I have always thought that the reason one buys risk insurance - be it on your life or your property - is so that you receive a benefit when you need it.
This, unhappily, is not always the case. This has long been a problem in the short-term insurance industry and is often a problem when it comes to claiming a disability, sickness or income replacement benefit from a long-term insurance policy.
Often the problem of a repudiated claim lies with the policyholder in that all the required information an insurance company needs to calculate the risk and the cost of the risk (premiums) is not provided, or because the policyholder is making a fraudulent claim.
However, some insurance companies have a better reputation than others for paying up. In fact, it has long struck me that with both long- and short-term insurance there are companies that find reasons to pay benefits while there are others that find reasons not to pay.
It is obviously also a matter of concern for the Ombudsman for Long-term Insurance, Judge Brian Galgut, who says you should not make your decision for risk assurance on premiums alone. You should also check the claims ratios of the different companies.
A claims ratio is the number of rejected claims as a percentage of total claims made.
The logic is simple: the less paid to claimants, the lower the premiums can be.
So Galgut has recommended that you should always find out about the claims ratio of your assurance company (see related article below).
Most companies do have the figures available and I thought it would be a good idea to publish a comparative table with the report on Galgut's concerns.
But, as too often happens with the life assurance industry, I found it was not quite so simple.
In response to an email I sent to all the main life assurance companies, I was asked how I could be sure there would be consistency in the comparisons.
For example, some companies include suicide repudiations in their figures and others don't. (All life assurance policies have a suicide clause, which states that they will not pay up if the policyholder commits suicide in the first 24 months of the policy being issued.)
Or it could be that a claim is rejected simply because the cause of the claim is not included in the policy.
Most companies are willing to participate in an initiative that will provide you with the comparative data, but some of them are cautious about providing the claim ratios before the approach is standardised.
My response has been that this should be sorted out by the industry. I have asked the Association for Savings & Investment South Africa (Asisa) to intervene to set up a template of comparable claims ratios, to collect the data and to regularly publish updated data.
I hope they do so with urgency. Personal Finance will keep you updated. You can help by demanding the ratios from your financial adviser in writing.
Your adviser is obliged to provide you with information that allows you to make an informed decision. If not, your adviser can get into a lot of trouble, including compensating you for any losses you may incur.
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This brings me to another issue, which concerns the short-term insurance ombudsman and the short-term insurer, Zurich.
In brief, a reader was hit by another vehicle going through a red traffic light. The reader, quite rightly, thought he was completely in the right and did not see why he should lose his excess on a claim as well as his no-claim bonus. The result was that he claimed against the offending driver's insurance company, namely Zurich. Yes, in case you were wondering, it is the same company that disgracefully lost all the personal details of everyone it has on record.
Zurich sent our reader what appears to me to be a knee-jerk reaction, without properly assessing the facts. At least, it has given me no indication that it even held an on-site inspection.
Zurich told our reader that, in terms of a 1981 court case, it would only accept liability for 60 percent of the damage.
When I started asking questions, I received a long-winded reply from Henry Ehlers, Zurich's general manager, operations support, in which he illogically states: "Even though we use case law to support the settlement decisions we make, the facts of the case may not be completely the same. But the underlying legal principle is the same, namely, it is required by law for all motorists entering any intersection (controlled or not controlled) to exercise more caution by keeping a proper look-out of what is happening in their immediate vicinity and to drive at a reasonable speed under any given circumstances."
He then says whoever alleges that the accident that took place was not avoidable must be able to prove the allegation. He says our reader could have avoided the accident if he had "kept a proper look-out and speed. Our client's damages are on the left rear side of the vehicle, which is a clear indication that the claimant is the one who collided into our client's vehicle."
He says that in terms of the Apportionment of Damages Act, "we would like to reiterate that, legally, no motorist has an absolute right of way".
So I stop at a green light to ensure no one is jumping the red light and I get smacked in the back. To say nothing of the traffic jams that Ehler seems keen on organising across the country.
Brian Martin, the Ombudsman for Short-term insurance, says that he cannot investigate the complaint because he can only investigate complaints of policyholders against their own insurance companies.
The remedy is to sue the driver or owner of the vehicle, who would, in turn, be entitled to claim from their own insurer.
Martin says that an advantage of comprehensive motor vehicle insurance is that it saves you the time and cost involved in the recovery of damages.
It seems to me that comparative claims ratios for the short-term insurance industry would also be a good idea.