The value of advice in ensuring customers are adequately insured

Hannes Smith, Head of Personal Lines & Operations at Old Mutual Insure.

Buying motor insurance is often a grudge purchase. Therefore, when customers opt in, it is essential that their risks are evaluated correctly and their premiums calculated accordingly, so that they are adequately insured and can be delighted at claim stage.

2017 has seen South Africans get back in the market for new vehicles following a depressed 2016 sales year. According to the National Association of Automobile Manufacturers of South Africa (NAAMSA), 557 586 cars were sold last year. Many of these are often loaded with additional features, such as keyless entry, panoramic sunroofs, leather seats etc. that can push their cost far above the sticker price.

The value of advice to improve customer experience

Experience indicates that customers often provide insurance companies with incomplete information when signing a policy agreement. Later on, this might lead to claims payments that do not cover the full value of the vehicle. The value of advice comes in when brokers enable customers to avoid being underinsured by asking questions, like:

• What optional extras did you purchase and cannot do without? Have you fitted aftermarket accessories? These types of questions are especially important when customers insure new cars, as these are often loaded with optional extras that push the vehicle’s value far above the factory price, making it difficult to correctly determine the insured value.
• What are the details of the purchase agreement of the vehicle? This enables brokers to determine whether the customer needs credit shortfall insurance.
• When was the vehicle manufactured and when was it registered? This enables brokers to register the correct vehicle model and make so that should the customer need to claim they will get a full payout to replace their vehicle and not an earlier model.

From the answers provided, brokers have the necessary experience to advise the correct insurance product and an appropriate value to insure a vehicle for. And, while it might be tempting for customers not to specify all the optional extras that they have fitted in an attempt to save costs, brokers aren’t easily fooled and will assist them to make sure that they do not find themselves under-insured. They will also have the opportunity to explain that adequate insurance cover becomes even more important in tough financial times.

Therefore, brokers play a key role in protecting the reputation of our industry and improving customer experience. By simply asking the right questions, they do the very important job of helping customers purchase adequate insurance to avoid unnecessary nasty surprises. Their valuable advice also shows customers that, although an insurance policy is intangible and might not sound that exciting, it certainly has value in protecting what’s important to them.