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 increased regulation.
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 South African Insurance Association (“SAIA”) has undertaken initiatives to address the poor perceptions. SAIA members, represent about 99% of the short-term insurance industry.
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.
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!