Read the fine print if you want anything out
Don’t take it for granted that you’re getting the best deal available
SHOP around. It’s a no-brainer, of course. But my guess is that most consumers don’t bother.
It’s often just too much effort, and suppliers count on that. It’s why we end up paying hundreds or thousands more for everything from groceries to armed response.
It’s a real pity, considering online shopping and social media have made it so much easier to get price information quickly. There’s really no excuse for paying more for the same product or service that is cheaper elsewhere.
Same goes for long-time customers being charged up to three times more than new customers for the same service. Don’t expect a supplier to take the time to alert you to the fact; it’s not in their interests.
It’s certainly in a customer’s interests, though. I’ve managed to save hundreds on my armed response contract as well as household and car insurance, by checking for errors on my policy (I’ve just been refunded several hundred rand) and refusing to accept historical escalations or automatic annual increases.
Such cost-saving exercises force consumers to dust off their contracts, actually read them, examine bank statements and ask the right questions.
If ever there was a case to be made for this, it’s the experience of Johannesburg airline manager and pilot Brad Dickson.
In two months, the 43-year-old not only secured a massive reduction in his house insurance premium, but a R65 000 refund from his insurer to boot.
It’s not often insurers refund clients; at least not unless they’re ordered to. So how did Dickson manage it?
In August, when he received an SMS marketing message, Dickson decided to test the value for money of his insurer, Outsurance.
“I pulled my policy documents and asked for a like-for-like quote for the building insurance.”
Auto & General said it would charge him R619 a month to cover the house based on exactly the same criteria as Outsurance. This compared to R1 944 he was paying via his bondholder, FNB.
“At this point alarm bells started to ring so I contacted Outsurance . . . not 15 minutes later, I received an e-mail confirming that the cover for my house would now cost me R553 per month!
“I’m stunned at how I can get a more than 70% decrease in my premium for exactly the same cover,” said Dickson, who then began to examine his relationship with the insurer. He said that when he used FNB for a bond on a property in 2011, the bank-appointed attorney had insisted that using Outsurance was a condition of the agreement.
However, the practice of “bundling”, where consumers are forced to enter into an agreement with a designated third party, was CHECK: Brad Dickson, below, secured a refund and a reduced premium from Outsurance after checking his contracts outlawed in 2007.
Had Dickson read the fine print, and the details on the declaration he’d signed, he’d have discovered that the bank, in fact, no longer made such demands.
“Outsurance must really want to keep my business,” said Dickson. “In 2007 they were insuring a building for R1.82-million and today they are insuring one for R4.1million, yet effectively charging me half of what I was paying in 2007. How do these people do business?” he said.
I asked Outsurance spokeswoman Natasha Kawulesar just that.
“We operate in a competitive market so, as with most insurers, we attempt to preserve the relationship we have with our existing clients,” she said.
“As such we have an aggressive retention strategy where our staff may reduce premiums. In certain instances, such as this matter, the premium reduction may be significant.”
Reducing a client’s premium did not mean he or she had previously been over-charged, Kawulesar said. “We did not want to lose [Dickson] as a client and when he advised us of the lower premium at a competitor we reduced his premium to keep his business. This is purely a business strategy.”
The exercise also alerted Dickson to the fact that because his premium was debited to his FNB home-loan agreement, he was charged interest on it.
It gets worse. After Dickson requested a copy of his home-loan agreement to scrutinise the fine print and compare it with his insurance schedule, he spotted an alarming discrepancy.
The insurance premium quoted in the declaration section of the home-loan agreement was half the amount he’d been paying since 2011.
Because the bond was new, he hadn’t noticed that his premium had doubled.
Said Dickson: “There is a clause in that agreement that states that the policy amount may change due to risk profile. However, given my track record with Outsurance and the similarity of the premiums [for insuring his old house and his new one], what on earth would justify a doubling of the premium?”
When questioned, Kawulesar told me the annual premium had increased from R9 369 (as stated on the FNB agreement) to R18 668 because the “projected amount on the declaration” did not take into account previous claims.
When Dickson’s property had been captured on the system, his claims “pulled through” onto his profile and resulted in the increased premium, she said.
“We should have contacted him and advised him of the increased premium but we erred and did not do so,” said Kawulesar.
“For that reason, the decision was made to refund the difference in premium, including interest, for the period of cover,” said Kawulesar.
But why are clients quoted premiums which turn out to be little more than thumbsucks? Isn’t this a sly attempt at luring clients with a low and potentially inaccurate premium?
Said Kawulesar: “There were certainly shortcomings on the declaration document and the processes have changed substantially since 2011.
“I can also confirm that the problem with the non-inclusion of claims was a system issue that was resolved in December 2011 so it really is unfortunate that Mr Dickson was affected.”
But, said Kawulesar, it had been agreed “a while back” that the premium be removed from the declaration and this development was “coincidentally rolling out imminently”.
There was a new document, she said, on which it was indicated that the premium (which doesn’t take previous claims into account) was just an estimation.
“We have requested further changes to this document to ensure that the estimated premium is not mistaken for a quote,” said Kawulesar.
She stressed that Dickson’s case was isolated and that there was “no indication whatsoever” that more clients had been affected.
I’ve heard that one before. Isolated or not, now is as good a time as any for consumers to take a look at the cost of their cover, crosscheck their documents — and then go shopping.
Tune in to Power 98.7’s Power Breakfast (DStv audio 889) at 8.50am tomorrow to hear more from Megan
We reduced his premium to keep his business. This is purely a business strategy