‘Restructure insurance, don‘t abandon it‘

Business Correspondent in JOHANNESBURG

A LEADING short-term insurer has assured its clients that they will not have to foot the bill for fraudsters making false claims.

The undertaking was given this week by Santam, which said that each client‘s policy “will be reviewed on an individual basis prior to any premium increase, and that no general across-the-board premium increases will be imposed”.

The company was reacting to recent media statements suggesting that the high incidence of fraudulent claims currently being experienced by the industry could result in honest consumers having to bear the brunt of above-average premium increases.

Santam underwriting executive Christelle Fourie said that, “to the extent possible”, Santam clients would not be penalised for the behaviour of others.

“Our entire philosophy is based on the concept of risk management. This means that where clients understand the risks they face and take steps to reduce these risks, we will reward them in terms of lower increases on their premiums.

“As risk management is a personal lifestyle option, our preference is to apply increases to premiums on an individual basis rather than through the application of a blanket increase.

“And while the current economic downturn has resulted in an increase in the number of fraudulent claims, if our clients are honest, we will certainly not treat them like fraudsters.”

Fourie said that, in addition to fraud, the industry was also facing significant cost pressures as a result of the increase in the costs associated with vehicle insurance claims, the impact of such issues as changing weather patterns on building and contents insurance, the ongoing crime situation and high inflation.

Her advice to consumers is to review their risks on a regular basis, and to consult a broker for any assistance they may require in managing these risks.

“With motor vehicle insurance, for example, the huge increase in repair costs, among other factors, will inevitably result in premium increases. But consumers can influence rate increases by realising that the value of their vehicle depreciates over time and by adjusting the insurance value on the vehicle accordingly.

“Similarly, with non-vehicle insurance, consumers can take any number of risk improvement measures that will ensure that rate increases are contained within acceptable limits, provided the improvements are noted on their policies.”

Fourie suggested that where clients were feeling financial pressure as a result of current economic circumstances, they should consider restructuring or reducing their cover, rather than foregoing all insurance cover.

“A restructuring might, for example, involve a voluntary increase in excess in order to qualify for a substantial discount on various policy sections. Additionally, it might be appropriate to investigate reduced cover options on vehicles, such as third-party only cover or third-party fire and theft.

“Reduced cover is certainly better than no cover at all, as one does not want to be uninsured in the situation where, for example, you bump into someone else‘s luxury vehicle on the wet roads. Clients who are feeling financially constrained should certainly discuss all the options with their broker,” she said.

She noted that risk management was about offering clients a more trouble-free and rewarding life by enabling them to take positive actions that would minimise the risks they face.

“While premium increases may be inevitable, they are certainly not uncontrollable.” – I-Net Bridge