Double trouble : Inflation and insurance
The impact of inflation on almost every aspect of South African life is dominating conversation and providing cause for concern across the country.
And insurance is no exception.
“Inflation rates have both a ripple and multiplier effect on insurance costs”, says Gari Dombo (pictured right), Managing Director, Alexander Forbes Insurance.
For example, not only do things get more expensive, but as fuel, food and the monthly mortgage go up household disposable income decreases. As employers succumb to wage pressure the cost of services and goods increase again – repeating the vicious cycle.
“Interest rate increases are not unusual. Combined, however, with a weakening Rand in an oil importing economy facing food inflation must put South Africa amongst the least favourable global investment destinations in a suddenly cash strapped and risk averse global economy. Given this combination of local and global scenario’s it would be very unlikely if interest rate increases did not lead to higher insurance premiums”, says Dombo.
Insurance costs in
“While there are some insurance companies out there promising their clients minimal increases, these will not be sustainable over the longer period. If fairly substantial increases are not implemented now, rates will only increase more dramatically later on – or the level of service will decline”, says Dombo. There is much talk in the industry about vehicle-repair inflation not applying to locally produced cars – and that this should limitincreases in the cost of motor vehicle insurance. But, says Dombo, “If you unpack it the bulk of our locally ‘produced’ cars are in reality locally ‘assembled’ cars – with parts produced abroad.” In short, most replacement parts are still imported and even if some elements are produced locally steel and aluminum prices, subject to the same inflationary pressures as other inputs in
Add to this eroding infrastructure and ever-increasing car volumes and the argument for motor insurance remaining flat, or only increasing marginally, falls flat. Moving to property Dombo argues that, “Building and other fixed asset insurance will also be affected by fuel inflation - impacting transport and construction costs. Furthermore, with power inflation about to increasethe cost of insuring fixed assets is hardly likely to remain unaffected.” Dombo concludes that, “The industry needs to take these increases on board and admit that there will be a substantial increase in premiums going forward. If insurance providers use these difficult times to score petty marketing points off each other by pretending that broader economic conditions will not affect premiums - their clientswill bein fornasty surprises later on.” Add to this eroding infrastructure and ever-increasing car volumes and the argument for motor insurance remaining flat, or only increasing marginally, falls flat. Moving to property Dombo argues that, “Building and other fixed asset insurance will also be affected by fuel inflation - impacting transport and construction costs. Furthermore, with power inflation about to increasethe cost of insuring fixed assets is hardly likely to remain unaffected.” Dombo concludes that, “The industry needs to take these increases on board and admit that there will be a substantial increase in premiums going forward. If insurance providers use these difficult times to score petty marketing points off each other by pretending that broader economic conditions will not affect premiums - their clientswill bein fornasty surprises later on.” Add to this eroding infrastructure and ever-increasing car volumes and the argument for motor insurance remaining flat, or only increasing marginally, falls flat. Moving to property Dombo argues that, “Building and other fixed asset insurance will also be affected by fuel inflation - impacting transport and construction costs. Furthermore, with power inflation about to increasethe cost of insuring fixed assets is hardly likely to remain unaffected.” Dombo concludes that, “The industry needs to take these increases on board and admit that there will be a substantial increase in premiums going forward. If insurance providers use these difficult times to score petty marketing points off each other by pretending that broader economic conditions will not affect premiums - their clientswill bein fornasty surprises later on.” Add to this eroding infrastructure and ever-increasing car volumes and the argument for motor insurance remaining flat, or only increasing marginally, falls flat. Moving to property Dombo argues that, “Building and other fixed asset insurance will also be affected by fuel inflation - impacting transport and construction costs. Furthermore, with power inflation about to increasethe cost of insuring fixed assets is hardly likely to remain unaffected.” Dombo concludes that, “The industry needs to take these increases on board and admit that there will be a substantial increase in premiums going forward. If insurance providers use these difficult times to score petty marketing points off each other by pretending that broader economic conditions will not affect premiums - their clientswill bein fornasty surprises later on.”
“While there are some insurance companies out there promising their clients minimal increases, these will not be sustainable over the longer period. If fairly substantial increases are not implemented now, rates will only increase more dramatically later on – or the level of service will decline”, says Dombo.
There is much talk in the industry about vehicle-repair inflation not applying to locally produced cars – and that this should limitincreases in the cost of motor vehicle insurance.
But, says Dombo, “If you unpack it the bulk of our locally ‘produced’ cars are in reality locally ‘assembled’ cars – with parts produced abroad.”
