Why your credit history is important

Can misrepresenting your credit history result in the cancellation of a short-term insurance policy? And would an insurer be within its rights to decline a claim on the basis of such misrepresentation? In the August issue of the Ombudsman’s Briefcase, the Ombudsman for Short-term Insurance publishes an interesting case study that answers these questions.

Complete disclosure the best policy
 Prospective clients are asked a number of questions when taking out a short-term insurance policy. The insurer wants information about the insured’s age, address and ‘no claims’ bonus, details of the security arrangements for the vehicle (including anti-theft devices, tracking devices and where the vehicle will be parked at night) and information about the primary use of the vehicle. And we already know that misrepresenting any of these facts will lead to problems at claims stage. But there is other information the insurer will ask for at policy inception.

In today’s case the insurance company asked the insured whether the regular driver of the vehicle “had ever been blacklisted, liquidated or sequestrated.” The insured’s response to this question was, “not that I’m aware of.” When the insured submitted a claim for damage to the motor vehicle (some three months later) the insurer determined that the insured had actually been blacklisted for a number of unpaid accounts prior to inception of the policy. The claim was rejected on the basis of non-disclosure!

Does this omission really constitute non-disclosure? The insured felt wronged and laid a complaint against her insurance company with the Ombudsman for Short Term Insurance.

Should the credit check occur pre-policy?
The complainant’s argument in this case is compelling. She felt that she hadn’t intentionally withheld information from the insurer and expressed the opinion that the insurer’s credit check could have been performed prior to policy inception rather than at claims stage. She also alleged that the insurer was unable (or not prepared) to provide her with a copy of the voice recording of the policy sale. A summary of her complaint: “The complainant was of the view that her insurer was not able to prove their allegation, should have conducted the credit check prior to granting the policy cover and by failing to do so, should therefore be made to entertain her claim in full!”

Another twist in the argument – which we quite enjoyed – was that risk of non-payment due to a poor credit history generally lies with the finance house. The insured argued that since the finance house had no trouble granting the loan (after completing a credit check), why would the insurer have a problem carrying her insurance?

Once the case reached the Ombudsman the insurer was able to produce a voice recording of the sale. The insurer provided the complainant’s policy schedule, a copy of the credit check conducted on the complainant and a copy of the voice recording of the sales conversation. “The insurer argued that had they been notified of the complainant’s credit history during the sale of the policy they would not have granted the complainant cover and would therefore, not have exposed themselves to the moral risk that the complainant represented.”

From our perspective it’s not that easy to understand how the client’s credit history impacts on a short-term monthly paid policy. If she missed a payment she wouldn’t be covered in any event.

The Ombudsman frequently rules for complainants around vehicle and drivers licence issues. Would the Ombudsman side with the complainant in this case?

Insurer’s decision upheld
The Ombudsman noted that the complainant’s credit check indicated five separate instances of bad debts written off totalling R71 201 in the 18-months prior to the inception of the policy. “It was the view of the office of the Ombudsman that it was clear that the complainant could not have been unaware of her bad credit history under the circumstances and intentionally withheld such information from the insurer during the sales conversation,” said the Ombudsman.

On advice from the insurer that they would not have accepted this risk if they had known about the insured’s debt history the Ombudsman rejected the claim and accepted the insurer’s decision to reject the claim and cancel the policy.

-- via FA News

Why children should get their own car insurance

Why children should get their own car insurance
A first car is a rite of passage for many young South Africans. However, the high accident rate in this age bracket, owing to a lack of driving experience and inability to handle high-pressure situations, means that insurance companies are often required to levy higher premiums on these drivers.

Studies have shown that young drivers between the ages of 16 and 21 are 10 times more likely to be involved in an accident than those aged between 30 and 59. Some newly qualified young drivers may be forced to pay up to three times more than an experienced driver for their car insurance.

According to Christelle Fourie, managing director of MUA Insurance Acceptances, this is a problem many parents are confronted with as they decide how best to insure their children.
"Many parents opt to simply put their children onto their own insurance policies and pay the premium for them. However, we have seen a number of cases where children who are well into their 30s are still on their parent s' policies and continue to have their premium paid," she says.


"While this is an honourable approach, the reality is that, by doing this, parents can end up impacting on their own claims history and their children are encouraged to delay taking responsibility for themselves. "It is best to let children take out their own insurance cover as soon as they acquire their first car, even if this proves to be an expensive exercise at the outset. The younger someone begins with a good claims record, the sooner they will be able to erase the additional loading charged due to age."

