Discovery Insure is introducing a range of new products

The company is enhancing the claims process, introducing new ways to improve driving ability and increasing cover in some cases, says Discovery Insure's chief executive Anton Ossip. The additional features would be available by the end of next month.

Launched in June 2011, Discovery Insure had insured more than 44,000 vehicles by June this year - making the company the fastest- growing insurer in SA with 10% share of new business. The insurer reported new business growth of 53% to R366m for the year to June.

Ossip said between 130 and 140 clients were signing up for the insurance cover each day.

The innovations being introduced included writing-off a car at lower levels of damage and a retail value booster which allows clients to receive 15% more than the retail value of their car following a total loss, either through a write-off or theft.

One of the main areas is focused on trying to improve driver behaviour and skills considering that the core of short-term insurance is paying motor vehicle claims.

Incentive to drive better

"Giving people incentives to drive better has a significant effect on reducing the number of motor vehicle accidents," claimed Ossip.

He said prior to the launch of Discovery Insure, short-term insurance had been about reacting to a claim, instead of preventing a claim and managing risk.

Clients on the driver behaviour programme, Vitality-drive, had one-third of the national fatality rate and about 60% the mortality rate of those on Discovery Life.

"We can see the difference in accident rates of our clients over time," Ossip said adding that the better they drive, the more they get back in fuel rewards.

"As average fuel rewards increase, it is hedged by the lower claims we get," he said.

Discovery Insure's key differentiator is the use of telematics - a wireless device in the client's vehicle that transmits data in real time to Discovery. The data is used to track the way the driver is driving.

"The increasing use of telematics is a worldwide trend, embraced by the large insurers in the US and UK," said Mr Ossip.

"Telematics is the way of the future in insurance offerings. Not to use it is missing out on the most important variable," he said.

Discovery Insure had a team of actuaries as well as an electrical and aeronautical engineer, responsible for analysing the data that is sent to it from the vehicles.

Source: Business Day via I-Net Bridge

Discovery Insure is introducing a range of new products and innovations to maintain its place as the fastest-growing insurer in SA.

Pinetown insurance broker raked R5 million in premiums from hundreds of clients

A Pinetown short-term insurance broker, who has allegedly raked in more than R5 million in premiums from hundreds of clients in the past three years, is under investigation by the police and the Financial Services Board (FSB).

It is alleged that his company is unregistered and that he is committing fraud and is not paying out claims.

The FSB has secured an interim order, in the Durban High Court, directing Pieter de Wett, of Model Insurance, which trades from Crompton Street, to stop acting as a broker, disable the company’s website and give the board details of his estimated 900 clients.

The company has been under investigation since September 2010 and, according to an internal police memorandum attached to court papers which came before Acting Judge Glenn Thatcher, in spite of collecting premiums “there is no evidence that he is paying the money to an insurance company”.

A Lieutenant-Colonel Mo-han said in an e-mail to the board that “it seems he is spending the money for his personal use”.

In just one complaint to the short-term insurance ombudsman, client Rouan Pillai said he had been trying for two years to claim R35 000 for his stolen car.

“All my calls are ignored. They swear at me telephonically,” he said, alleging that when he went to the office De Wett had become aggressive.

David Mbetse said he had insured his Mercedes-Benz for R300 000 in June. On July 1, after another vehicle crashed into his, he contacted Model Insurance and was told by a “Ria de Wet” that she would e-mail forms to him.

Four hours later he received a call from a rude “white gentleman” who said his claim would not be honoured “because I had not taken the car for inspection”.

The FSB, represented by advocate Vishalan Naidu, said in its court application that the first complaint about the company’s lack of a valid licence was received three years ago.

The complaint was referred to De Wett, who gave the assurance that Model Insurance had stopped conducting short-term insurance business.

FSB executive Jonathan Dixon said this was not true and in December the next year the board again wrote to him warning that unless he stopped, the matter would be referred to the police and National Prosecuting Authority.

The e-mailed response was: “Please note that we will be registered by Mei (sic) 2012.”

Not satisfied, the FSB referred the matter to the police for investigation. It was discovered that the company was already under investigation because of a complaint from financial services providers.

