Cheap car insurance? A cheap monthly premium is not the only consideration to keep in mind!

We all want cheaper insurance. Though it is a necessity, most people tend to view their monthly premium as a grudge payment. Insurance companies across the board use the lure of cheaper premiums very effectively in marketing campaigns; in certain cases even offering to pay out an agreed sum of money should they not be able to provide you with a cheaper quote... Read more here

29 Killed in Mpumalanga Bus-Truck Crash

Johannesburg - A bus collision late on Monday killed 29 people and severely injured eight others, on a road notorious for deadly accidents, a provincial government spokesperson said.

"The number is now 29," said Mpumalanga safety department spokesperson Joseph Mabuza, updating an earlier tally of 26 dead.

The bus collided with a truck near Kwaggafontein, 100km east of Pretoria.

Three of the 11 injured had died in hospital, while eight others were still critical and another 12 slightly hurt.

The bus was travelling from Pretoria when it collided with a truck which had swerved out of its lane, said Mabuza.

"The truck driver was trying to avoid a stationary vehicle and collided with the oncoming bus," he told AFP.

"We are not sure if the truck driver and the bus driver survived the accident," he added.

The injured were taken to hospital in nearby KwaMhlangu.

The bus company's name was not immediately available.

Notorious road

Known as the Moloto Road for one of the towns along its way, the route is notorious for deadly collisions.

Around 50 000 people commute to work in Pretoria daily along the narrow and potholed route, using 635 buses.

Transport vehicles using the road are often overloaded and unroadworthy while drivers are prone to speeding.

Last month 18 people were injured in a collision on the route, while news reports about deadly accidents are frequent.

Last year religious leaders held a prayer service for the safety of the road. A radio station also dedicated a day to profile its dangers during which a provincial minister committed to improve conditions.

In September, 27 people died when a heavy-duty truck crashed into traffic near Durban, while 24 were killed when a double-decker bus crashed into a mountainous pass near Cape Town in March.

AFP.

Some Short Term Insurance Companies Have Dropped Third Party Liability Cover

A couple of short term insurance companies have removed third-party liability cover from their policies without informing the insured parties.

Third party liability is also known as passenger liability. It covers you if you were negligent as the insured driver and caused an accident in which injury or death resulted in others involved in the accident.

The decision to drop third party liability stems from changes in the Road Accident Fund (RAF).

In the past, insured parties merely claimed the difference between the amount the Road Accident Fund covered and the total cost of the damages from their insurers under the third party liability clause, but an amendment in the Road Accident Fund Act of 2008 has abolished the victim's common-law right to sue the responsible person for damages or losses not covered by the RAF. 

You can only claim back from the Road Accident Fund.

The only thing you can do to recoup losses after an RAF claim is to claim for disability or loss of income insurance if you have such policies in place. You cannot even sue the driver or owner of a taxi or bus that was not roadworthy and caused an accident.

Some insurers claim that they have done away with the third party liability cover as it is no longer an insurable risk, due to the fact that their policyholders cannot be sued for damages anymore. But other insurers still think that this cover is necessary.

Why was the Road Accident Fund Act of 2008 Changed?

The act was changed and the common-law right to sue abolished as many motorists are uninsured. Therefore if a successful claimed was levelled against them, they would be unable to pay in any event.

The removal of this basic right was originally disputed in court in 2010 by the Law Society of South Africa (LSSA). Their challenge, however, was unsuccessful. One of the lawyers involved in the case was Jacqui Sohn. She commented that most people are still unaware that they are left exposed to financial risk due to the changes in the Act.

The LSSA also challenged two other changes to the Act: the limit the fund pays out for loss of income, or for a dependant's loss of support, and the regulations prescribing the amount one can claim for medical costs.

The LSSA was successful on one count only: the prescribed tariffs were found to be unconstitutional. The Act has been changed again to remove all tariff limits.

Which Insurers Dropped Third Party Liability and Which Ones Kept It?

