Discovery Insure has repaired 350,000 potholes in Johannesburg through its Pothole Patrol programme, run with the Johannesburg Roads Agency and Avis since May 2021. Chief executive Robert Attwell says the repairs have cut the insurer's pothole-related claims by 26%, which helped Discovery Insure reach R1 billion in normalised profit. Discovery pays for the repairs itself.

The idea came from Discovery chief executive Adrian Gore, who writes in his book The Four Principles that his friends kept complaining about potholes over their weekly coffee. "Pothole claims were soaring, costing our motor insurance business and the broader industry millions each year," he says.

Discovery estimated at launch that potholes cost Johannesburg R650 million a year in damage and lost economic activity, and South Africa about R2 billion. In 2021 it offered the mayor of Johannesburg to fund repairs and new repair technology at its own expense, because the city said it did not have the money. A small team studied why repaired potholes kept failing, and Discovery partnered with a road repair specialist. In its first four years, the programme used 11,800 tonnes of asphalt to fill 300,000 potholes, and Discovery estimates only 0.2% of its repairs have needed fixing again. The fewer claims mean lower costs, which Discovery says it passes back to clients through rewards and lower premiums.

"We have invested in the project substantially, but the net cost to us is far lower because better roads mean fewer accidents and, thus, fewer insurance claims," Gore says. Discovery has not said how much it has spent on the programme or exactly how much it has saved.

Daily Investor's Shaun Jacobs reported the new figures and pointed out the unusual part: the repairs also cut claims for Discovery's competitors, such as OUTsurance and Santam, which pay nothing towards them. Gore compares the programme to the broken windows theory used in New York to fight crime, arguing that fixing visible signs of decay restores public confidence and encourages wider investment. We covered the bank behind the same group when Discovery Bank turned its first full-year profit.

The lesson here is simple and widely useful. Discovery worked out that a public problem, broken roads, was driving a private cost, damage claims, and that fixing the cause was cheaper than paying the bills it created. It did that even though rival insurers get the same benefit for free, because the alternative was paying those claims forever while the city could not afford to fix the roads.

That logic applies well beyond insurance. Plenty of South African businesses carry costs created by failing public services: generators for power cuts, private security for crime, water tankers for broken pipes. Sometimes the cheapest option is to fix the problem at its source, ideally with the public body that owns it.

Johannesburg is short of money for infrastructure, which is the same pressure behind City Power's AI billing tender. The one thing missing from Discovery's story is the cost. Without that number, it is hard to judge how good the deal really is.

You might also like our piece on government considering scrapping the RAF fuel levy, Johannesburg's R517.8m solar microgrids, and Aura's emergency response network.

Get more SA tech and business news and subscribe to The Open Letter.