In short, most replacement parts are still imported and even if some elements are produced locally steel and aluminum prices, subject to the same inflationary pressures as other inputs in
Add to this eroding infrastructure and ever-increasing car volumes and the argument for motor insurance remaining flat, or only increasing marginally, falls flat. Moving to property Dombo argues that, “Building and other fixed asset insurance will also be affected by fuel inflation - impacting transport and construction costs. Furthermore, with power inflation about to increasethe cost of insuring fixed assets is hardly likely to remain unaffected.” Dombo concludes that, “The industry needs to take these increases on board and admit that there will be a substantial increase in premiums going forward. If insurance providers use these difficult times to score petty marketing points off each other by pretending that broader economic conditions will not affect premiums - their clientswill bein fornasty surprises later on.” Add to this eroding infrastructure and ever-increasing car volumes and the argument for motor insurance remaining flat, or only increasing marginally, falls flat. Moving to property Dombo argues that, “Building and other fixed asset insurance will also be affected by fuel inflation - impacting transport and construction costs. Furthermore, with power inflation about to increasethe cost of insuring fixed assets is hardly likely to remain unaffected.” Dombo concludes that, “The industry needs to take these increases on board and admit that there will be a substantial increase in premiums going forward. If insurance providers use these difficult times to score petty marketing points off each other by pretending that broader economic conditions will not affect premiums - their clientswill bein fornasty surprises later on.” Add to this eroding infrastructure and ever-increasing car volumes and the argument for motor insurance remaining flat, or only increasing marginally, falls flat. Moving to property Dombo argues that, “Building and other fixed asset insurance will also be affected by fuel inflation - impacting transport and construction costs. Furthermore, with power inflation about to increasethe cost of insuring fixed assets is hardly likely to remain unaffected.” Dombo concludes that, “The industry needs to take these increases on board and admit that there will be a substantial increase in premiums going forward. If insurance providers use these difficult times to score petty marketing points off each other by pretending that broader economic conditions will not affect premiums - their clientswill bein fornasty surprises later on.” Add to this eroding infrastructure and ever-increasing car volumes and the argument for motor insurance remaining flat, or only increasing marginally, falls flat. Moving to property Dombo argues that, “Building and other fixed asset insurance will also be affected by fuel inflation - impacting transport and construction costs. Furthermore, with power inflation about to increasethe cost of insuring fixed assets is hardly likely to remain unaffected.” Dombo concludes that, “The industry needs to take these increases on board and admit that there will be a substantial increase in premiums going forward. If insurance providers use these difficult times to score petty marketing points off each other by pretending that broader economic conditions will not affect premiums - their clientswill bein fornasty surprises later on.”
“While there are some insurance companies out there promising their clients minimal increases, these will not be sustainable over the longer period. If fairly substantial increases are not implemented now, rates will only increase more dramatically later on – or the level of service will decline”, says Dombo.
There is much talk in the industry about vehicle-repair inflation not applying to locally produced cars – and that this should limitincreases in the cost of motor vehicle insurance.
But, says Dombo, “If you unpack it the bulk of our locally ‘produced’ cars are in reality locally ‘assembled’ cars – with parts produced abroad.”
In short, most replacement parts are still imported and even if some elements are produced locally steel and aluminum prices, subject to the same inflationary pressures as other inputs in
Add to this eroding infrastructure and ever-increasing car volumes and the argument for motor insurance remaining flat, or only increasing marginally, falls flat. Moving to property Dombo argues that, “Building and other fixed asset insurance will also be affected by fuel inflation - impacting transport and construction costs. Furthermore, with power inflation about to increasethe cost of insuring fixed assets is hardly likely to remain unaffected.” Dombo concludes that, “The industry needs to take these increases on board and admit that there will be a substantial increase in premiums going forward. If insurance providers use these difficult times to score petty marketing points off each other by pretending that broader economic conditions will not affect premiums - their clientswill bein fornasty surprises later on.” Add to this eroding infrastructure and ever-increasing car volumes and the argument for motor insurance remaining flat, or only increasing marginally, falls flat. Moving to property Dombo argues that, “Building and other fixed asset insurance will also be affected by fuel inflation - impacting transport and construction costs. Furthermore, with power inflation about to increasethe cost of insuring fixed assets is hardly likely to remain unaffected.” Dombo concludes that, “The industry needs to take these increases on board and admit that there will be a substantial increase in premiums going forward. If insurance providers use these difficult times to score petty marketing points off each other by pretending that broader economic conditions will not affect premiums - their clientswill bein fornasty surprises later on.”