In spite of a press statement warning the public about the investigation, Model Insurance continued trading and reeling in clients. And, Dixon said, the complaints continued.

One client, Sabelo Khuzwayo, said: “There is only one lady working at reception – the call centre is not functional.”

Another, Aadil Malek, complained that the company had refused to pay out for his stolen vehicle.

He said after “two weeks of constant contact”, he had received a two-line e-mail “from the lady at the front desk, not management”, stating that due to negligence “they will not be paying me”.

Dixon said that in July the police applied for a subpoena to be served on a company called Netcash which would provide evidence of premiums received. The evidence was to be handed to Model Insurance.

“Our registrar then received a letter from Lieutenant-Colonel Mohan saying that, to the surprise of the SAPS, it had been established that the company had almost 900 clients, not 85 as was originally believed.”

In the letter, Mohan said between October 2010 and April this year, the company had received about R200 000 a month from Netcash – a total of about R5.2 million.

He suggested that the FSB seize files and computers and close the business before more unsuspecting people were defrauded.

Dixon said the court application was urgent because the company continued to dupe unsuspecting members of the public, exposing them to financial loss.

De Wett has until October 22 to file opposing papers.

Read more insurance news at http://www.car-insurance.org.za or subscribe to our twitter page

September 23 2013 at 11:18am 
By Tania Broughton

Santam, Mutual & Federal and Zurich SA - are struggling with a broken business model!

The three traditional insurers rely on insurance brokers for the bulk of their business. And every year, it becomes clearer that these big three - Santam, Mutual & Federal and Zurich SA - are struggling with a broken business model, at least in their core personal lines, motor and property books.

The insurers often give their "pen" to brokers, who are given the freedom to choose their own risks. As most brokers focus on the quantity and not the quality of business, the losses on these group schemes have often been high.

In the six months to June Zurich had the worst result, with an almost unheard of 9,6% underwriting loss, paying out in claims almost 110% of what it collected in premiums. It made underwriting losses in all its major lines of business, with its motor losses up almost 120% to R83,7m.

All three insurers have a reputation for paying claims diligently, but none more than Zurich, from its days as SA Eagle. Which means it pays claims even its peers would repudiate.

Mutual & Federal gives only limited information as it is now a wholly owned subsidiary of Old Mutual and is no longer listed. But it can't be a coincidence that as it was reporting a 2,7% underwriting loss for the six months to June 2013 there was a change of management, with Peter Todd handing the reins to Old Mutual insider Raimund Snyders.

It will take years for M&F to make its personal lines (retail) business consistently profitable. It will get easier victories in the less competitive African market. And in a vote of no confidence in its short-term subsidiary, Old Mutual will not be using the M&F brand as it builds short-term insurance operations in the rest of Africa. It will use the Old Mutual brand instead - not even a compromise brand such as Short Mutual.

Snyders will be spearheading the Old Mutual group's expansion of short-term insurance into Africa. "If we just think SA is the business, we are thinking small," says Snyders. He has some insight into the opportunities of Africa as he was previously head of African operations for the whole Old Mutual group. He says that he hopes to be selling motor and property insurance soon to 200m people in East Africa and 240m people in West Africa under the Old Mutual brand.

Back home he says that he is prepared to cancel lines of business in which the claims experience is too high, such as poor-quality books of motor business from second-tier brokers. Market share will be secondary to profit on his watch, he promises.

In the long term, M&F will benefit from its investment into its unusual direct business, iWyze. This is not a clone of direct insurers such as Outsurance, insuring Volvos and BMWs, but focuses primarily on the bottom end of the market. Old Mutual's mass market group schemes sales force is the most important source of leads. iWyze made a loss of R85m but it is getting some traction from the Old Mutual mass market sales team.

Santam is without question a far better-managed business than Zurich or M&F, and it has proved that a broker-based insurer can still be highly profitable. Santam CE Ian Kirk says that Santam would consider a 6% underwriting margin to be satisfactory, as this is the average return it achieves through the underwriting cycle. The insurer ended up with a 1,3% underwriting surplus, positive if only just. There was an underwriting loss in personal lines, which fell from a R120m profit to a R9m loss.

