Stick it to them one more time! Compulsory 3rd party insurance proposals

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First world problem?

Not a week after writing a blog on the proposed compulsory retirement savings, there’s another sector of the financial services market wanting to pick the pockets of beleaguered South Africans, this time the Short Term Insurance providers. In case you missed it: The Short Term Insurance providers are lobbying to extract even more of the man-on-the-street’s hard earning bucks with compulsory short term (vehicle) insurance (3rd party insurance). Sure, they have it in the USA, but is it really appropriate here, or do those ‘long suffering’ ST insurers, begging poverty, just have to suck it up? Pleading poverty when the greatest proportion of advertising space these days seems to be taken up by insurers is going to fall on deaf ears – or is it?

Sure, when an uninsured driver causes an accident, the insurer is lumped with fixing your car and not being able to offset it against the other party’s insurer. Making lofty statements about ‘if you can afford a car then you can afford insurance’ isn’t going to fly. Ask Sanral.

Of all the providers in the financial services industry, the Short Term Providers are probably the least popular, and this sort of publicity isn’t going help. One of the nasty results of high premiums, or premium increases that the average consumer considers unreasonable, is the ‘padding’ of claims – making this a vicious cycle.

Medical aid and Short Term insurance are the two areas in financial advisory where you see the most claims on an annual basis, (fortunately you only die once, and other claims like disability are also mercifully few and far between). A well-publicised, poor claims experience, tarnishes the whole industry. More than ever, it is important that a client understand exactly what they are and are not getting. Getting ‘apples for apples’ quotes from different providers is a hazardous and time-consuming exercise. Complacently sitting back and expecting the average person to read through pages of small print to try and decipher if they are getting the cover they expect, and still not understanding, is not on – but it seems to be the norm. As long as you can get the client to accept it, recording his voice or getting his signature, then that’s all that is needed. If Mrs Jones gets her one-of-a-kind Jenna Clifford, hand-crafted ring stolen and the insurer offers to replace it with an off the shelf special for a quarter of the price – fur is going to fly. I am not going to go into all the aspects of ST insurance that create problems, and what to look out for, you can look at this blog HERE if you want more
Even if the Department of Transport manages to get this implemented, then how on earth are they going to enforce compliance? After the eTolling fiasco, it sounds like they enjoy the taste of shoe leather. More road blocks and more fines – with the biggest offenders never paying anyway? I think we’re going to have to accept that our ‘comprehensive’ ST insurance premiums are going to be ‘subsidising’ the poorer sectors of the economy because those accidents can’t be counterclaimed from uninsured offenders. One of those sneaky ‘wealth taxes’.

Author Dawn Ridler

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