The announcement of a number of new players in the short term insurance space in South Africa, including Discovery and now Liberty, has highlighted the increasing complexity for consumers of how best to navigate the many options available when choosing an insurance provider.
According to Clint Harker Managing Director of Genesis Capital’s short term insurance subsidiary Gen-Assist Insurance Brokers, while consumers now have more choice than ever before, it is essential that they are aware of certain factors. “Consumers should look at all aspects of an insurance policy including who underwrites the risk. Often when consumers are asked who they are insured with, they are only able to name the broker concerned and have no idea who the insurer is.”
“It is also important for anyone who is looking to change their short term insurance provider to ensure that they are comparing apples with apples. If one only looks at the premium payable and not also the cover being offered, then they are potentially leaving themselves exposed to huge risk.”
He says many consumers don’t realise there are some major differences between short term insurance providers. “Insurers have very different business models and while one may offer attractive rates, the other may offer a far more comprehensive policy without subjecting the client to an array of potential restrictions and exclusions.
Harker says consumers should be aware that some direct insurers may also reduce the cost of a motor premium by insuring the vehicle for market not retail value. “In certain cases, restrictive cover may also be imposed to reduce the premium payable, however if the client is unaware of these limitations, it could easily result in a claim being repudiated..”
Harker adds that it is also important to note that direct insurers assume the role of player and referee, which can lead to a conflict of interest. “A good broker will always play the role of referee, keeping the insurer honest as well as ensuring that the client receives the best advice for their needs.”
“It is important to note that while new players may be entering the market, there is also much speculation about consolidation in the short term insurance space. For example, while the number of insurers has continued to increase, the number of uninsured vehicles on our roads has not decreased, meaning the pool of consumers is not increasing to accommodate these new players. This is one reason as to why it is especially important to ensure that you are dealing with an established and reputable insurer.
Harker says some of the key points consumers should bear in mind when choosing a short term insurance provider are:
What the insurer’s claims paying track record and repudiation rate is How many of the insurer’s claims get referred to the ST Insurance Ombudsman
Ask your broker what the key terms and conditions mean and what exclusions are included in the policy
Find out how independent the insurance broker is
“Price should not be the only factor when considering an insurance provider. Insurance brokers cannot know every price or product in the market and therefore cannot guarantee the lowest rates. However if you approach your broker with a better deal he will often try to match this,” concludes Harker.