INDUSTRY OBSERVATION

Why People Choose
not to Insure

There has been a fair amount of concern expressed of late (in the media) regarding the high number of uninsured motor vehicles in South Africa. This begs the question – why are so many people choosing not to take up (comprehensive) insurance? 

As a motor vehicle insurer, HCV Underwriting Management is definitely a proponent of compulsory comprehensive insurance for all vehicles in South Africa and believes that the number of uninsured vehicles on our roads is at an unacceptably high level. 

Of deep concern to us is the emerging trend that sees certain insurance companies actually coercing their clients into claiming third party damage from the other party’s insurance company themselves! 

It seems that some insurance companies adopt a business model that essentially ‘off-loads’ the third party recovery claims onto their clients. In other words; "if you want your recovery, go and get it yourself. If you do claim from us you will lose your three year bonus." The aspect I want to pick up on or extend is the area where there is apportionment in the claim - in other words, the ‘man in the street’ is faced with a LESS than 100% recovery. 

Let’s use my classic case where trucks ARE always blamed, i.e. the multiple lane roadway proceeding right at ninety degrees into a new road. The car in our example has ‘tucked up’ next to the truck as it negotiates the turn. The car has entered the intersection after the truck, has entered its blind spot and as the trailer proceeds, is involved in a collision with it. 

In this scenario, the car is not blameless and the truck is certainly not totally to blame. 

Now consider this: 

The car owner (C) is now to confront the truck insurer (T) about the damage. At this point in the process, the truck is deemed to be 100% to blame, of course! So C expects 100% recourse. 

T wants nothing to do with it. Eventually this goes to court and C only gets a 20% settlement of his damages. 

From C’s perspective this has turned into a nightmare. Apart from the trauma of the accident, C’s insurer says, "in order to retain your bonus, you do the recovery." 

The situation reaches deadlock and ends up in litigation. Now there are accident reconstruction costs, attorneys’ costs, quantum, apportionments, time delays etc. and all this without the help and scope of the client’s insurer. The settlement is paltry compared to how easy C’s company said it would be to recover costs from the third party insurer (T) 

To add insult to injury, the financial costs have escalated and have not been mitigated by the insurance company! 

What I am attempting to highlight here is that the very areas where insurance companies should be displaying their expertise and scope of professionalism is where they are in fact (through this particular ‘business model’) outsourcing. 

In other words, C in this example will quite rightly be more disillusioned about an insurance company than before the incident and with this sort of ‘hands-off’ approach from insurers, it’s little surprise then that so many people choose to fight it out ‘alone’.