The short-term insurance industry has, traditionally, been
misunderstood and perceived by many as a necessary evil.
Perceptions of poor market conduct and vanilla offerings
As a key element in a modern economy, insurance encourages
businesses to better manage their risks and it minimises the impact
of catastrophes. The paying of valid claims and investment by
insurers in the capital markets, stimulates the economy and
contributes to an efficient financial market. Businesses confidence
is improved by minimising the risk of significant liability related
to routine transactions. Insurance cover permits individuals to
recover quickly after unforeseen losses.
Many believe the industry is lethargic about managing its image.
The inactivity could however be due to other priorities such as
Direct insurers have cut out the broker to provide cover at more
competitive rates. They have however unwittingly increased the
perception that the traditional insurer charges "additional
fees". Complaints about unfair claim repudiations, misleading
policy wording, excessive premium increases and poor customer
service adds fuel to the fire.
Many perceptions have been created by the public due to lack of
knowledge and it is those perceptions that need to be managed.
Policyholders don't always understand the benefit and
importance of factors such as nominated drivers, car and home
alarms, or the need to update insured values.
More than half of the complaints to the ombudsman in 2011
related to motor claims. A major concern is the perception that
insurers are making sizeable profits in this line of business, at
the expense of the customer. The economic reality is that motor
insurance is expensive because it is the least profitable line of
business for many insurers because of rising repair costs and the
frequency and severity of accidents.
While the complaints are publicised, the impact of positive
initiatives and good claims service, is not given similar
prominence. The OUTsurance pointsmen man our problematic
intersections while the Direct Direct pothole brigade repaired over
50 000 potholes in and around Gauteng over a period of 18 months.
Etana have also done their part with their annual DAREdevil speedo
run to raise awareness for testicular cancer.
The SAIA initiatives
The South African Insurance Association ("SAIA") has
undertaken initiatives to address the poor perceptions. SAIA
members, represent about 99% of the short-term insurance
The re-launch of SAIA's code of conduct seeks to strengthen
self regulation and ensure consistency in behaviour amongst its
members in terms of market conduct, claims settlement, ethics,
communications, advertising and third party relationships.
Other specific initiatives include:
Information sessions with parliament and National Treasury
Theme events with opinion makers in the media
Targeted marketing in low income markets.
Raising the skill levels of call centre staff.
Interaction with municipalities to address issues such as
sustainability, climate change and community risk.
An agricultural insurance initiative to make insurance more
accessible and affordable.
7 Collaboration with the National Disaster Management Centre to
provide support with data collection and risk management.
Other industry initiatives
Customers often only experience good insurance service after a
claim, when they have experienced the value of their cover. The
adverse weather conditions that concluded the 2012 calendar year
was the ideal opportunity for the industry to capitalise, as all
eyes were focussed on how the Johannesburg and KwaZulu Natal
hailstorms, as well as the St Francis fire, would be managed. Many
insurers rose to the challenge and examples of fantastic claims
settlement experiences were plentiful.
Initiatives to improve market perceptions should be celebrated
and publicised. It's time to be Proudly Insurance!
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Directors & Officers Insurance (D&O) is a relatively new
branch of insurance in the United Arab Emirates (UAE) market.
Accordingly, issues such as allocation of costs have not yet been
considered by UAE or Dubai International Financial Centre (DIFC)
It is a fundamental principle of insurance law that the utmost good faith must be observed by each party. This rule was stated clearly by Lord Mansfield since 1766, when he said1that: "Insurance is a contract upon speculation..."
Subrogation is the insurance law term used to refer to an insurer's right, after having paid a claim and having indemnified the insured, to take the place of the insured to recover the insured's loss from the responsible third party.
The Short-term Insurance Act is exempt from the provisions of
the CPA for a period of 18 months until 1 October 2012. Those
insurance sector lows must be aligned with the consumer protection
measures in the CPA or the provisions of the CPA will apply to
The amended Policyholder Protection Rules promulgated under section 55(5) of the Short-term Insurance Act, 1998 and section 62(5) of the Long-term Insurance Act, 1998 published on 17 December 2010 come into operation on 1 January 2011.
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