The list of major insurers that dropped the third party liability clause include but is not limited to:

·        Hollard;

·        Outsurance;

·        DialDirect; and

·        All other Telesure underwriters.

Hollard's personal lines policies have excluded the cover since 2008, but none of their policyholders were informed about this in writing. The Telesure Group, including Dial Direct, is currently in the process of informing all of their policyholders about the changes.

The list of major insurers that still kept the third party liability clause include but is not limited to:

·        Mutual& Federal;

·        Santam; and

·        Zurich.

Boni Zondani, specialist underwriter at Santam, commented that Santam's cover is still relevant in case the RAF does not have the funds to settle the claims, or if one of their policyholders drive outside of South Africa (the RAF applies to incidents on South African roads only.)

Mutual & Federal and Zurich policies also allow for incidents in some neighbouring countries.

Drive Safe and Save Money!

Do you consider yourself a good driver? You probably do, especially if you have a driving record free of accidents or traffic violations. But the fact is, no matter how good of a driver you are, you are not the only one on the road. Have a look around on your next drive. Aggression and impatience dominate on the South African roads, especially during peak traffic hours.

Arrive Alive offers the following chilling statistics:

·        Over 700 000 accidents occur on South African roads each year;

·        Of these accidents, 36 000 are serious and / or fatal;

·        12 000 fatalities occur annually as a result of road accidents in South Africa;

·        Annually, the total cost of road accidents to the South African economy is approximately R36 billion.

In light of the above statistics, it is time to start thinking and acting proactively before you become part of them. Of course, one should always start with the small things like buckling your seatbelt, driving according to the speed limit and stopping for stop signs. Statistics compiled by the Road Traffic Management Corporation show that 90% of all fatal accidents are caused by one or more driver committing a traffic violation.

So what can you do to further increase your chances of safety on the roads? A viable option is to take an Advanced Driving Course. There are many companies that offer these courses, such as:

·        The Killarney Advanced Driving Training Centre;

·        Mercedes-Benz AMG Dynamic Driving;

·        Adrenaline Driving Academy; and

·        Master Drive Defensive Driver Training.

These courses teach you much more than how to drive on a racetrack. They give you the confidence and ability to avoid unexpected incidents on the road. These courses often start out by teaching you how to control skids and demonstrate various accident avoidance techniques.

Your driving skills will also be enhanced by the high-speed driving part of the course. Instructors demonstrate the various techniques of cornering, braking, steering, acceleration and balance control and allow you to practice it for yourself. At the end of the course you will typically receive a certificate of attendance.

These courses allow you to have confidence, satisfaction and driving ability of a professional. Your life and the lives of your children or loved ones may very well be saved if you know how to handle tricky situations on the road.

So how could you maximise the benefits of being an advanced driver to save you money?

The first and most obvious point is that your claims for vehicle damage will decrease. Therefore, you stand a better chance of receiving money from your insurer as per the “cash back” policies many insurers offer. You will also save in excess costs this way.

In addition, many insurers, like Platinum Life, will offer a decrease on your monthly policy fees as your risks of dying in an accident drastically decrease. In fact, Platinum Life is so convinced of the efficacy of these Advanced Driving Courses that the randomly pick members every year to attend a course for free. They also offer all of their existing members a 10% discount on the course fees if they elect to go for the course themselves.

The course that Platinum Life supports is the Mercedes-Benz Dynamic Driving Course which, in addition to the above mentioned practical lessons, also offers a theoretical presentation that covers the following points:

·        Driver awareness and attitude;

·        The various forces acting on a vehicle;

·        The causes of skids and how to control them;

·        Different seating positions and steering techniques; and

·        Mercedes-Benz safety features.

The practical lessons are demonstrated using the powerful Mercedes-Benz C63 AMG, but the concepts taught can be applied to any other passenger vehicle.

