Car insurance companies are betting on difficult odds. Clever actuaries need to work the numbers and calculate the risk of vehicle loss or damage in a specific area. This is a rather complex process with many variables such as location, vehicle type, owner and driver behaviour etc.

Many of these risks are not easy to predict and historic data might not be able to provide guidance. On Friday we have found many visits coming to the Car Insurance Blog from searches on Google about hail damage. Horrific stormy weather in Australia resulted in hail damage to many vehicles and many owners were searching the internet to find if their car insurance covers them for hail damage.

There is nothing we can do to prevent these forces of nature or “Acts of God”. Human intervention- or the lack thereof is further adding to the pressure of increased vehicle claims.

In South Africa these variables include the rapid deterioration of roads and damage to vehicles from potholes and damage to windscreens from loose gravel and stones near road works. There has been a significant increase in claims from vehicle damage from potholes and these volumes of claims might not have been predictable last year.

Perhaps the biggest threats to car insurers have been the high levels of vehicle related crimes. Tough financial conditions have motivated crime and hijacking syndicates to target vehicle owners with hijackings and vehicle theft.

As if this is not enough of a threat, there have been numerous reported cases of car insurance fraud.
Car insurance companies are threatened with a wide variety of risks to vehicle damage and vehicle loss. They have only one primary tool in their arsenal to combat these risks – the ability to raise car insurance premiums – a measure that they are heavily criticized for.

Perhaps next time when we are confronted with escalating car insurance premiums we might consider the challenges confronting the car insurers as well!

Related posts:

1. What do consumers say about the best car insurance companies?
2. How to identify the best car insurance companies
3. How are road accidents affecting car insurance companies?

Technology and new product development have provided solutions to strengthen the windscreen – but what if it is damaged beyond repair? Will car insurance cover your damaged windscreen?

As a general rule car insurance will normally cover windscreen damage on a comprehensive policy if the damage was sustained during the covered period and all terms and conditions were complied with!

It is important to share with our visitors’ advice on the more important question – Does YOUR car insurance cover windscreen damage to YOUR car?

It remains the most important advice to focus on the terms and conditions of your car insurance policy! There might be reasons why and circumstances under which your car insurance policy will not cover the damage:

• If you failed to pay all the car insurance premiums
• If you failed to take the vehicle for the inspection as prescribed
• If you have not used an approved windscreen replacement agent

The question is however not as simple as merely enquiring about payment or non –payment. You will need to establish whether the full replacement costs will be covered and whether this will have an effect on your excess…Will the replacements have an effect on your no claims bonus?

Car insurance policies in most cases do not pay excess unless the glass is repaired by approved agents. They might also exclude full cover and payment of excess for glass forming part of sunroofs or special glass or windscreens found on expensive imported vehicles.

What can the vehicle owner do to prevent financial harm in the event of windscreen damage?
Best advice is to consult your insurer or broker and request confirmation that your car insurance covers windscreen damage, what the effect might be on your excess and whether this will negatively impact a potential no-claims bonus.

If you are not covered adequately you might consider scratch and dent insurance as an alternative to normal car insurance to help you save thousands in paying unnecessary excesses to your insurance company.

Always communicate with your insurer and rather stay informed to avoid nasty little surprises later on at the time of claims process.

Also view:

• Does car insurance cover hail damage?
• Windscreens and Road Safety

Related posts:

1. Does your car insurance cover hail damage?
2. Through a dirty windscreen, expect to see a car insurance claim!
3. Avoid smash and grab vehicle damage and car insurance claims

We would like to share these amazing images captured in Gauteng!! It is incomprehensible that this vehicle could ever have been driving on a public road!!

Also view:

• Tyres and Car Insurance
• Tyres and Road Safety

Related posts:

1. Your car insurance company needs to know who is driving your car!
2. Car insurance will not cover those driving without a license!
3. Will car insurance cover texting and distracted driving?

Technology and innovation from car insurers have streamlined the process of making products available to the consumers. There are affordable products available for the most basic of needs – products stripped of “extras” to be found with ease via aggregators. This however does not mean that car insurance is “simple”!
I believe it is important to face the facts about car insurance and focus on the challenges facing the consumer.

Many providers / Wide product range

There are today much more variety in providers and products than a decade ago. With the internet and online-businesses of today we have seen an increase in the number of insurance providers, an increase in competition and an increase in car insurance products.

