Disclosure is a two-way street

New consumer legislation is promising South Africans international standard protection. This means that service providers like insurance companies are required to fully disclose their terms and conditions of cover to clients. The rights of consumers are paramount but by the same token, however, consumers will also be duty-bound to make equally genuine disclosures when buying a policy.

“As a consumer it pays to know your rights and responsibilities – especially when it comes to insurance,” says Willem Smith, CEO of Old Mutual’s iWYZE valuables insurance. The information you get from the insurer at purchase stage will help with your product choice as well as help you determine whether or not the insurer is legitimate or not.

The information you should obtain from a legitimate insurer

To ensure that you are not dealing with an unscrupulous institution and to protect yourself, you have the right to establish the following:

• The legal status of the company that underwrites the policy. Ask for the contact details and make sure you have the physical address. This way if you have any queries later on, you will know there is a place you can visit if necessary.
• Particulars of the company’s compliance officer and complaints process so you’ll know what to do if you are not happy about something. If you still feel that your complaint hasn’t been adequately addressed you can contact the Short-Term Insurance Ombudsman or the Financial Advisory and Intermediary Services (FAIS) Ombudsman if you are specifically unhappy about the information you received at sales stage.
• The fees charged by the insurer, and included in your premium, for payment of the call centre agent or broker involved in selling the policy to you. Intermediaries (brokers) involved in selling policies also need to declare if there are any circumstances (including an interest in the insurance company that underwrites the policy) that may influence the objectivity of the advice they give you.

However, just as you have the right to expect your insurance company to pay valid claims, so you as the policyholder have a responsibility to understand exactly what your policy covers – and what to do to ensure that your claim isn’t rejected.

Honesty is the best policy

Insurers rely on the information provided at purchase stage and base their assessment of the risk on the truth and accuracy of that information. According to Smith: “You should always disclose as much information as possible upfront so that you don’t have any nasty surprises at claims stage – and remember to ask questions to clarify any points that you are not clear on.”

If you do submit a claim under your policy, your insurer will take care to validate all pertinent information you supplied when you applied for your policy. If any discrepancies are found between the information supplied and the reality at the time of the incident, this may affect your claim.

“For example, if the car insured under your name is now mostly being driven by your 21-year-old son, this changes the risk profile for the insurer,” says Smith. He continues: “Similarly, if you already have a policy, let your insurer know the value of any additional items you have purchased.” If you have bought an item of significant value, you need to consider revising the value of all your insured items so that you are not underinsured.

The information you should accurately disclose to an insurer

Insurers will need the following from you:

• Your personal details;
• Accurate replacement values for the valuables being insured;
• Any previous claims history and financial background about yourself – such as previously being declared insolvent, being denied insurance cover in the past or having your insurance cancelled; and
• Your correct banking details.

While you have the right to demand disclosure from your short-term insurance provider, you must also make sure you are completely truthful when you give them the information they need from you. “An open and honest relationship means that you can be absolutely sure of your cover,” concludes Smith.