Better regulation means you can protect assets without being ripped off

South Africa's growing middle-class' annual spending power has increased from R130-billion in 2005 to a staggering R180-billion at the start of 2007, but despite their ongoing accumulation of wealth, many of these consumers remain distrustful of insurance companies and the benefit that they can provide in terms of protecting their assets.

Mpumi Tyikwe, Executive Head of Corporate and Specialist Distribution at Santam says, "South Africa's black middle-class has grown by an astonishing 30% in just over a year, now making up 2.6 million of the countrys population. Corresponding with this growth is the purchasing of suburban homes and new vehicles of which there are estimated to be another 800 000 added to our roads this year.

"Many of these consumers do realise the financial impact of having a new car stolen or a house robbed empty will have on their lifestyle and future wealth, however they remain distrustful of the industry as a whole due to insurance stereo-types that include unethical sales people who spend little time analyzing specific needs and, once the sale is made, provide limited after sales service.

"FAIS, the  Financial Advisory and Intermediary Services Act, eradicated any kind of underhandedness that previously existed in the industry by protecting consumers, ensuring they are provided with trusted advice, allowing them to make informed decisions every step of the way."

Tyikwe says brokers are now compelled to conduct a 'needs analysis' for each client ascertaining whether they are already insured, what type of cover they require and whether the insurance product you are offering them will satisfy their needs.

"When selling a short-term insurance product, such as household insurance, a broker must explain the type and nature of cover to the client.

"When recommending a certain short-term insurance product underwritten by a particular insurer, a broker is obliged to advise a client as to why you recommend that particular product allowing them to understand the difference between the products and make an informed decision.

"FAIS also allows a client to request everything in writing before accepting the short-term insurance policy.

"Brokers need to disclose brokerage fees, the commission received from the insurer, as well as premium obligations."

On top of FAIS, which has made the entire industry more transparent, consumers have the Ombudsman mechanism through which the industry self-regulates, ensuring policyholders get fair treatment and service. The Ombudsman also plays an important role in promoting ethical practice within the industry and, in so doing, improving the perception of the industry at large.

"It is important for both consumers and insurers to have an independent party from which they can seek advice and who can mediate disputes around insurance claims. The Ombudsman reinforces the increasingly consumer-centric focus of the SA insurance industry."

Tyikwe says as South Africa's largest short-term insurer, Santam is forging the way for the rest of the industry through their new 'risk management' platform through which they aim to make peoples lives safer all around.

"We are doing this by educating and advising people on safer lifestyles as apposed to solely selling them insurance.

For more information on how to manage your risk successfully and thereby protect your wealth, contact Santam on 0860 726 826 or log on to www.extremeriskmakeover.co.za. The FSB (Financial Services Board) can also be contacted toll free on 0800 20 20 87 or 0800 11 04 43".