Yet when the leading direct insurer, Outsurance, reports its results next week, its underwriting margin is expected to be north of 18%. Santam finance director Hennie Nel says that the largest single contribution to the depressed margin was the losses from crops, which were affected by hail in the east and drought in the central and western regions. Crop insurance made a modest but respectable R34m surplus in the first half of 2012. A year later there was a R112m loss.

Santam has maintained its dominance through its successful underwriting managing agencies (UMAs), such as Stalker Hutchison Admiral in liability, Mirabilis in engineering and Emerald on corporate property.

But commercial and corporate business also suffered, with the underwriting surplus down about two-thirds to R119m. The liability book, for years a cash cow for Santam, has seen its surplus fall more than 30% to R67m. This is 10 times what Zurich made, while M&F has not disclosed this detail.

But there were bright spots for Santam: the engineering portfolio's surplus was up 25% to R59m in a period when the counterpart at Zurich fell into losses. Zurich has no plans to set up a direct business, says CE Edwyn O'Neill. It is hoping to increase business through alternative distribution such as UMAs.

Zurich is benefiting from its position as part of a large multinational, with corporate related premiums up 48% to R236m. But in its bread and butter business, the commercial sector, its premium increased just 2% to R1,3bn, while in the unprofitable personal lines its premium income was up 14% to R514m. Zurich's personal lines underwriting loss has not been disclosed.

Zurich might have a future in the corporate market, with its powerful parent, but looks doomed to keep writing the business no-one else wants. Snyders says it is important for the traditional insurers to continue to support the value proposition of buying insurance through brokers. "There is a difference between a low price and value for money," he says.

• Stephen Cranston | 12 September 2013 | FinancialMail

Another Petrol Strike Hit South Africa

Pretoria - Thousands of workers in the motor industry, who include petrol attendants, will embark on a strike on Monday, the National Union of Metalworkers of South Africa (Numsa) said.

“Regrettably, employers took a very irresponsible stance by pulling back from the engagements which were intended to avert the strike,” general secretary Irvin Jim said on Sunday.

Employer organisations, the Fuel Retailers’ Association and the Retail Motor Industry, have been given notice of the strike.

“Employers were unhappy with Numsa’s decision to issue a 48-hour notice to strike,” he said.

The strike would see thousands of petrol attendants, workers at components retailers, panelbeaters, car and spare parts dealers, fitment workshops, and dealerships down tools.

Numsa demanded a R30-an-hour pay increase across the board in all sectors by 2016 for workers earning more than R6 000, a night-shift allowance of 20 percent of the normal rate of pay, and an afternoon shift allowance of 15 percent.

Deputy secretary general Karl Cloete said the industry had about 300 000 workers, of whom 70 000 are Numsa members.

A petrol attendant earned R700 a week, he said.

Numsa also announced that striking workers at five of seven vehicle manufacturing plants would go back to work on Monday.

The strike saw production lines at major vehicle manufacturers – that included Toyota, BMW and Nissan – shut down and production halted during the three week strike.

However, workers at Toyota in Durban and BMW in Pretoria were unhappy with the offer, the union said.

Numsa said it had not been established yet whether workers at the two plants would also return to work on Monday as negotiations with them were still continuing.

Workers at Toyota had secured an adjustment last year, and now wanted more, said Jim.

At BMW, the employees, who had already embarked on a strike before the rest of the industry joined in, demanded that their shift allowance be increased.

“Numsa office bearers are working with our members at Toyota and BMW to accept the offer,” said Jim.

The deal included an 11.5 percent increase for this year and a 10 percent increase for next year and 2015. It also entails a R1 200 transport allowance a year, a 70 percent medical allowance and a R750 housing allowance.

Meanwhile, Numsa on Sunday stepped up its onslaught against ANC secretary general Gwede Mantashe, calling him a “factionalist” who is campaigning for its isolation.

Numsa was reacting to Mantashe’s remarks about its general secretary Irvin Jim, whom he described as a lone voice within labour federation Cosatu.

