Qantam Risk Assessment (Pty) Ltd
Qantam Risk Assessment was the first specialist insurance valuation company in South Africa (and, in fact, in the world) and was founded in 1987. We offer contents and structural valuations for insurance purposes to ensure that clients are correctly covered before a claim. Qantam was developed with a strong insurance background which puts us in the forefront of our industry and gives us an in depth understanding of gathering information that is pertinent to risk measurement.
Our Services Include:
· Residential, Commercial and Industrial Structures including risk assessment information (Pre- and Post-Loss)
· Household Contents Valuations (Pre- and Post- Loss) including art, antiques etc.
· Residential Security Appraisal (Risk Matrix)
· Office Contents Valuations
· Vehicle Inspections
· Monthly Update Service – valuations are kept up-to-date by recording new purchases and disposal of old items for a small monthly fee.
Statistics kept by Qantam since the year 2000 show that insofar as household contents are concerned 77.65% of policyholders were underinsured by an average of 61.21%. Over 75,000 homes were assessed and it is interesting to note that 22.35% of policyholders were overinsured.
It is rather sad to note that many of those that are overinsured are people who least can afford it. Some pensioners were found not to have adjusted their cover after moving into smaller homes or children having left and removed assets. But what happens? Insurers and brokers continue to apply the AIM (Automatic Inflation Margin) percentage year after year. Old folks are often paying double what they should be.
We all know what hardship can result from underinsurance but perhaps do not consider the unfortunate effects of overinsurance.
One has perhaps been inclined in the past to focus more on home contents than houses and buildings in general. Some of us make the assumption that the lending institution will have seen to it that buildings are adequately insured, forgetting that many lenders only want to see to it that there is sufficient security to cover the loan.
The underinsurance figures on buildings gives cause for concern and the consequences of underinsurance can be more devastating than for contents.
Statistics provided by Qantam show that of the homes that were valued for a total of R2.8billion 87.7% were underinsured by 50.21%. Of those 19.2% had underinsured by 100% (50% cover) and more. There were 32 cases where the underinsurance exceeded 200%. The worst case was a charitable institution insured for R2,500,000 and valued for replacement at R19,246,965!
The benefits to each sector of the industry can be summarised as follows:
Benefits to the Client
1. Correct cover means that the client obtains full recovery in the event of a claim and pays the correct premium. This eliminates the need for average being applied. The effect of underinsurance can be financially crippling.
2. An inventory eradicates the “proof of ownership” problem. Without an inventory this can be difficult since many people do not retain purchase invoices.
3. Less hassle at claim time.
In a case study: a Qantam client had fire damage and 80% of the contents of his home were destroyed. In the normal course of events compiling a list of items would have been a formidable and time consuming task, whilst proof of ownership would have been impossible. Because of the inventory, the adjuster, by deleting the rescued items, was able to assess the loss in less than 30 minutes and the client was paid over R500, 000 within 7 days. Prior to the Qantam valuation he had only been insured for R200, 000.
4. If the monthly update service is selected:
4.1 Automatic revision according to actual indices. Many insurers have an automatic increase that sometimes bears no relationship to the actual indices.
4.2 Regular contact to check for new acquisitions or disposal of assets. It is important to maintain an inventory, otherwise it is only a “snapshot”.
4.3 Assistance with formulation of claims. If requested Qantam can obtain quotes from replacement suppliers such as “Cats Digital”.
Benefits to the Broker
1. Increased client loyalty which means fewer lapses. The pre-loss assessment elicits information prior to the loss that is usually obtained by the loss adjuster after the claim. This results in quicker settlements which reflect kindly on the broker
2. Reduced PI exposure. With the promulgation of the FAIS act the duty of brokers to provide good advice will come under scrutiny more frequently. By appointing professionals in the field the broker is discharging the duty of ensuring correct cover.
3. Increased earnings. Higher premiums = higher commissions.
4. Adds a dimension to service. An increasing number of clients expect the service.
Benefits to the Insurer
1. Correct premiums for exposure = lower loss ratios. The majority of people want to be correctly insured. On average, premiums inevitably increase.
2. If one uses the statistics of both over- and underinsured clients then the average underinsurance is 34%. If one takes an average sum insured of R350, 000 then the insurer can expect the average sum insured to increase to R470, 000. At a premium rate of 1.5%pa. The monthly premium should increase by R150pm meaning that the survey fee of R550 (ex VAT) would be recovered within 4 months and after that the insurer begins to feel the benefit of the investment.
3. If the book is correctly valued the insurer gains a competitive edge. By reducing loss ratios the insurer is able to charge a lower rate to obtain the required premium.
4. Substantial reduction in fraudulent claims. This is probably the class of business that creates more opportunity for fraudulent claims than any other. Claimants are tempted to claim for items they never possessed. The existence of an inventory all but removes this temptation.
5. Lower claims handling cost. The pre-loss assessment renders the appointment of loss adjusters unnecessary in the majority of claims thus saving insurers these substantial fees.
6. Better client care image. Quick hassle-free settlements = happy clients.