Simple steps to choosing an insurer

Johannesburg - Don't use price as the sole guideline when choosing personal or business insurance, as there are other equally important factors to consider.

While understanding that consumers will shop around for the most competitive insurance quote, Gari Dombo, Alexander Forbes Insurance MD, says it is important to choose an insurer that best meets your particular needs.

Before a loss

“We work hard for the assets we own - our home, businesses, car and other material belongings - so it’s essential to have the peace of mind of knowing that they are protected from fires, floods, theft and many other risks,” says Dombo.

When you purchase cover, the cost of a potential loss is transferred to the insurer for a premium. If correctly insured, you will be put back into a similar position to that which you were in before a loss.

Says Dombo: “You want to make sure that you choose an insurer that will be able to assist you at the most critical stage which is when you need to claim. This is when the insurance promises are tested.”  

He suggests that consumers follow the following guidelines when choosing an insurer:

 - The insurer’s mix of products and services. Focus on your requirements and ensure you receive the best protection by being aware of what is covered in your insurance policy. It is very important to read the fine print;

 - Be aware of the excess that you are expected to pay in the event of a claim and policy exclusions;

 - Understand the difference between the three business models: direct insurers, traditional insurers and hybrid insurers. This can affect the quality, cost and effectiveness of any insurance purchased. Direct insurers transact directly with clients, cutting out the broker. Traditional insurers deal with clients via brokers and hybrid insurers provide a personalised service by making use of in-house consultants;

 - Check that the insurance company is registered with the Financial Services Board (www.fsb.co.za – go to Departments/insurance/Pages to find a list of registered insurers). This will give you assurance that the company is operating legally and that it is financially able to meet their obligations. The policy is of no use if the insurer is no longer in business when you need to claim;

 - Take out your policy with a credible insurer that other people trust and recommend. An existing customer is a good source of information about a prospective insurer;

 - Research the different insurers and their products and services; investigate their claims payment statistics and customer complaint ratios. The Ombudsman for Short Term insurance (www.osti.co.za) gives statistics in his annual report and a consumer watchdog website like hellopeter.com is helpful.

Make sure you understand the small print

While insurers compete on price, Dombo warns that you should not use price as the sole determinant, as it is also very important to look at the content of cover and to investigate the payment history of a provider.

He recommends that consumers consider price only once they fully understand the small print along with what is being covered, what excess they will be carrying and whether they are getting the best advice.

 - Fin24