Be proactive. Never take your life and the lives of those whom you love lightly. You are in a position to protect them, as well as making a change on South African roads.

What helps OUTsurance grow? Scientific underwriting!

If anyone were dropped off blindfolded at OUTsurance's offices, they could mistake them for a campus of the local university: it has 2,200 people, mostly under 25, playing action cricket and volleyball or else staring studiously at their PCs.

OUTsurance's campus in Centurion has none of the usual trappings of a head office, few people dress in shirts with buttons, let alone doormen in top hats, which are a feature of its sister company, Discovery.

But these are not idle students: there are 100 different jobs being done, often highly specialised ones such as handling building claims.

Chief executive Willem Roos fits right in with this relaxed, yet high-performance culture. He put on a shirt with buttons and his least-torn pair of jeans for the FM interview but otherwise is indistinguishable from anyone else.

It doesn't matter to him how staff are dressed, just how they perform. "A key part of the culture of the organisation is that everybody is on a pay-for-performance structure.

Actuaries measure staff

At least three OUTsurance actuaries spend their time developing tools to measure each employee's contribution accurately.

"In the call centre, we have a complex measure that decides who is allocated the call; it is not, as in most call centres, the longest idle operator. I can't go into detail but the system is designed to maximise productivity. And there are at least 10 measures to assess employee performance: the key one in the call centre is premium income generated."

OUTsurance proves the adage that the character of the organisation comes from the top. Roos is a publicity-shy actuary who likes to keep the business simple. There is complexity, but it is behind the scenes in the scientific underwriting which determines how premiums are calculated. Roos seems to want to measure almost everything. During his interview he constantly uses phrases such as "clean data" and "disciplined statistical analysis".

"With the right information, there is no need to red-line any vehicles or clients. There are no bad risks, just bad premiums," he says.

Scientific underwriting wasn't invented by OUTsurance: it is used by large direct insurers abroad such as Geico and Progressive in the US and Direct Line in the UK. Under Roos, OUTsurance has implemented a scientific approach with discipline.

OUTsurance has a single brand, which it uses in personal lines (individual), business (commercial) and life operations. Unlike competitors such as Telesure, OUTsurance does not hire out its licence to retailers or cellphone companies.

Making widgets

"We are making widgets here; I prefer to focus on doing just one thing," says Roos

The business contrasts noticeably with its largest competitor, Telesure, which uses brands such as Auto & General (A&G), Budget, Dial Direct and First for Women, and which manages insurance branded by Woolworths and the AA.

After 15 years in the business, OUTsurance has become the second-largest personal lines insurer in SA with premium income of R5bn, and a further R600m going into the commercial OUTsurance Business book. Only Santam is larger; OUTsurance has left insurers such as Mutual & Federal, Zurich and even Hollard in the dust.

OUTsurance Group has 1,35m policyholders and even after taking its share of the losses from last year's hailstorms, still made R1,1bn after tax. Roos says the beauty of direct insurance is that once it has critical mass, advertising costs are lower than the commissions paid out. The advertising cost is estimated at R400m/year, making it the largest advertiser in the financial services sector and the largest overall after a few warhorses such as Unilever.

"We need to be top of mind when a client wants to buy a car," says Roos.

Dabbling with brokers

OUTsurance even dabbled in distributing through brokers in its first six months - the OUTbonus attracted interest from intermediaries - but has since not sold any policies through brokers.

OUTsurance caught the public imagination with its catchy slogan, "You always get something out". Instead of a no-claims bonus in the form of a reduced premium, after every three years OUTsurance pays out 10% of your premiums over this period in the OUTbonus if you haven't claimed in that time. It has paid out R1,74bn in cash to date, dishing out R328m in the year to June alone.

Roos says it is lucrative for direct insurers to increase the length of policies as their main costs are incurred upfront (unlike a broker-based insurer who will pay 15% of the premium in commission every month).

"We chose three years for the OUTbonus period as we estimated that without this incentive our clients would stay with us for two years on average."