Jim and Mantashe have been trading harsh words after falling out over Cosatu’s suspension of its general secretary Zwelinzima Vavi.

Jim is one of Vavi’s vocal supporters in Cosatu.

He has repeatedly accused Mantashe of taking sides.

But the ANC leader dismissed this claim as public rants from a “howler”.

“The ANC secretary general has now shown his true factional colours when he defined the Numsa general secretary as a lone voice within Cosatu and ostensibly within Numsa,” Jim said at a press conference in Joburg on Sunday.

“We have repeatedly stated that once the Numsa constitutional structures have resolved on any matter, the Numsa general secretary becomes the champion of such decisions.”

Jim said Mantashe chose to campaign for his isolation “instead of engaging with the neoliberal National Development Plan which would be disastrous for the working class and poor if it becomes the foundation of the ANC’s election manifesto”.

Jim added: “We reject with the contempt it deserves the endeavour to isolate Numsa and its leadership.”

Mantashe could not be reached for comment on Sunday.

The Gauteng SACP defended Mantashe, saying it strongly condemned “unprincipled attacks” against the party and the ANC leaderships by Jim.

It challenged Jim to back up his claims that senior tripartite alliance leaders had plotted Vavi’s suspension, or to shut up.

“The PEC (provincial executive committee) strongly condemned these strange phenomena of making serious but unsubstantiated allegations against senior leaders of the movement,” the Gauteng SACP said.

Jim said Numsa members – including car dealership workers and petrol attendants – would embark on a national strike on Monday. Numsa is demanding a minimum wage of R6 000 a month or R30 an hour from July 1, 2016. It has organised strikes in Cape Town, Joburg and other areas throughout the week.

Last month, Cosatu announced that Vavi had been put on special leave pending the outcome of a disciplinary hearing relating to an affair he had with a junior Cosatu employee.

The employee was also placed on special leave.

Pretoria News

September 9 2013 at 07:41am 
By SAPA

Did you also get hit by the current Eishkom union strike???

We also got hit by the Eskom union strike, this is pathetic.

I had the time to take a walk in the neighborhood because our office has no power, so annoying, thinking to myself how could employees sabotage power stations and not get punished, suddenly i saw this guy and had to take a picture of him, it was a perfect for the moment.

I guess people in this country still need to learn how to negotiate their way and not play with people's life.

Watch out for fake car insurance

September 2 2013 at 09:05am 
By Wendy Knowler

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The long wait: This damaged Toyota RunX, belonging to Aarvarn Rajcoomar, was subsequently repaired by a panel beater, but Model Insurance failed to settle the bill.

Many people assume they will be “covered” if they have an accident in their car, or if the car is stolen or hijacked, when in reality they are violating a key provision of their policy which will see any claim being rejected by their insurance company.

Things like the car being unroadworthy, having failed to disclose a previous accident when taking out the policy, or not being the “regular driver” listed in the policy.

But here’s an even worse scenario – what if the insurance company you’re paying your premiums to every month is just pretending to be an insurance company, treating clients’ premiums as pure income, going through the motions of claim approval and then just not paying?

That’s the story of Model Insurance, based in Pinetown, KwaZulu-Natal. They have been in operation since at least 2011, offering low premiums and incentivising existing clients to refer new clients to them.

The company’s website claims: “We offer by far the lowest car, motorcycle and business insurance premiums, so why pay more when you can pay less, save money today and make a difference in your life. We can help.”

In fact Model Insurance, owned by Pieter de Wet, was never a bona fide insurance company. And the difference the firm made in the lives of those who claimed, and the lives of many panel beaters, was indeed big – but not in a good way, in most cases.

On hold: Liz de Gee of Bruce s Panel Shop in Pietermaritzburg, with the Nissan Tiida of Model Insurance client Sharon Prince. The company owes more than R40 000 for the repair.

Independent Newspapers

Complainants say the company didn’t quibble about or reject their claims – they made all the right noises, but then just failed to pay.

