Brokers need to keep clients informed to avoid complaints

26 November 2006 Santam / Lange Strategic Communications

The majority of insurance related complaints arise as a result of policyholders not being informed or correctly advised by their broker or insurer.

And SA's largest short-term insurer, Santam, says many of its most frequently received complaints can easily be avoided by better communication from brokers.

According to the statistics 7% of all complaints received by Santam relate to delayed payout for claims.

Steffen Gilbert, Chief Executive at Santam says, "As we know, the claiming process can sometimes result in delays. But it is the brokers job to act as the go between, placing the claim and keeping the claimant informed along the way as to the progress of their claim.

"By making a quick courtesy call every few days, delay-related complaints are easily avoided. This reinforces the necessity of using a broker - to take the hassle out of claiming."

Gilbert says 5% of complaints relate to only a portion of a claim being paid, rather than the full amount. This is inevitably due to policyholders' having insufficient cover.
"In warranty policies for vehicles, where insurers limit cover for major parts to R10 000, the replacement cost of a luxury car engine for example, will exceed what the policy provides. In such cases the policyholder will need to pay the difference, over and above the R10 000.

"It is the brokers job to ensure that policyholders know exactly what they are paying for and the limitations of their policies. The policyholder is, after all, using a broker in order to benefit from expert guidance.

"Often policyholders will decide against 'all risks' cover for personal effects and other valuable items like jewelry then, when their cell phone is stolen in a smash and grab, they are surprised when their insurer doesn't pay out. This kind of cover would need to be specified in an all risks policy, which many policyholders dont know."

Gilbert continues that if under a client's motor policy they are required to have theft preventative devices in place, like satellite tracking or gear locks, these need to be Vesa (Vehicle Security Association of South Africa) approved, meaning they are regulated and endorsed by the South African Insurance Association.

"A client needs to be informed that if their vehicle is stolen with, for instance, a non-Vesa approved gear lock in place, it is doubtful that an insurer will pay out in full. One percent of our complaints are from claimants who have unfortunately not used Vesa approved security measures".

"Huge increases in home values over the last few years mean that a property worth R100 000 ten years ago, can nowadays easily be valued at R1 million. Household cover is linked to the value of a policyholders home thus, should their home burn down without having a updated policy in place, R100 000 is all that will be received in claims.

"And, should the loss not be total, for instance, should the roof blow off and the damage total R30 000, just R3000 will be paid out as there are only insurance provisions for 10% of the true value of the home.

Gilbert reiterates that this is why it is so important to highlight these factors and constantly remind your clients to update policies. The broker ultimately loses business by not keeping clients informed.

"A lack of security gates and burglar bars or dysfunctional security systems is yet another factor that leads to claims not being paid out, accounting for 3% of the complaints we receive.

"If a client lives on the ground floor of an apartment block they need to install burglar bars on all external, 'open-able' windows. Also all external doors, including sliding doors, need security gates in place. Second floor apartments with balconies may also need security gates and bars, however this will depend on how easily the balcony can be accessed.

"As with a motor policy, household cover requirements will depend on the area in which the policy holder lives, as well as security measures in place. If a client lives in a security block, the tightness of security needs to be assessed by you as the broker.

"The complaints we receive illustrate that there is a definite information gap. Many issues are not discussed, resulting in the client only learning the true implications of their policy choices when it is too late to rectify their decisions. These issues should be explained to the client at inception and at least once a year when the cover is renewed." 

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