Fourie says that even if some parents choose to pay the premium on their children's policy, it is important to begin encouraging them to start building their own insurance records from a young age and to pay the correct risk premiums so they can start taking responsibility for the costs of running a motor vehicle.
She says if young people find the costs too high, it may be an idea to combine their motor and home policies, as most companies offer reduced car insurance premiums if the policy is accompanied by household contents insurance.

"Some insurers will also offer a premium discount if the insured chooses an additional voluntary excess, so it may be better for parents to assist their children by funding the voluntary excess during the early years of insurance, instead of placing them on their own policy."

Fourie says another method that may not keep premiums down, but can be used as a personal risk management tool by parents to minimise the likelihood of their child being involved in an accident, is to install a tracking device.

"This enables parents to monitor not only where their children's cars are at any time of the day or night, but also exactly how fast they are driving."


-- via timeslive.co.za

Need to install a Tracking System? Get Comparative quotes from SA's leading Tracking Systems companies in one place!

The worlds first flying car

How amazing is this invention? A car that flies.. or is it a planes that drives?

Either way, it's certainly going to push the limits of insurance as we know it!

Company Directors can expect claims against themselves in their personal capacity under new Companies Act

Directors and officers, charged with making difficult management decisions in the course of their work, may face heightened litigation once the new Companies Act comes into effect in later this year. Increased litigation may also cost directors millions in their personal capacity.

Key provisions in the new Act will raise directors' accountability to shareholders and increase the likelihood of shareholders participating in legal action, particularly if the company and its officers caused shareholders to suffer significant financial loss.

“The scope of persons able to bring an action as well as the basis for liability is now much wider,” says Philip Hobson, Financial Lines Manager at Chartis South Africa.

“This means that anyone, including shareholders and staff members, can sue directors and officers directly, which will heighten their personal liability.”

Currently, a shareholder’s relationship with the company means that they can’t, generally speaking, bring an action against officers directly. They have to request the company to bring a law suit against an officer who committed a wrongful act.

However, directors and company officers are unlikely to bring an action against their colleagues, and therefore shareholders have limited recourse to recover damages from wrongful acts committed by company officers.

“Under the new Act, shareholders will have direct recourse against directors and officers in a personal capacity as long as they can prove they have suffered damages,” says Hobson.

This recourse will now be available to a wider range of persons, not just shareholders. Directors will be personally liable for breaches of their fiduciary duties and may be sued for loss and damages caused to creditors, employees, customers, competitors, shareholders or other stakeholders of a company.

For example, if a director makes a bad decision or acts negligently, causing his company to suffer financially, and this results in retrenchment of an employee, that staff member will be able to bring an action against the company officers directly.

Another significant change in the Act is that it specifically provides for class actions by extending liability to a class of persons. Class actions increase the amount of damages claimed exponentially.

Increased shareholder activism and the extension of liability to a wider class of persons means that South Africa is likely to follow the trend in countries like the US, UK and Australia which all have experienced increased litigation against companies, company officers, and directors.

Australia, for example, which has gone through a similar corporate law evolution, has seen claims against directors and officers double in the last 4 years. In the UK, the D&O insurance market is forecast to grow by 27% to £596 million by 2013.

Directors and officers need to be prepared for the changes in the Act and the wider basis for liability, as their own assets will be in the firing line should an action be bought against them. This means they could face very large monetary damages.

Hobson warns that management should make sure they are properly insured for any eventuality.

“Companies, directors and their insurance advisors aren’t well prepared for the risks that could arise from increased shareholder activism and class actions. Considering the Act provides for personal liability, which could cost directors financially, they need to ensure they are adequately covered.”

Original article here: Directors can expect heightened shareholder activism under new Companies Act

The secure, simple way to get your claims settled

Santam isn't South Africa's leading short term insurer for nothing, and there are plenty of good reasons why more of our clients are insured at Santam, than anywhere else.  Here's another reason why you should consider insuring with Santam, with Absolutely Covered as your broker, of course.

Michael Lodge, Finance and Group Sourcing Business Manager at Santam, says at Santam we believe insurance should be simple.

“In May many Santam claimants received our brand-new Visa Santam Claims Card via courier.”