Model Insurance has never been registered with the Financial Services Board, as required by the FAIS Act, and is not underwritten by a registered insurance company, and has therefore been conducting business in contravention of the Short-Term Insurance Act.

Acting on complaints, the Financial Services Board referred the matter to the SAPS for investigation.

Police spokesman Colonel Jay Naicker says the company has or had 884 clients around the country, and their premiums, paid into Model Insurance’s bank account via debit order every month, ranged between R200 000 and R250 000.

“There is no indication that the money has been paid to an insurance company,” Naicker said.

Investigating officer Lieutenant-Colonel RR Mohan has taken six statements from victims, who have not had their claims settled – including several in KZN, one in Pretoria and one in Port Elizabeth – with another four pending.

“We are in discussion with prosecutors on how we can proceed with this matter,” Naicker said. “Any other victims out there, or those who can assist police in their investigation, are requested to contact Lieutenant-Colonel Mohan on 079 5000 074.”

I last spoke to De Wet, and his mother, Ria – an employee who “lodges claims” – as she put it, early last week in connection with the case of Sharon Prince. (See Case 2.)

That was before I learnt of the police investigation into his business, but I have not been able to reach him by phone since. The office number rings unanswered, and my e-mails have not been responded to.

De Wet admitted the company was not registered with the FSB, adding that it was going to be liquidated “in about five months”.

He appeared unrepentant about the failure to pay claims, saying he had a long list of payments to make, that people had to wait their turn, and he had a family to think about.

He blamed the firm’s woes on false reports and a vendetta against the company on the internet – there are several complaints about Model Insurance on consumer complaints website HelloPeter – saying he’d lost “over 700 policies” as a result.

In March 2012, the SA Motor Body Repairers Association sent an e-mail to members urging them not to release repaired vehicles authorised by Model Insurance until the company had made payment.

This was as a result of complaints from the association’s members about non payment of claims by the “insurance company”.

CASE 1: Aarvarn Rajcoomar

Newly graduated, Rajcoomar bought his car, a 2005 Toyota RunX, in April 2011 and took out a policy with Model Insurance on the recommendation of a colleague.

“I did my research on them but at that stage there were no complaints on the internet,” he says.”I was swayed by the fact that they were associated with the Automobile Association, giving their policyholders free AA membership and roadside assistance.”

But a few months later all policyholders were informed by Model Insurance that the company was no longer associated with the AA, and that they could use any towing service after an accident.

Rajcoomar’s accident happened in April last year. While travelling in the Ladysmith area, his car was side-swiped by an SUV, the unlicensed driver having lost control on a bend at high speed.

He submitted the claim to Model Insurance, the repair was authorised on May 8, with a promise to pay in 30 days, and carried out by Concorde Panel Beaters. Five months later, Model had still not made the payment.

“Hundreds of calls to the insurance company got me nowhere; they kept saying that they were working on it and that they would pay at the end of the month, but this never happened.”

Concorde refused to release the car until they were paid, and began talking of selling it to defray costs.

“In October 2012 my father went to Model Insurance’s dodgy looking basement office in Pinetown to meet Pieter de Wet on my behalf. He said they were having a hard time financially as panel beaters were not releasing clients’ vehicles until they paid. He said they had many clients waiting for their vehicles, and thus there was a shortage of funds, strongly implying that the panel beaters were in the wrong.”

Letters sent by Rajcoomar’s uncle, an attorney, to Model were ignored. Finally Rajcoomar borrowed R25 000 from a relative to pay Concorde and get his car back.

“Today no one from Model Insurance answers my calls or replies to my e-mails,” he says. “In fact, they didn’t even respond to my policy cancellation and have since debited my bank account several times, which I have reversed.

“I am now seriously in debt, which is going to take me years to recover from.”

CASE 2: Sharon Prince

Sharon Prince, who’s from Durban but is working as a trainee supermarket manager in Pietermaritzburg, got her first car, a Nissan Tiida, in 2011.

She took out a premium with Model Insurance based on their premiums being low and a friend having recommended them, and began paying about R450 a month.

Last February the car was badly damaged in an accident. Prince contacted her insurer, submitted the relevant paperwork and the claim was approved.

