The long and short of it is that in­sur­ance com­pa­nies want to make a profit and will not of­fer lower es­ca­la­tions or sig­nif­i­cant dis­counts on premi­ums un­less pushed to do so

CityPress - - Business - Your pre­mium es­ca­la­tion is cal­cu­lated). read How

cus­tomer be­ing un­der­in­sured, as the in­crease in the in­sured value will also ac­count for a por­tion of the over­all pre­mium in­crease that is al­lo­cated (

O’Cal­laghan says when a cus­tomer con­tacts them re­gard­ing a pre­mium in­crease, “we will do what is pos­si­ble to as­sist and re­tain the cus­tomer. This may range from ad­just­ing the cus­tomer’s cover based on the in­di­vid­ual’s spe­cific needs, which may have changed since in­cep­tion of the pol­icy, to re­view­ing the in­crease to de­ter­mine if a dis­count can be al­lo­cated.” In some cases, Auto & Gen­eral will make a busi­ness de­ci­sion “to in­sure cer­tain cus­tomers at a rate lower than what we would deem eco­nom­i­cal to in­sure the cus­tomer for the next year”.

So Ros re­ally ben­e­fited from the fact that she had a good track record. She had been in­sured by Auto & Gen­eral since 2008 and she did not claim against the home con­tents or por­ta­ble pos­ses­sion sec­tions of her pol­icy. “Based on her out­stand­ing cus­tomer pro­file, a de­ci­sion was made to in­sure her at a lower rate and a dis­count was al­lo­cated ac­cord­ingly.”

While Ros is un­der­stand­ably frus­trated that Auto & Gen­eral did not ini­tially put through a lower pre­mium in­crease, it high­lights the need for cus­tomers to re­main proac­tive.

In Gil­lian’s case, Ernst Gouws, CEO of OUT­surance, says that over time, a client’s pre­mium rat­ing could change.

“When we cal­cu­late a client’s ini­tial pre­mium at the time of tak­ing out cover with us, we use a very so­phis­ti­cated ac­tu­ar­ial model to pre­dict the client’s likely fu­ture ex­pe­ri­ence with us.

“Based on this, we set the client’s ini­tial pre­mium. Over time, we get to learn a lot more about the client’s ac­tual ex­pe­ri­ence with us, and we use this data – over time – to ad­just the client’s ini­tial pre­mium.”

Gouws ex­plains that some clients, there­fore, get an an­nual ad­just­ment that is in ex­cess of in­fla­tion, which re­flects a wors­ened pro­file, while oth­ers get a be­low-in­fla­tion in­crease. Some clients don’t get any in­fla­tion­ary ad­just­ment to their premi­ums, which im­plies a pre­mium re­duc­tion in real terms.

Due to the fact that Gil­lian had not claimed be­tween Septem­ber 2012 and June 2014, her pro­file was close to re­ceiv­ing no re­newal ad­just­ment, but still fell within the stan­dard 7% ad­just­ment bracket.

“When she called in to query her pre­mium, our re­ten­tion ad­viser did his best to re­tain her as a client. Our sys­tem al­lows our re­ten­tion ad­vis­ers a mea­sure of dis­cre­tionary dis­count, and it al­lowed him to waive the re­newal ad­just­ment and of­fer her roughly a 25% dis­count on her pre­mium.”

As Gil­lian had sub­se­quently sub­mit­ted two claims, when she called the sec­ond time she did not re­ceive any fur­ther pre­mium re­duc­tion, but the ad­viser was able to waive the re­newal ad­just­ment.

“We be­lieve we of­fer our long-stand­ing clients very good value for money. Yes, it some­times hap­pens that we are able to give a client some fur­ther dis­count when she queries her pre­mium or wants to can­cel, but this de­pends on the client’s pro­file with us.

“There are also many clients who call in be­cause they are un­happy with their premi­ums, or be­cause they were of­fered a lower pre­mium by a com­peti­tor, but to whom we can­not of­fer a bet­ter deal. Over time, a good pro­file with us does lead to lower premi­ums in real terms, with­out the client hav­ing to query her pre­mium,” says Gouws.

The long and short of it is that in­sur­ance com­pa­nies want to make a profit and will not be of­fer­ing sig­nif­i­cant dis­counts on premi­ums or lower es­ca­la­tions un­less pushed to do so. The good news is that it is a highly com­pet­i­tive in­dus­try that ben­e­fits in­di­vid­u­als with good risk pro­files – but you have to be proac­tive.

“We live in a world where the con­sumer is king and if you look af­ter your in­sur­ance claims record, you will be in a po­si­tion of power to suc­cess­fully ne­go­ti­ate in­creases with­out hav­ing to change in­sur­ers,” says Fourie.

Dif­fer­ent in­sur­ers of­fer dif­fer­ent rates for the same cover, so it is worth shop­ping around. As Buys ex­plains, in­sur­ers hire ac­tu­ar­ies who have de­vel­oped dif­fer­ent rat­ing fac­tors that in­flu­ence the dif­fer­ent el­e­ments.

“Im­per­fect pric­ing and dif­fer­ing strate­gies to an ex­tent also re­sult in pol­i­cy­hold­ers be­ing able to pur­chase in­sur­ance cheaper at another in­surer,” says Buys.

So, get proac­tive and check that you are get­ting the best deal from your in­surer.

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