“This Visa Santam Claims Card looks like a normal credit or debit card and can be swiped at any store that displays the Visa Electron sign. Clients will automatically have their cards activated by the courier who delivers the card, after verifying their identification as Santam policyholders. Once their cards are activated,
Santam will load their cash claim payment onto their cards, instead of making EFT payments as we've done in the past,” says Lodge.

“Our clients will be able to cash in on good risk-limiting behaviour with great cash-back benefits. We have negotiated this special arrangement with our suppliers, based on our clients purchasing their replacement goods from these stores. These cash-back refunds will automatically be uploaded onto their cards.

“The new Visa Santam Claims Card will give our clients the freedom to replace their damaged or stolen assets when and where it suits them. Added to that, the claims experience will be much safer and more secure, because the card is as good as having cash in your hand and yet you only need to ensure your card is safe.”

How the Soccer World Cup 2010 can affect your insurance

It is less than a month before kick off and South Africa is no doubt going to have an influx of people from all over the world.  Tourists will most likely hire vehicles and may cause or be involved in motor accidents.

It is vitally important that you report ALL motor accidents to your insurer or broker without any delay, especially if there is another party at fault.


If insurers do not attend to these claims immediately, tourists will most likely be on a plane in less than six weeks and your insurer's chances of recovering any of the costs will be zero.


The Department of Justice and Constitutional Development has announced that special night courts
will be introduced during the World Cup, which will be operational day and night to deal specifically with matters arising out of the World Cup. The intention is to avoid burdening existing court rolls and the main issue is that the cases need to be disposed of immediately and cannot be postponed to later dates.

What info do you need to get from another person after an accident has occurred?

1. Full name and ID number (or passport number);
2. Physical address;
3. Telephone numbers;
4. Vehicles' registration number;
5. His insurer's name & policy number;
6. Exact details of how the accident occurred, including street names and suburb;
7. Names and telephone numbers of any independent eye witnesses;
8. Take photos with your cellphone as additional evidence;
9. Make sure you report the accident to the SAPS within 24 hours.

Cyber thieves are out to get you... and your money

Internet banking fraud, and phishing in particular is on the increase in South Africa. The South African Banking and Risk Information Centre (Sabric) says the incidence of phishing has more than trebled since January this year.


According to research, approximately 4 million people in SA use internet banking. If you are one of them, you need to be extremely careful in order to protect yourself from this scourge.


In the latest phishing scam, bank clients receive emails that purport to be from the South African Revenue Service (SARS). The emails typically inform you that you have qualified for a tax refund and, in order to receive your refund, you need to confirm your banking details. 

Some of the email addresses you should watch out for include returns@sars.co.za and refunds@sars.co.za

The email says there may be delays in the payment of your money, which include "applying after the deadline" or submitting incorrect details. You are required to click on a link that takes you to what looks like a SARS website. You are then asked to fill in your banking details, including your credit card details. 

SARS has issued a notice that it will never ask for your personal banking details through an email request or via links to websites. You should provide your banking details on your tax return forms. 

How to protect yourself:

• Always type the web address of your bank into your browser manually.
• Keep your online banking access information such as your account number, user name, PINs and passwords secure by memorising them instead of writing them down.
• Make sure you see a lock icon at the top or at the bottom of your browser window.  This shows that you are indeed on a secure website.
• Install the latest anti-virus software on your computer and ensure that it is updated at all times.  Most banks provide free anti-virus software for their customers.
• If you use cellphone internet banking, install anti-virus software for you phone too.
• NEVER click on a link in an email to access online banking. No bank will send you an email asking you to click on a link in order to update or confirm your details online.
• Since many of the phishing scams originate from Ukraine, Russia, Nigeria and Indonesia, the grammar, punctuation and spelling in these emails is quite often bad. That alone should be a complete give away, and the warning bells in your head should start going off. 
• Although most email service providers include spam filtering, they aren't all that intelligent.  I have found that Gmail's spam filter is just about bullet-proof. I recommend signing up for a Gmail account, if you haven't got one already, and use that for all your personal email.
• Last but not least, check with your insurer if your household insurance policy includes cover for Identity Theft. If you have this cover, and you fall victim to one of these scams, you will at least have some cover for the cost of time taken off work to sort out the mess with the bank, as well as some cover for the loss itself.

Who and what is the FIA? » FIA - Financial Intermediaries Association of Southern Africa

Many people aren't aware of the benefits of having a broker who is a member of a professional association, such as the Financial Intermediaries Association of Southern Africa (FIA).

But, what is the FIA, and why should you make sure your broker is a member?