The OUTbonus is undoubtedly the best-known loyalty bonus in SA, and OUTsurance has extended the concept into the life business, in which all premiums are paid back after 15 years. Unfortunately, this isn't such a good deal: it is optional and 30% of the premium is then allocated to the OUTbonus. That premium could be invested in a money market fund and make a similar return.

Pay clients to find cheaper insurance?

OUTsurance also promises that it will give R400 to anyone finding a cheaper premium elsewhere. Though "cheap" is not part of the OUTsurance brand image, it does aim to offer value for money.

OUTsurance is respected as a brand. Its unremarkable though workmanlike advertising puts a message of competence across, but without the humour and warmth of some of the Dial Direct and MiWay campaigns.

OUTsurance has strong support from its internal customer satisfaction rating of 89,1%, but the independent hellopeter website indicates that market leader complacency has crept in. Its compliments to complaints ratio is 41%, with 1,500 compliments and 2100 complaints over the past 12 months. This is below the average of all insurers and way below the 81% achieved by MiWay and 70% by Dial Direct.

OUTsurance had a remarkably short journey to break even: competition remained limited and in 2000, with 20,000 clients, it was in the black. By contrast, its Australian business, Youi, broke even only after it had gained 300,000 clients.

OUTsurance has remained true to the direct model with one exception: it has employed a team of 100 direct sales executives in OUTsurance Business for commercial clients. In an advertisement on Gumtree, OUTsurance is clearly looking for hard sellers - it requires these executives to have at least two years of cold calling experience.

Commercial operations need specialists

Roos says the executives are employed by OUTsurance and are similar to tied agents in long-term insurance. "The reality is that a lot of commercial business such as restaurant chains and shops cannot be done over the phone: clients need an adviser on the spot."

But he says this is not the thin end of the wedge - OUTsurance advisers will be seen at the local golf club but they will not be offering risk management to Anglo American or Sasol

OUTsurance has done a good job of repairing the reputation of direct insurers, despite its low scores on Hellopeter. Previously, direct insurers seemed to go out of their way not to pay claims. The short term insurance ombudsman shows that many direct insurers still behave badly. Out of 1,000 claims, Dial Direct generated nine, King Price 11, RMB Structured 25 and AIG 30.

OUTsurance has two per 1,000, in line with Santam. Roos says OUTsurance has a firm policy of paying all valid claims - and the prospect of losing the OUTbonus deters many from making frivolous claims.

OUTsurance Life has been in a gradual build-up phase but it could gain traction from its controversial, but innovative plan to offer all premiums back after 15 years.

It remains a minnow with premium income of R163m, barely a quarter of the income at OUTsurance Business.

There is no doubt that OUTsurance has been a game-changer, proving the old adage that "insurance is sold and not bought" to be wrong. Whether it can remain as entrepreneurial as a market leader is the big challenge for the next five years.

Source: Financial Mail via I-Net Bridge

SA insurers 'need to understand risks in rest of Africa

Professional services firm EY has said that one of the risks faced by SA insurers expanding to the rest of the continent was a lack of detailed knowledge about the insurance environment in various African countries.

A lack of knowledge may result in South African companies delivering smaller returns from investments made.

Trevor Rorbye, a director at EY advisory services said in an interview that insurers needed to spend time and effort in understanding African markets and then price for the risk properly.

Old Mutual has set aside R5bn over a three- to five-year period for expansion in Africa, Liberty wants to spend hundreds of millions of rand in West Africa on an acquisition and has deployed a senior executive to be stationed in Nigeria to bed down an acquisition. MMI has set aside R500m for African expansion. Sanlam has hundreds of millions of rand to build up scale in its businesses in Africa and has already spent billions of rand expanding to fast-growing Asia.

Rorbye said some SA insurers had ideas about exporting the insurance solutions offered in SA to countries such as Nigeria.

Markets are different

However, in Nigeria people did not, for example, put as much value on funeral products as people did in SA. Funerals are cheaper in some African countries than they are in SA. The other challenge was that clients paid insurance premiums to brokers and some of the brokers took time to deliver the cash to insurers.

"The challenges that we see is distribution. In Nigeria the brokers have so much power. You pay premiums to the broker and brokers can sit with premiums for up to a year."

This introduced a risk of the insurer rejecting the claim or making a delayed payment. A delay in paying claims risked tarnishing the brand of insurers.

Rorbye said SA insurers, save for Sanlam, had a bigger focus on Africa and yet the future growth was expected to come from Asia and South America.

"So while I do not think it is entirely wrong for the South African insurers to go after the rest of Africa, there is a very big market in Asia and South America that they could potentially go after as well," he said.

The middle class in the Asia Pacific is expected to top 1.7bn people by 2020, accounting for about 54% of the global middle class. Central and South America is expected to have a middle-class population of about 251m people, accounting for about 8% in 2020 and sub-Saharan Africa is forecast to have about 57m middle-class people, making up 2% of the global number.

Source: Business Day via I-Net Bridge

Read more at car-insurance.org.za

How to save big bucks on your car insurance policy

We bring you several tips to help you getting the best insurance at the lowest cost.

1. Compare quotes online.

The internet provides a great platform for comparing quotes online, there are several insurance comparison sites available for the South African market.

2. Insure your vehicle for the correct value:  

Drivers of older vehicles must ensure that they are not over-insuring their cars. Not all insurers take into account the vehicles depreciated value so make sure your vehicle is insured for the correct value.

3. Update your home contents policy:  

When it comes to home contents insurance, opportunities to reduce coverage could lie in carefully and regularly updating household inventories.

Review your household inventory every six months and adjust the total insured sum accordingly.

When you calculate the insured amount of your home contents, make sure you are using replacement values and not market values.

Remove old and discarded items that no longer need to be insured from your inventory list. Why should you pay for cover on a computer that stopped working in 2011? 

Similarly, the costs of some appliances and gadgets have come down in price so you really shouldn’t be paying to insure an item that was more expensive when it first hit the market than it is nowadays.

4. Don’t duplicate coverage:  If your short-term insurance company offers free roadside assistance, you needn’t opt for the same benefit from your medical aid provider, and if your cellphone is insured under your home contents, you shouldn’t be paying for separate cellphone cover.

5. Increase your security:  Your short-term insurance premium is calculated based on your risk profile.  Your risk profile is based on a number of things such as where you live, the type of car you drive, and the security interventions you have in place, amongst others.

Burglaries, robberies, hi-jackings and petty theft are also on the up so insuring your valuables has become a necessity. Aside from the risk of having your car or any other possessions stolen, there is the possibility that something else could go wrong, such as a burst geyser or even a fire.

You could reduce your car insurance premium if you’ve fitted your car with additional safety features such as a tracking device or an alarm, for example.

You could receive a reduction on your home insurance premium if you’ve invested in new alarm system for your home or if you’ve moved to a safer neighbourhood.

6. Don’t claim unnecessarily:  Keep your insurance for real catastrophes which result in unexpected large losses and avoid claiming for small events that you could cover from your own pocket. When you claim for every little scratch, your insurance provider will raise your premium to reflect the higher risk you pose.

7. Don't be hasty when it comes to choosing your excess.

You need to make sure you balance the cost of a policy and the level of excess it will require you to pay in the event of a claim.

A relatively 'cheap' policy could mean a large excess and a more expensive policy, although it may demand lower excess, might not be worthwhile.

Ideally, you want to pay the lowest excess you can in the event of a claim. However, opting for the lowest excess might make your premium too expensive for you. Best practice is to find a balance where you’re paying a reasonable premium and your excess is not too high that you won’t be able to cover that amount should you need to make a claim.

Visit: http://www.car-insurance.org.za to compare quotes online