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Financial Services
Thursday, February 1, 2007
Claims pointers

The majority of insurance related complaints arise where brokers have failed to inform or correctly advise their clients, according to Santam.

It says that many of its most frequently received complaints can easily be avoided by better communication from insurance brokers.
According to statistics, 7% of all complaints received by Santam relate to delayed payout for claims.
Steffen Gilbert, Chief Executive at Santam says, “As we know, the claiming process can sometimes result in delays. But it is the broker’s job to act as the go between, submitting the insurance claim and keeping the client informed along the way as to its progress.
“By making a quick courtesy call every few days, delay-related complaints are easily avoided. This reinforces the necessity of using a qualified, efficient broker – to take the hassle out of claiming.”
Mr Gilbert says that 5% of complaints relate to only a portion of a claim being paid, rather than the full amount. This is inevitably due to policyholders’ having insufficient cover.
“In warranty policies for vehicles, for instance, where insurers limit cover for major parts to R10 000, the replacement cost of a luxury car engine would exceed the policy limits. In such cases the client would need to pay the difference, over and above the R10 000.
“It is the broker’s job to ensure that policyholders know exactly what they are paying for and the limitations of their policies. After all the client is using a broker in order to benefit from expert guidance.”
In another example, clients often decide against taking out the ‘all risks’ option in the household contents policy, which would cover personal effects and valuable items such as jewellery then. So when a cell phone is stolen they are surprised there is no cover. Brokers should emphasise this risk to clients who demure at the extra expense of the all risks section.
Back with motor insurance Mr Gilbert warns of the need for care when clients are required to have theft preventative devices in place, such as satellite tracking or gear locks. “These need to be Vesa (Vehicle Security Association of South Africa) approved, meaning they are regulated and endorsed by the South African Insurance Association.
“Clients must be informed that if their vehicle were stolen with, for instance, a non-Vesa approved gear lock in place, it is doubtful the insurer would pay out in full. One percent of our complaints are from claimants who have unfortunately not used Vesa approved security measures,” he observes.
“Huge increases in home values over the last few years have meant that a property worth R100 000 ten years ago, could easily be worth R1 million today.” Brokers are urged to review the household covers of their clients, especially those older enough to, perhaps have repaid their bonds.
In any case homeowners should not rely on their bank to keep property indemnity values up to date. The consequences of a fire or water damage could be very serious for those who were underinsured. That R1m home insured for only R100 000 would, in terms of the principles of ‘average’ entitle the client to a maximum indemnity of 10%. Should a roof blow off, probable damage of at least R50 000 would only be compensated to the tune of R5 000. Insurance Times & Investments reported on a case last year where the damage caused by an exploding geyser amounted to R230 000. Hopefully the homeowner was sufficiently insured.
Adds Mr Gilbert, “A lack of security gates and burglar bars or malfunctioning security system is yet another factor that leads to claims repudiations, and these account for 3% of the complaints we receive.
“If a client lives on the ground floor of an apartment block he needs to install burglar bars on all external, ‘open-able’ windows. Also all external doors, including sliding doors, need security gates in place. Second floor apartments with balconies may also need security gates and bars, though this will depend on how easily the balcony can be reached.
“As with a motor policy, household cover requirements will depend on the area in which the policy holder lives, as well as the security measures in place. If a client lives in a complex, the quality of the security needs to be assessed by both the client and his broker.
“The complaints we receive illustrate that there is a definite information gap.” Many issues are not discussed, resulting in the client only learning the true implications of his policy choices when it is too late to do anything about it. These issues should be explained to the client at inception and at least once a year when the cover is renewed.

Copyright © Insurance Times and Investments® Vol:20.1 1st February, 2007
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