Add to this eroding infrastructure and ever-increasing car volumes and the argument for motor insurance remaining flat, or only increasing marginally, falls flat.
Moving to property Dombo argues that, “Building and other fixed asset insurance will also be affected by fuel inflation - impacting transport and construction costs. Furthermore, with power inflation about to increasethe cost of insuring fixed assets is hardly likely to remain unaffected.”
Dombo concludes that, “The industry needs to take these increases on board and admit that there will be a substantial increase in premiums going forward. If insurance providers use these difficult times to score petty marketing points off each other by pretending that broader economic conditions will not affect premiums - their clientswill bein fornasty surprises later on.”
Add to this eroding infrastructure and ever-increasing car volumes and the argument for motor insurance remaining flat, or only increasing marginally, falls flat.
Moving to property Dombo argues that, “Building and other fixed asset insurance will also be affected by fuel inflation - impacting transport and construction costs. Furthermore, with power inflation about to increasethe cost of insuring fixed assets is hardly likely to remain unaffected.”
Dombo concludes that, “The industry needs to take these increases on board and admit that there will be a substantial increase in premiums going forward. If insurance providers use these difficult times to score petty marketing points off each other by pretending that broader economic conditions will not affect premiums - their clientswill bein fornasty surprises later on.”
“While there are some insurance companies out there promising their clients minimal increases, these will not be sustainable over the longer period. If fairly substantial increases are not implemented now, rates will only increase more dramatically later on – or the level of service will decline”, says Dombo.
There is much talk in the industry about vehicle-repair inflation not applying to locally produced cars – and that this should limitincreases in the cost of motor vehicle insurance.
But, says Dombo, “If you unpack it the bulk of our locally ‘produced’ cars are in reality locally ‘assembled’ cars – with parts produced abroad.”
In short, most replacement parts are still imported and even if some elements are produced locally steel and aluminum prices, subject to the same inflationary pressures as other inputs in
Add to this eroding infrastructure and ever-increasing car volumes and the argument for motor insurance remaining flat, or only increasing marginally, falls flat. Moving to property Dombo argues that, “Building and other fixed asset insurance will also be affected by fuel inflation - impacting transport and construction costs. Furthermore, with power inflation about to increasethe cost of insuring fixed assets is hardly likely to remain unaffected.” Dombo concludes that, “The industry needs to take these increases on board and admit that there will be a substantial increase in premiums going forward. If insurance providers use these difficult times to score petty marketing points off each other by pretending that broader economic conditions will not affect premiums - their clientswill bein fornasty surprises later on.” Add to this eroding infrastructure and ever-increasing car volumes and the argument for motor insurance remaining flat, or only increasing marginally, falls flat. Moving to property Dombo argues that, “Building and other fixed asset insurance will also be affected by fuel inflation - impacting transport and construction costs. Furthermore, with power inflation about to increasethe cost of insuring fixed assets is hardly likely to remain unaffected.” Dombo concludes that, “The industry needs to take these increases on board and admit that there will be a substantial increase in premiums going forward. If insurance providers use these difficult times to score petty marketing points off each other by pretending that broader economic conditions will not affect premiums - their clientswill bein fornasty surprises later on.” Add to this eroding infrastructure and ever-increasing car volumes and the argument for motor insurance remaining flat, or only increasing marginally, falls flat. Moving to property Dombo argues that, “Building and other fixed asset insurance will also be affected by fuel inflation - impacting transport and construction costs. Furthermore, with power inflation about to increasethe cost of insuring fixed assets is hardly likely to remain unaffected.” Dombo concludes that, “The industry needs to take these increases on board and admit that there will be a substantial increase in premiums going forward. If insurance providers use these difficult times to score petty marketing points off each other by pretending that broader economic conditions will not affect premiums - their clientswill bein fornasty surprises later on.” Add to this eroding infrastructure and ever-increasing car volumes and the argument for motor insurance remaining flat, or only increasing marginally, falls flat. Moving to property Dombo argues that, “Building and other fixed asset insurance will also be affected by fuel inflation - impacting transport and construction costs. Furthermore, with power inflation about to increasethe cost of insuring fixed assets is hardly likely to remain unaffected.” Dombo concludes that, “The industry needs to take these increases on board and admit that there will be a substantial increase in premiums going forward. If insurance providers use these difficult times to score petty marketing points off each other by pretending that broader economic conditions will not affect premiums - their clientswill bein fornasty surprises later on.”
