as you’re concerned, the matter is closed, but it isn’t.”

She explained that this is because once the insurer pays your claim, they legally step into the insured party’s shoes, inherit the rights, and can sue the at-fault driver to recover their money.

If, for example, a negligent driver causes R50,000 worth of damage to someone’s car, the insured party pays a R5,000 excess, and the insurer pays the remaining R45,000.

De Villiers said that, through subrogation, the insurer assumes the legal burden of recovering the full amount from the guilty party. 

“Once recovered, you get your R5,000 back, and the insurer keeps the R45,000. It’s a win-win for the consumer that costs the policyholder nothing,” she said.

She said that this system is actually an essential legal tool that prevents drivers from avoiding financial responsibility simply because the person they collided with had insurance.

“Without subrogation, insurance companies would have to absorb billions of rands in losses every year. To survive, they would have to raise monthly premiums through the roof, forcing honest, insured motorists to pay for the country’s national road lawlessness,” she said.

AARTO points demerit system: