The Future Of Car Insurance In South Africa: How AI Is Revolutionising The Industry


May 31, 2024
Team Pineapple

South Africa’s energy crisis has massively affected the economy, forcing many businesses and private citizens to reassess their risk. Similarly, the insurance market is filled with questions about managing underwriting risks and exposure moving forward.  

The previous year saw marked changes in Mzansi’s car insurance industry, as reported in Aon’s Insurance State of the Market 2023.  


  • An increase in insurance premiums and exchange rates meant repairs have gotten pricier.


  • The deterioration of our roads has led to a rise in claims.

Thankfully, it wasn’t all bad news. 

A separate report by Blueweave Consulting found that SA’s insurance industry showed signs of healthy growth and is teeming with possibilities. 

The car insurance market was estimated at a sizeable USD 3.77 billion (R71.6 billion) in 2022, with an approximate CAGR (compound annual growth rate) of 10.52% projected to grow further, reaching USD 6.5 billion (R123,3 billion) by 2029.

The growth of the vehicle insurance space can mainly be attributed to the increasing number of car owners, increased awareness and AI (artificial intelligence) technology that is making insurance more accessible and affordable. 

This powerful technology holds immense potential to reshape the industry, offering benefits for both insurers and policyholders. AI promises to bring more accurate risk profiles, real-time telematics data, fraud detection and enhanced customer experience services.

Breakthrough innovations by software company NVIDIA in the form of ‘the world’s most powerful AI chip’ have helped accelerate this growth. 

Known as a leader in AI chip technology, specifically Graphics Processing Units (GPUs), NVIDIA's AI chip technology focuses on accelerating tasks critical to AI, like image and speech recognition, natural language processing, and scientific computing.

Such advancements are said to lead to breakthroughs in various fields like self-driving cars, medical research, and financial modelling.

With that said, let’s take a deeper dive into how AI innovations will affect the future of car insurance in South Africa.

What is The Transformative Role of AI in Car Insurance?

Traditional car insurance models rely heavily on historical data and broad risk categories. 

AI disrupts this with a more nuanced approach. 

AI technology allows insurance providers to move from using traditional, one-size-fits-all policies to offering a more personalised, dynamic, and data-driven model. Insurers can streamline underwriting processes, improve efficiency, customer care, and claims management, and detect fraud more accurately. 


AI enables the automation of many underwriting tasks that were previously manual and time-consuming. 

The technology also improves efficiency and accuracy, fundamentally changing how risk is assessed, and policies are priced. 

This is further enhanced by AI’s ability to work with unstructured data (data that doesn’t have a predefined structure or format, for example, images, text, audio, video or social media posts) where traditional actuarial models often struggle, allowing the insurer to pass these benefits to customers in the form of reduced premiums.

Furthermore, this automation also reduces human error, leading to more consistent and reliable risk assessments.

Using machine learning algorithms means the insurance industry has been able to analyse data that provides: 

  • Vehicle type and safety features, 
  • Driver behaviour, 
  • Historical accident information and 
  • Road conditions and real-time traffic patterns.

Therefore, premiums and coverage are tailored to specific needs and behaviours, which could lead to fairer pricing.

Drivers with safer risk profiles stand to enjoy lower premiums. In contrast, those with more risks might pay a more accurate reflection of their potential cost.

Another positive is the introduction of telematics data. Real-time telematics data analysis can warn drivers exhibiting risky behaviour, such as speeding or harsh braking, leading to safer driving.

One of the best benefits of AI in car insurance is arguably its predictive capabilities. 

AI systems are known to identify patterns that can predict accidents and other risks, allowing preemptive action to prevent calamity.

Overall, the potential AI has to improve the motor vehicle insurance space will see greater improvements in efficiency, accuracy and fair systems.

Fraud Detection

Thanks to more effective fraud detection methods, it’s becoming increasingly more challenging for people to get away with duping their insurers. Some of these, of course, make use of AI technology.

AI-based algorithms are a wiz at identifying patterns and anomalies in expansive and unstructured datasets. In car insurance, this means detecting irregular patterns potentially indicating fraudulent activity by looking into claims data, policy applications, and historical fraud data.

This will enable insurers to identify and look into any inconsistencies in claims submissions, unusual patterns in accident reports, or suspicious behaviours.

And as they are exposed to more data, AI systems will undoubtedly become more sophisticated in their detection capabilities.

By analysing trends and correlating data points, AI can predict potential fraud scenarios and flag high-risk claims or policies for investigation. This early detection and proactive approach allows insurers to intervene swiftly, potentially preventing fraud before it even happens.

Such innovation couldn’t have come at a better time. 

An article by ITWeb, citing a study by Google, reported that as many as 60% of South Africans said they were excited about the possibilities of AI. Interest in the subject has increased by 650% over the last five years since 2019.

Globally, artificial intelligence is already driving innovation in the vehicle insurance industry.

Progressive Insurance in the US offers Snapshot, a telematics programme that rewards motorists with discounts based on their driving habits. 

At home, South Africa’s very own Pineapple (hey, that’s us!) offers a similar telematics programme, Drive Less Get Blessed, which rewards clients with up to 30% of their premium for driving under 300 km monthly.

In China, WeSure, a joint venture between Tencent and, uses AI to analyse traffic patterns and weather conditions to offer location-based pricing for ride-hailing services.

As a policyholder, this can translate to safer roads, lower premiums, and, potentially, access to innovative safety features in your car.

AI-Powered Customer Experience

Customer Care

Harnessing the power of AI allows chatbots and virtual assistants to provide customers with ‘round-the-clock support. 

From random inquiries and policy details to claims reporting, these tools can handle various requests without the need for human intervention. 

However, they are continuously trained by some of the world’s best minds, to ensure they never quite lose that human element, reasoning and touch.

Unlike the run-of-the-mill chatbot, which often relies on keywords and pre-programmed responses or asks questions only to direct you to a self-service centre or a human agent, generative AI bots offer a more sophisticated understanding and can interpret nuanced questions while providing helpful answers in real-time. 

Clients can get assistance no matter the hour, thus improving their overall experience.

By analysing customer data, previous interactions, and preferences, AI allows insurance providers to deliver more customised services.

A few advantages of this will be: 

  1. The speed of responses will be almost, in not, instant.

  1. Unmatched accuracy when compared to humans.

  1. Needle In A Haystack Test

  1. 1 million tokens (the  capacity of a large language model (LLM) to process information–so, this figure signifies the model's ability to consider a vast amount of information [up to 1 million tokens])

  1. 99.7% accuracy

  1. The ability to complete complex multi-step tasks is expected to improve greatly.

  1. In an interview with Lex Fridman, OpenAI’s Chief Executive Officer (CEO) Sam Altman predicted that AI would get better at reasoning and thus take on more complex tasks. In the same interview, he proclaimed that GPT-5 will be greatly superior to its predecessor, GPT-4, when it comes to completing such elevated multi-step assignments.

Thus, AI's ability to work with unstructured data holds immense potential for transforming claims management, making it a more efficient, cost-effective, and customer-centric process.

Claims Management

Something of a fear for clients and a pain point for insurers is the claims process. 

Due to the careful attention to detail and intricate investigations that may require documents and details, the turnaround time for claims resolution can be lengthy.

That’s where artificial intelligence enters the chat.

AI can automate the beginning stages of the claims process, involving filing and the initial assessment. 

For example, you can upload photos of vehicle damage directly through an insurer's app. The AI systems, in turn, can assess the damage, give an estimation of repair costs, and even approve claims within minutes (for straightforward cases).

By automating routine tasks and using AI for predictive analytics, insurers can allocate human resources to more complex activities. These include handling sensitive claims or providing personalised customer service if the customer prefers dealing with a real person.

Faster claims processing and accurate settlements throughout the claims process help reassure policyholders during a potentially stressful time. These advancements help make insurance more accessible and responsive.

Plus, the transparency and fairness facilitated by AI can strengthen trust between policyholders and insurers.

Earlier, we touched on AI’s ability to work with unstructured data; this will come in handy, especially in the claims management space.

Traditionally, processing unstructured data has been a time-consuming manual process.

AI, however, can analyse large volumes of this data quickly and efficiently. It can extract key details like dates, locations, damage descriptions, and witness statements. Not to mention emails, photos, voice recordings, and police reports related to a claim.

The beauty of this is that it allows clients to experience faster claims processing and quicker payouts.

Predictive Analytics and Risk Management

As previously mentioned, AI enables insurers to predict potential accidents and claims more accurately, fundamentally changing the landscape for insurers and policyholders.

But let’s first backtrack since you might ask yourself, “What is this predictive analysis you keep referring to?”

Predictive analytics use historical data, behaviour patterns, and numerous other risk indicators to forecast future events. 

At the heart of predictive analytics lies  AI algorithms. They’re capable of processing and making sense of the magnitude of data at speeds and accuracies unknown to human analysts.

The assessment of data by insurers (including telematics data, driving records, environmental factors, geographic location, and social demographic information) influences car insurance by determining the likelihood of your involvement in incidents that could lead to a claim.

The result is tailored vehicle insurance policies specific to your risk profile rather than a broad, generalised criterion.

So, for insurers, using predictive analytics in risk management means improved pricing strategies. These competitive yet customised policies reflect the actual risk of each policyholder and more efficient allocation of resources.

For policyholders, fairer pricing, potential policy discounts and possible incentives for better driving.

The South African insurance industry still faces challenges with issues surrounding the overwhelming number of uninsured drivers, questionable road conditions and the affordability of car insurance premiums.

However, adopting predictive analytics can contribute to the overall safety and efficiency of the country's roadways.

Insurtech Trends in South Africa

If you’re new around here and don’t know what an insurtech is and what one does, this next one’s for you.

The word ‘insurtech’ is a portmanteau (a word blending the sounds and combining the meanings of two others) of “insurance” and “technology”.

An insurtech company aims to disrupt and transform the insurance industry by leveraging new technologies, data analytics, connectivity, and machine learning to create more efficient, personalised and flexible insurance products, offerings and services.

While South Africa remains the continent’s most insured country, we still have a way to go, as only 3% of Africa is insured.

Vehicle insurance numbers are even lower because car insurance isn’t mandatory in SA. Instead, citizens pay a levy on top of the petrol price, which goes to the government-owned RAF (Road Accident Fund).

However, a glimmer of hope is on the horizon.

According to an article by Briter Bridges, “Insurtech in Africa saw its dawn with companies such as Jamii and BIMA in the early 2010s. It was not until late in the decade that dozens of companies began to appear and attract investment.”

Currently, South Africa's insurtech scene is characterised by a mix of startups and established insurance companies embracing digital transformation. 

Our market is witnessing a significant shift towards leveraging technology to meet clients’ changing needs and expectations. 

Some short-term insurance giants, like Old Mutual through Old Mutual Alternative Risk Transfer Insure Limited, are partnering with companies like Pineapple (still us!) to develop insurance products to improve claims processing by employing image recognition technology. 

Assessing vehicle damage from photos submitted via mobile apps significantly speeds up the claims process.

Plus, the adoption of telematics, apps, and online platforms is fast becoming common, reflecting a trend towards digital-first insurance solutions.

Still, challenges remain, including the need for significant investment in technology and skills development.

Additionally, there are concerns surrounding data privacy and security. 

Moreover, there's the challenge of ensuring equal access to AI-driven services to avoid situations where only the most digitally literate or financially well-off benefit from such innovations.

Successfully addressing these challenges can unlock significant opportunities for the industry. 

For consumers? More accessible car insurance services.

Regulatory Considerations and Ethical Implications

AI technologies and tools have evolved and are being applied at a neck-breaking speed. As a result, concerns around the use of information, a lack of transparency, discrimination, and lack of fairness have arisen.

These developments have triggered numerous legislative and regulatory initiatives, such as the European Commission’s proposed EU AI Act.

The Act is a groundbreaking piece of legislation being implemented. It is a rulebook for developing and using AI within the EU. 

The European Union's solid reputation and track record for developing guidelines for the ethical use of artificial intelligence make it unsurprising that such initiatives have emerged.

The Act categorises AI into different categories:

  1. Banned: Super dangerous AI, like one that could harm people physically, is completely forbidden.

  1. High-Risk: Powerful AI needs thorough testing and clear regulations to prevent misuse.

  1. Limited-Risk: Most AI used every day falls into this category. For example, an AI programme recommending movies on a streaming service wouldn't require heavy restrictions.

  1. Minimal-Risk: These pose minimal risk, like simple AI helping with online searches, and might not need many regulations.

The EU AI Act sets strict rules for high-risk AI, like facial recognition software, to ensure they don't violate privacy or discriminate against people.

Closer to home, South Africa's regulatory framework specific to AI in car insurance is still under development. However, the following existing laws around data protection and financial services can provide a foundation for ethical AI practices:

  1. Protection of Personal Information Act (POPIA).

The POPI Act requires lawful and reasonable processing of personal data, particularly relevant for AI-driven insurance practices that rely heavily on personal and sensitive data.

  1. Financial Advisory and Intermediary Services (FAIS) Act.

While not explicitly addressing AI, the FAIS Act regulates the provision of financial advice and intermediary services, ensuring fairness and transparency in financial services, which extends to AI-driven insurance products.

  1. Financial Sector Conduct Authority (FSCA).

The FSCA oversees market conduct in the financial sector, including insurance. It aims to protect consumers, ensure economic stability, and promote fair treatment by financial institutions. The FSCA is likely to play a crucial role in developing and enforcing guidelines for AI in insurance.

The bottom line is that maintaining high ethical standards while leveraging AI technologies is vital for trust, compliance, and social responsibility.

As AI continues to transform within the insurance industry, the need for ethical standards can’t be overstated. It’ll still require ongoing attention from insurers, regulators, and stakeholders.

The Future of Car Insurance in South Africa

Propelled by AI innovations, car insurance in South Africa promises efficiency, customisation, and fairness.

Imagine we had a crystal ball and asked, “What does the future hold for AI-based car insurance in South Africa?”

The answer would probably be something like: 

  • Insurance clients will be able to enjoy fairer pricing and lower premiums for vehicle coverage.

  • Claims settlements will become quick and hassle-free, with AI algorithms assessing damages and processing claims in real-time, reducing fraud and administrative costs. 

  • Customer service will transform with 24/7 AI chatbots providing instant support, policy information, and even risk management advice, enhancing the overall customer experience.

Overall, the nature of the underlying risk will change as cars become smarter and self-driving (consider a world where 30% of the cars on the road are self-driving while 70% are human-operated vehicles).

As we already mentioned, insurers have their work cut out for them to ensure data privacy and security and manage the transition for employees whose roles may evolve due to automation.

While consumers stand to benefit greatly, there's still the issue of digital literacy and access. Another concern is the transparency and fairness of AI decisions, particularly in claims denials or premium adjustments.

Still, using AI for improved risk assessment, cost reduction, and enhanced customer service presents attractive advantages.

The End?

AI's ability to analyse expansive data for predictive analytics, streamline claims processing, and enhance customer interactions promises a future where insurance is more responsive to individual needs. 

Plus, it’ll be more accessible and fair.

The evolving landscape of insurtech shows the importance for all stakeholders—insurers, consumers, and regulatory bodies—to remain informed and adaptable. 

As tech advances, staying up-to-date with these changes and understanding their implications is crucial. 

This will ensure all involved parties can navigate any challenges that come with digital transformation and enable them to leverage the opportunities AI presents fully.

By working together, insurance providers, consumers, and regulators can navigate the challenges and seize artificial intelligence opportunities, steering South Africa towards a future where car insurance is more accessible, fair, and aligned with the modern consumer's needs.

And while much of this innovation is still a way’s away, there’s an insurance provider offering coverage solutions to suit modern drivers and their need.

Who? Pineapple, of course.

We leverage AI tech in our very capable self-service chatbot, which gives clients the freedom to get information or inquire about their policies anywhere and at any time. 

Insurance is all about eventualities, after all, and one never knows when they might need assistance. That’s why we’ve prioritised convenience in all of our communication.

For an insurance policy that puts all the power back in your hands, get a quick 90-second quote (see, even our quote process is condensed) for comprehensive car insurance and experience accessibility like never before!

Please Note: The information provided above is for informational purposes only; you should not construe any such information as legal or financial advice.

Pineapple (FSP 48650) is underwritten by Old Mutual Alternative Risk Transfer Insure Limited, a licensed Non-Life Insurer and authorised FSP. T&Cs apply.

Team Pineapple

Team Pineapple comprises our company’s top talents, who are dedicated to creating clear, high-quality content on essential vehicle insurance topics. This diverse group, including actuaries, accountants, data scientists, and insurance professionals across South Africa, collaborates to produce enlightening and empowering articles.

Each piece is thoroughly researched, factually accurate, and rigorously reviewed to ensure quality.

*We say they’re the finest because we want them to keep writing for us!

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Please Note: The information provided above is for informational purposes only; you should not construe any such information as legal or financial advice.

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