When I moved house, I contacted my insurer, MiWay, to inform them that my address had changed and that my car would no longer be in a locked garage. They informed me that my monthly premium would be increased by nearly R200. After picking myself up from the floor, I told the consultant that I would have to shop around for other quotes. He asked me to hold. A few seconds later, he came back on the line and said he had looked at my customer profile. As someone who was such a valuable customer, they had reassessed the situation and would only increase my premium by R20.
I was ecstatic and thought my insurer was just fabulous. But then I started speaking to other people about their insurance experiences and a pattern started to emerge.
When Ros was notified by her insurer, Auto & General, that her premium on her household insurance would increase by a massive 21.7%, she sent them an email to question the figure. “They replied quickly, offering me a reduced quote that was an increase of just 4.2%, which obviously I accepted,” says Ros.
Gillian, a savvy consumer, has learnt to question her OUTsurance insurance premiums each year.
“Last year, they dropped the proposed premium by R11 000 for the year when I showed them competitor quotes. This year, all I had to do was say that I was querying the premium increase and they instantly kept it the same as last year instead of hiking it by 17% – a saving of R4 000 over the year.”
It is understandable that customers are wondering why they have to question escalations – surely these should already be priced according to your behaviour and you should already be getting the best deal possible.
The reality is that insurers are willing to make less money from good clients rather than lose them altogether.
As Dawie Buys, manager of insurance risks at the SA Insurance Association, explains, the short-term insurance industry is a hugely competitive business and insurers will do everything in their power to retain clients with good risk profiles because it is far more expensive to put new business on the books.
Buys says the difficult economic situation means consumers find themselves with less distributable income and the first thing they look at is where they can save on insurance premiums.
“It is therefore not abnormal for them to approach their insurer with the request to have the level of their premiums reviewed. Insurers then take a look at their circumstances and risk profile, and if it is a risk that they would like to retain, they will compromise by offering a lower premium at renewal, where it may be justified,” Buys explains.
Christelle Fourie, CEO of insurer MUA, says the renewal of the policy is a time when consumers typically shop around, so for the insurer it is a very fine balancing act to try to increase premiums to keep up with inflation, but at the same time retain profitable clients.
“Ultimately, we have to work hard to retain our good clients. You will find most insurers will be prepared to renegotiate renewal increases if a good client is not happy with the increase proposed.”
In response to a City Press query around the handling of escalations, Antoinette O’Callaghan of Auto & General Insurance says that factors such as general global financial dynamics, rising inflation, unpredictable weather conditions and the customer’s individual risk calculations are used to calculate premium increases.
In the case of Ros, who had household contents insured with Auto & General, O’Callaghan says the general increase for household items is 10% to mitigate the risk of the
how your premium will be affected at renewal before submitting smaller claims because, often, it is not worth claiming when considering the annual increase in premiums.
Not all insurance policies are created equal. Typically, if you pay less, you have less cover and it is therefore vital to do a proper comparison of cover. Check excesses, driver restrictions, policy cover and limits of extensions. If you get stuck, ask a broker for help.
Use your bonus or 13th cheque to pay your premiums annually rather than monthly. This could save you up to 15% of your premium.