SAIA inches towards opening its salvage database to the public

Johannesburg - The past few years have seen the South African Insurance Association (SAIA) and its members undergo sustained pressure mounted by the national motor body repairs association, SAMBRA and its erstwhile National Director, Richard Green, who demanded that the non-life insurance industry makes public its Vehicle Salvage Database.

But what is VSD, what constitutes this database, and why has it been such a bone of contention between non-life insurers and motor body repairers over the last few years? In June 2015, SAIA entered into a contract with the Insurance Crime Bureau (ICB) to create and manage a database of all available insured motor salvage. This included all vehicles that had been damaged as a result of accidents and or other incidents, some of which were partially damaged `but could still be repairable, right up to vehicles that had literally been turned into a heap of steel and rubber. 

Accidents will usually trigger claims which are duly honoured by the insurer, should the claim be found valid, with the insurer settling the bank an agreed or contracted value of the vehicle. The insurer then assumes possession of the said vehicle and finds a way of disposing it, which is usually done through third parties since insurers are not in the business of selling vehicles. However, in line with legislation, these vehicles must be coded according to the extent of their damage, and details of these vehicles are captured into a collective database, owned by members of SAIA, called the VSD. 

When a written-off vehicle is sold, the respective code is disclosed to the buyer.  In this, the non-life insurance industry ensures that the relevant stakeholders who buy the salvage vehicle is fully informed of the state of the vehicle being sold, and therefore how the respective vehicle should be treated going forward.  For instance, a salvage vehicle Code 4, Code 4 is a Permanently Demolished vehicle. Permanently demolished, means that the chassis of a motor vehicle has been a) Compacted; b) compressed; c) melted; d) destroyed d; or e) damaged to such an extent that the motor vehicle concerned cannot be made roadworthy and the chassis cannot be used to build a motor vehicle.

However, over the years, SAMBRA has contended that the opening of this database which is currently only open for SAIA member companies2, is key to working towards crime reduction in the motor salvage, and selling space. While SAIA has never dismissed this belief by the motor body repair association, it has sought to make all parties involved understand that its database only contains a very small fraction of the vehicles that are on the roads, and making it public will not immediately solve the challenges faced by the public.

This database, SAIA says, was created to meet the conditions of the South African Police Services (SAPS) with reference to the Second-Hand Goods Act 6 of 2009, as well as to assist in combatting various forms of vehicle fraud. Further to this, SAIA explains that initial access to the VSD was designed for SAIA motor member companies only and not for public use. As a result of lobbying by various stakeholders over the years, the SAIA Board, agreed that perhaps it was time for SAIA to conduct a thorough investigation of the risks associated with opening this database to the public. However, SAIA had to consult with various stakeholders and explore ways of mitigating risks, not only for business but also for individual previous owners of the salvage vehicles in the database, in line with current existing legislation, that includes, but not limited to the protection of private information.

Zakes Sondiyazi, SAIA Manager: Insurance Risks says SAIA and its motor members are in the process of creating a parallel system that would assist in providing the public, and probably interested commercial entities, access to a version of the VSD, adding that SAIA remains cognisant of the fact that the provision of access to the VSD platform alone to the public will not solve all the challenges the public and motor dealers face when buying salvage vehicles.

“In as much as we believe that the provision of access to the previously insured vehicle salvage records is the right thing to do, we remain acutely aware that this action is not the silver bullet to solve the issues around the quality of repair work of accident damaged vehicles or related vehicle crime issues.

“It must be kept in mind that insured vehicles on SA roads are only about 33% to 35% of the entire twelve million registered vehicles in South Africa. And vehicles on the VSD will, again be a fraction of this percentage. We believe that such an initiative, whereby a private sector party (non-life insurance industry) considers availing data for public use in an age where data is regarded as currency and an asset, is a noble and responsible thing to do, given the need to reduce crime in all spheres of modern-day South Africa.”

SAIA says it has unpacked the areas where insights gained from properly accessed and accurate data could create substantial social and economic benefits:

1. Public safety: The information is assumed will help anticipate and possibly prevent bad experiences when buying second-hand vehicles, minimising the opportunities that facilitate criminal behaviour.
2. National security: The data is assumed will help prevent conflict and instability through additional information about salvaged vehicles which have been repaired and sold as second-hand vehicles. It will also inform decision making for consumers, motor dealers, banks, and insurers.
3. Education: It is assumed that the information in the database will also improve and enhance the public’s protection and outcomes, especially during the purchase of repaired salvaged vehicles.

Sondiyazi says the need to reduce information asymmetry that currently exists in the form of previously written off cars, which are sold as salvage, repaired, and resold back to the uninformed and unsuspecting public needs to be addressed.

“As a progressive organisation and industry, we believe that the big data revolution is about arming society with useful information and insights to facilitate social and economic development. It is also SAIA’s intention to empower the business eco-system through our involvement in the development of the socio-economic pillars that talks to the financial well-being of families and individuals through assisting in crime reduction initiatives across South Africa.

“I would like to however reiterate that one of the reasons why it seems to be taking too long for the database to be made public is that there is a dire need for the industry to ensure that there are additional mitigating measures and mechanisms in place with an objective of minimising any unintended consequences or risks that could result in liabilities to the non-life insurance industry and any other stakeholder as a direct result of making the platform public.

Contacted for comment, current Sambra National Director, sounded acutely aware of the challenges faced by SAIA, and what the non-life insurance association is working around in order to make the database public. The current approach adopted by SAMBRA to address some challenges faced by its members with its peers seem like a remarkable departure from its usual confrontational stance. Its current National Director, Uvashen Bramiah said: “SAIA is busy with a strategic plan to produce the VSD, and it will be premature for SAMBRA to comment whilst this is ongoing.”

Ms. Pamela Ramagaga, SAIA GM: Insurance Risks says: “In the spirit of availing these records, SAIA requested affected stakeholders to provide comments on the creation of the suggested “Vin Look-Up” solution. Their input has been invaluable as we continue to develop the “Vin Look-Up” concept to benefit the public, some of whom have unfortunately lost their savings after buying poorly repaired salvage vehicles.”

“SAIA will present its business case to the SAIA Board on 1 December 2022, after which we will be able to speak to timeframes with certainty,” concludes Ramagaga.