It’s time to innovate
A couple of days ago we received an email from one of our regular readers. We’re not going to dwell on the specifics of his correspondence; but will share his thoughts on some of his experiences in dealing with the short-term insurance industry. He accuse
During the results presentation he informed the audience of the various measures the group was taking to right the ship. These included an aggressive restructure, full utilisation of the company’s extensive information technology systems and the ‘axing’ of unprofitable group schemes. These actions are all fine and well; but there must be other steps a short-term insurer can take to get their ‘mojo’ back!
Education makes sense; but the focus might be wrong
There’s an age-old saying which reads: “Prevention is better than cure.” And it’s this adage that short-term insurers should live by. In doing so they will move focus from the continued drive for new business premium to a tighter control on the costs that impact profitability. Let’s begin with education.
The South African Insurance Association (SAIA) has a proud record in the area of insurance education. They spend millions each year to educate people about the usefulness of insurance. It makes sense; but in focussing all educational activities in this area the company is addressing only one side of the short-term success equation – the premium side. The education directed at ground level consumers might have some long-term impact on insurance premiums; but it doesn’t address the issue of escalating claims costs.
What if the country’s short-term insurance companies take active steps to address issues which have a direct impact on short-term insurance claims? There are many areas they could get involved in, with the most promising the area of driver education. Short-term insurance companies could offer incentives to drivers who complete advanced driving courses. In fact, any insurance company with a few thousand drivers on their books should offer free advanced driving courses to all their policy holders… And offer a premium reduction once the driver successfully completes the course to boot.
If insurers pay similar attention to educating clients about correctly ‘valuing’ their household contents the amount of follow-up administration would be greatly reduced, premiums collected would increase and claims payouts would be significantly improved. It’s common sense really. By taking more time to ‘know’ the insured, the insured’s assets and the insured’s security arrangements the short-term insurer takes a big leap in the direction of prevention. The focus should be on preventing accidents, preventing fires, preventing lightening and other electrical damage, preventing theft from vehicles etc.
Technology creates opportunities
The short-term insurance industry cannot afford to ignore technological improvements. One area where such innovations abound is in the area of combating motor vehicle theft and hi-jacking. South Africa offers a range of affordable vehicle tracking and recovery solutions and short-term insurers have been quick to realise that such systems (especially on higher value vehicles) make perfect economic sense. Other recent innovations include a company that sprays vehicle with microdots – thousands of tiny specks that will assist police in identifying stolen property.
Imagine if the country’s short-term insurers got together and implemented an electronic (micro-chip or similar) tagging system for each of their insured client’s motor vehicles. This process could be extended to personal belongings to create a national asset register. It wouldn’t stop theft; but would assist police in identifying the owners of recovered stolen goods… And if everyone knew about the system it might put a major dent in the market for stolen goods. A pawn shop caught in possession of an electronically tagged item would have no defence!
Of course there will be those who ask why short-term insurers should get involved in road safety campaigns, efforts to combat vehicle theft and the like. The answer is quite simple – it makes business sense. SAIA already supports Business Against Crime initiatives to combat vehicle theft. But there will always be further avenues that can be explored!
Editor’s thoughts:
South Africa is in the unenviable position of topping the world tables for crime and road deaths. We believe that short-term insurers are well positioned to reduce motor vehicle accidents and theft. Active and innovative campaigns from these companies would go a long way to reducing both numbers. Do you think the short-term insurers are doing enough in these areas? Add your comments below, or send them to [email protected]
