UNDERWRITING: INFORMATION THAT INSURERS REQUIRE FROM YOU UPFRONT

When you approach an insurance company for a quote, you will be required to provide the following:

Your insurance history and previous claims. This is vital information, which can be verified using industry data. Marius Neethling, Santam’s personal lines underwriting manager, says it is the frequency of claims, rather than the total amount paid out for claims, that raises a red flag for the insurance company. He says a person with a claims history showing a single claim of R400 000 will not be penalised as much as someone who has made 40 claims of R10 000 each. Neethling adds that while your insurance history is pivotal to the assessment process, it’s also important for you to enquire about the insurer’s claims-paying record, which is a strong indicator of how well it serves its clients in a time of need.

Credit record. The insurer will obtain your credit record from a credit bureau with your consent. Based on actuarial models that insurers use, the better your record, the lower your insurance risk.

The region in which you live. This is another vital piece of information. Price-rating structures are based on region, and different underwriting rules apply in different regions of the country. For example, Neethling says that, if you live in Johannesburg, you will fall into a higher risk bracket (and pay a higher premium) than if you live in a small country town such as Sutherland in the Karoo. Plus, you would probably be expected to have a tracking device fitted to your car, whereas in Sutherland you would not. Crime is not the only factor that is region-specific, though – your region may be more prone to floods or lightning, for example.

Specified regular driver. Neethling says all rating for vehicle policies is now done on a regular-driver basis. The regular driver is the person who drives the car most of the time. So if you have taken out insurance on your car, but you let your son drive the car most of the time, the policy must reflect that your son, who is probably a higher risk, is the regular driver.

Make and model. Some makes and models are targeted by thieves more than others, and insurers have access to these statistics. But this is not the main reason this information is required. The powerto-weight ratio of a car, the cost and availability of its parts, and its built-in security features are all factors when assessing risk on a vehicle policy.

Modifications. You must disclose any changes made to your vehicle that are not classed as factory standard and made after it was produced. This could include engine modifications, alloy wheels, spoiler or sunroof. Gender. Some insurers differentiate according to whether the regular driver is male or female, with women generally considered

lower risk than men.

Security arrangements. An alarm connected to a security company will lower your risk, and burglar bars and safety gates are a standard requirement for cover. Other security features, such as garden infra-red beams and electric fencing, will also lower your risk.

Use of home. Neethling says that under its personal lines cover, Santam covers only private use, although this can be extended, for an additional premium, to cover you if you have a small home industry or use your house as a B&B, provided you, as the insured, also live in the house, and three or fewer rooms are rented out to guests.

Structure of home. This information is needed for both home contents and buildings insurance policies. Brick and wooden structures are rated differently, while a thatched roof will bring with it a higher premium and additional conditions.

Whether the home is unoccupied for long periods. A holiday home that is unoccupied for much of the year, for example, will attract higher premiums.

Whether the house is on a slope. Neethling says that basic buildings cover provides you with limited subsidence and landslip cover, but if your house is on a slope, you will probably need comprehensive subsidence and landslip cover, in which case the insurer may need to know the age of the building. It may also ask for an engineer’s report.