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Personal Lines Insurance
Friday, August 1, 2008
Fraud won’t wash

There will be no general across-the-board premium increases on its short term insurance policies. That’s the message from Santam, which assures its clients that each policy will be reviewed on an individual basis prior to any policy adjustments.

Recently there have been several media statements suggesting that the high incidence of fraudulent claims, currently being experienced by the industry, could result in honest consumers having to bear the brunt of above-average premium increases. However, as Christelle Fourie, Head of Personal Lines Underwriting at Santam,  notes, “Clients will not be penalised for the behaviour of others, as far as is possible.
“Our entire philosophy at Santam is based on the concept of risk management. This means that where clients understand the risks they face and take steps to reduce them then we will reward clients in terms of lower increases on their premiums. As risk management is a personal lifestyle option, our preference is to apply increases to premiums on an individual basis rather than through the application of a blanket increase.
“And while the current economic downturn has resulted in an increase in the number of fraudulent claims, if our clients are honest, we will certainly not treat them like fraudsters,” she says.
Fourie notes that, in addition to fraud, the industry is currently facing significant cost pressures associated with vehicle insurance claims and the impact of such issues as changing weather patterns on building and contents insurance, the ongoing crime situation and high inflation.
Her advice to consumers is to review their risks on a regular basis, and to consult a broker for any assistance they may require in managing these risks.
“With motor vehicle insurance, for example, the huge increase in repair costs, amongst other factors, will inevitably result in premium increases. But consumers can influence rate increases by realising that the value of their vehicle depreciates over time and by adjusting the insurance value on the motor accordingly. Similarly, with non vehicle insurance, consumers can take any number of risk improvement measurements that will ensure that rate increases are contained within acceptable limits, provided the improvements are noted on their policies.”
Fourie suggests that where clients are feeling financial pressure as a result of the current economic circumstances, they should consider re-structuring or reducing their cover, rather than foregoing all insurance cover.
“A restructuring might, for example, involve a voluntary increase in the excesses applicable in order to qualify for a substantial discount on various policy sections. Additionally, it might be appropriate to investigate reduced cover options on vehicles, such as third-party only cover or third-party fire and theft. Reduced cover is certainly better than no cover at all, as one does not want to be uninsured in the situation where, for example, you bump into someone else’s luxury vehicle on the wet roads. Clients who are feeling financially constrained should certainly discuss all the options with their broker,” she says.
She notes that Santam’s focus on risk management is about offering clients a more trouble-free and rewarding life by enabling them to take positive actions that will minimise the risks that they face. “While premium increases may be inevitable, they are certainly not uncontrollable. By applying the principles of risk management, clients can significantly influence the rate of these increases. For our part, we will look at each policy individually to ensure a fair premium in each case,” she concludes.

Copyright © Insurance Times and Investments® Vol:21.7 1st August, 2008
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