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Chasing cheap premiums not beneficial in the long run

Published

2006

Thu

16

Feb

 
Many choose to swap insurers in the New Year to escape premium increases, but staying put can have its advantages, especially when you start comparing cost and benefits. Steffen Gilbert, Chief Executive of Santam says one should first ensure you are correctly covered before you look at the costs. “An exceptionally low premium may mean your cover is not as comprehensive as it should be. Secondly, ensure that you are with a reputable company that will pay out should you have a claim and then only should you consider the peripheral ‘nice to have’ benefits like no claims discounts and money back benefits. “Consumers are sometimes enticed to change insurers by lower upfront costs, but get a shock when they claim, because the excess may be far higher or the aspect they may be claiming for is specifically excluded from the policy. “Should the policy not actually pay out when you need it to – no matter how attractive the benefits – means money down the drain.” He says it’s also good to have a longer term relationship with your insurer and that ‘cherry pickers’ who move from insurer to insurer to save a few rand may loose out in the longer term when its comes to claims, where you do not have loyalty and a history with one insurer. “If you are deemed to be a higher risk due to frequent claims – or frequent moves from insurer to insurer - you can expect your premiums to go up by anything from 3 to 15% on a yearly basis.” He says Santam has not had any general rate increases in the past two years, but, especially costs relating to motor insurance, has necessitated adjustments to motor premiums recently. Gilbert says several factors precipitated the increases, including: • High performance vehicles are more commonplace and are usually deemed a higher risk to insurers. Owners are more likely to speed and could therefore be more accident prone. • Foreign vehicle ownership has increased from 29.6% in 2004 to 39.3% in 2005. Parts for foreign imports are generally pricier, pushing up the costs of repairs substantially. • Advanced technology within cars such as safety and travel accessories, like air bags and GPS systems, add to the cost of the car and, in turn, cost to replace or repair. • Changing weather patterns, the higher incidence of hail and flooding, have a larger impact on the deterioration of vehicles. You may find living in a certain geographic area results in your premiums being higher than those elsewhere. “Insurers do differ, but if you’ve stayed with one for several years, have diligently paid your premiums with few or no claims, it means your premiums are less likely to increase and your claims will be processed faster given your good claims record”, says Gilbert.
 
Source: Lange Strategic Communications
 
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