All members of the FIA are authorized financial services providers or representatives of such providers. In terms of the FAIS Act their members must adhere to all the requirements prescribed by the Act and its Regulations.

In addition to the compliance and conduct requirements of the Financial Advisory and Intermediary Services (FAIS) Act, members are obliged to conduct business in terms of the FIA’s Code of Conduct. This code aims to ensure that intermediaries maintain a professional relationship with clients, the regulator and financial services product providers.

To read the full article on the FIA's website: Who and what is the FIA? » FIA - Financial Intermediaries Association of Southern Africa

Let's take back our country

We can all make a difference and help take back our country from criminals - watch this video from Tracker.

ShoutSA

The official music video of SHOUT SA. Check out Danny K, Kabelo and 37 other top South African celebrities as they SHOUT out against crime and start the battle to make South Africa a safer place ...

Business Report - No clarity on whether Absa broke law

No clarity on whether Absa broke law

A meeting between a government agency and Absa has failed to clarify whether the bank's insurance company used inertia marketing, which was banned by the government in 2005.

However, agreement was reached at the meeting with the Department of Trade and Industry last week on four steps Absa would follow in regard to its home underinsurance project. Absa requested the meeting to seek legal clarity after allegations the project was using inertia marketing techniques.

This follows Absa sending letters to 21 347 of its 480 000 home loan clients in November alerting them that their homes were underinsured and advising them the insured value of their properties and premiums "will be automatically increased" by the level of underinsurance if Absa did not receive a response to the letter by December 17.

Inertia marketing involves taking or demanding payment for goods and services supplied to consumers who have not actively refused offers for them.

Ebrahim Mohamed, the chief director of the office of consumer protection, consumer and corporate regulation division at the Department of Trade and Industry, said the issue of Absa's alleged use of inertia marketing had been resolved in the sense that Absa would not in the future require consumers "to do something to stop something happening".

Edwyn O'Neill, the managing director Absa Insurance Company, said Absa had committed at the meeting to be "absolutely compliant with the laws of the country" and not in the future be involved in inertia marketing, while stressing that Absa had not admitted nor agreed that it had used inertia selling in the past.

Mohamed said there was not any agreement that Absa had never used inertia selling in the past.

Read the full article on Business Report


Fair practice? I think not! Banks should advise their clients properly, as any proper financial adviser should do. Increasing their clients insured values and premiums without the client's consent is simply not on. That's why we recommend taking homeowners insurance with your own insurer, not the bank's insurer!

Tracker saves family from potential deadly blaze

Tracking device continues to work despite vehicle being on fire

A family in Boksburg is today (January 21, 2010) recounting its good fortune after their Tracker saved them from what could have been a fatal blaze at their home.

The incident happened at approximately 05h00 this morning when Tracker contacted the family after receiving a ‘battery disconnect’ warning signal from one of their vehicles. The family was then asked to check if the vehicle was safe.

‘When our customer looked outside, she noticed that it looked particularly “misty” in the area around her car and decided to go outside for a closer look. As she approached the vehicle she realised that what she had thought was mist was in fact smoke billowing out from the vehicle’s engine bay. She rushed back inside and, together with the help of her family, was able to use a household fire extinguisher to put out the blaze,’ explains Gareth Crocker, Tracker’s Communications Manager.

But the drama did not end there. A few minutes later, Tracker called again, saying that they had received another warning signal from the vehicle. As the family returned to the car they noticed that the blaze had flared up again. Fortunately, they were again able to extinguish the flames.

The vehicle in question had failed to start the day before and had to be towed home from a neighbour’s house, due to a suspected electrical fault. It had also just been filled with fuel and was parked directly alongside the family’s second vehicle which also had a full tank of fuel.

‘The customer believes that had the fire been allowed to continue it may well have spread to both the second car and the house, and possibly even to her family who were sleeping at the time,’ says Crocker. 

Damage to the car has been limited to the engine bay, the dashboard and some upholstery near the front seats. 

‘We’re used to our devices tracking down stolen and hijacked vehicles and helping people in medical emergencies, but preventing a potential deadly fire is probably a first for us,’ comments Crocker. ‘Our engineering team is particularly proud that our SkyTrax device and its sensors continued to function despite the fire. A great deal of effort is put into ensuring that our devices are robust enough to handle the most testing conditions – a point underlined by the fact that we have, over the years, recovered several vehicles submerged under water.’