The car had been towed to Bruce’s Panel Shop in Pietermaritzburg and on March 9 Model Insurance wrote to the panel shop authorising R45 000 worth of repairs.

Model was to pay Bruce’s Panel Shop R41 750, and Prince, as the policyholder, the excess of R3 250.

By early April the car was repaired, and Prince paid that excess amount. But Model Insurance just never paid.

“They never said they wouldn’t. They kept saying they would… next week, next month… for 16 month now!” Prince says.

As Liz de Gee of Bruce’s Panel Shop had been warned about Model Insurance by the SA Motor Body Repairers Association, she wasn’t prepared to release the car without getting payment first.

“We feel desperately sorry for Sharon, and I have never given up trying to get the money out of the De Wets, we can’t afford not to be paid for the car,” she said.

Prince had to walk to work in the dark and cold of winter, and finally bought another car, having been unable to get a personal loan to pay the R42 000 she owed the panel beaters.

That car is costing her R3 500 in repayments, which has put paid to her plan to buy a flat.

Pieter de Wet appeared unmoved by her story when I confronted him with it last week.

He undertook to “sort it out”, then contacted De Gee and offered to pay R20 000 on October 5, and the balance on November 5.

She refused, given that all the De Wets’ promises to pay since last April have come to naught, not a single cent has been paid, and now there’s talk of liquidation.

She demanded a payment of the full amount immediately.

De Wet, however, claimed the moral high ground for making an offer which was rejected.

WHAT TO DO

A red flag number one when considering car insurance: a very low premium. Check out the company’s credentials first, starting with FSB registration.

Then go on to the Ombudman for Short-Term Insurance’s website and look at claims statistics.

The Ombud’s office this year revealed how the 51 competing insurers dealt with their claims in the preceding year. Their claims statistics were laid bare in the Ombud’s 2012 annual report, including the number of repudiated claims which the office overturned in favour of the consumer, for each company. To see all the stats, go to www.osti.co.za and click on Annual Reports, 2012.

Before committing to a car insurance policy, read the small print, paying particular attention to the excess amount and the exclusions.

-The Star

Gang makes millions from insurance scam

Rome - A mafia clan in southern Italy staged hundreds of fake car crashes every year to get millions of euros in insurance payouts to buy drugs and weapons, police said on Friday.

The insurance fraud was just one of the charges against 70 people sought for arrest in dawn raids by police on Friday in the Calabrian city of Lamezia Terme, near the "toe" of Italy.

"The insurance scam permitted the boss to manage his clan, to buy guns and drugs, and to pay his men," said Rodolfo Ruperti, head of the police squad that carried out the investigation.

The mob had local insurers, doctors, lawyers and auto body repairers on the payroll to pull off the fraud which earned the gang well over a €1m a year, Ruperti said. 

Police seized assets worth €1.2m

The defrauded insurer was a local branch of the Zurich Insurance Group, which operated independently, under licence from the head office in Switzerland.

"Zurich does not comment on ongoing investigations and legal proceedings," the Swiss group said.

The insurance hoax was just one of the crimes the mafia gang is suspected of. 

Police said mafia boss Giuseppe Giampa, 32, extorted protection money from local businesses and sold the clan's votes to the highest bidder in a 2010 mayoral vote.

Prison guards

The investigation had a breakthrough when Giampa turned informant, much more unusual in the brutal and closed Calabrian mafia, the 'Ndrangheta, than in Sicily or Naples. 

Investigators would not say why he chose to give evidence.

In Rome, a Calabrian senator in Silvio Berlusconi's centre-right People of Freedom party is being investigated for suspected vote buying as part of the investigation, police said.

Another PDL politician, who is deputy chairman of the local airport management company, has been arrested, along with prison guards suspected of being on the boss's payroll.

Finance police arrested several local businessmen, including a fireworks manufacturer suspected of providing explosives to the gang.

Giampa is suspected of ordering about 20 murders in a mob war for control of the city between 2005 and 2011.

Among those arrested on Friday were hitmen thought to be behind 11 killings, Ruperti said.

Source: Reuters