Car insurance Aggregators / Comparison Websites

Insurance aggregators and comparison websites have become business in their own right, feeding off all these other providers and assisting the consumer to select from the maze of offerings available.
The consumer can benefit from the assistance provided by these portals – but has to remain vigilant to which providers are included and excluded from the quotation process, the independence of the aggregator or comparison website etc.

Terms and Terminology

With so many new products and specialization there have been an increase in the terms and terminology to be found in car insurance policies. Financial services legislation drafted with the objective of protecting the consumers has increased the “fine print” required and included in policy documents.
More attention is required by the consumer before signing a car insurance policy document – a document which is no longer a 2 or 3 pager but rather a lengthy document.

Brokers / Direct Insurers

There is more choice available to the consumer as to finding the correct insurer. Some might still use a broker and this broker is less likely to work only as an agent of one specific car insurance company.

The client might decide to purchase car insurance through a direct insurer. There are now a variety of direct insurers operating in the car insurance segment of the financial services industry. Some might even focus on a specific gender group and other will focus on specific categories of vehicles.

It might be important to keep in mind that all the legislation and the increase in offerings and competition are to the benefit of the consumer – but only to the consumer who is willing to put in the work and time to sift through the information overload and find the correct product to meet his needs!

To say that car insurance and finding the best car insurance is simple – is simply not true!!

No related posts.

The Ombudsman for Short-Term Insurance has warned consumers to ensure that they fully understand and appreciate the basis upon which motor vehicle insurance is taken out and the category of persons who are insured whilst driving a motor vehicle belonging to an insured.

Why is “regular driver” and “nominated driver” important for car insurance?

“Motor vehicle policies are commonly underwritten on the basis of a “regular driver” or a “nominated driver”, however in insurance, a regular driver is not the same as a nominated driver”, says Ombudsman for Short-Term Insurance, Brian Martin. These concepts are used in order to assess the risk associated with the insurance of a particular motor vehicle and the premium to be charged. The identity and profile of the driver of a motor vehicle is obviously an important factor in risk, which the insurer is being asked to assume as well as the premium to be charged.

Certain policies of insurance define a “regular driver” as “the person who uses the motor vehicle the most frequently and more than any other”, but this definition is not without its difficulties. The concept is not always capable of precise definition. Where a policy is underwritten on a “regular driver basis”, other persons may drive the motor vehicle in addition to the regular driver, provided that they are in possession of a valid driver’s license and that they are only the secondary driver. It is vitally important that consumers correctly identify the regular driver in instances where more than one person will drive a motor vehicle, to be insured on a regular driver basis and that they provide this information to their insurance company or broker.

A “nominated driver” policy, on the other hand, only gives cover to persons who are actually nominated and recorded as a nominated driver on the policy of insurance. Any person who is not nominated and recorded, as a nominated driver on the policy schedule will not be covered.

What will happen if the vehicle is incorrectly insured and incorrect information disclosed?

The Ombudsman says that consumers should take heed of the fact that if a vehicle is incorrectly insured or incorrect information is furnished to an insurer concerning either a regular driver or a nominated driver, this can result in a policy being declared void from inception, or the insurer having no liability to compensate for any loss or damage. “Utmost care must be exercised in ensuring that the correct information is given to an insurer and that any change in one’s circumstances or day-today living is immediately communicated to one’s insurer or broker so that the necessary endorsements or changes to the policy can be made. Changes could include any change of address or change in the use of a motor vehicle”, says Brian Martin.

If consumers are in any doubt as to whether their motor vehicle is correctly insured or not, they should seek professional advice from a licensed broker, insurance advisor or attorney prior to taking out the policy. This will avoid many problems that could arise at a later stage.

Also view:

• Rather disclose too much than too little when buying car insurance

Related posts:

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2. Who is the BEST car insurance company?
3. US Car Insurance company lists most dangerous drivers by occupation

Termination of the deemed kilometre method

The use of the deemed kilometre method has over time become more restrictive with the gradual increase in the number of deemed private kilometres and a resultant decrease in the maximum deemed business kilometres. Currently, the first 18 000 kilometres are deemed to be private. As the maximum deemed kilometres are 32 000 per tax year, the maximum deemed business kilometres are 14 000.

SARS has made it clear that a travel allowance should only be granted in circumstances where an employer is certain that an employee will incur business-related expenses and that the quantum of the allowance should be based on the anticipated business expenditure.

Nevertheless, the deemed kilometre method has according to Sars inadvertently provided an opportunity for employees who are not necessarily required to undertake business travel or who are only required to undertake limited business travel, to structure a travel allowance.

Now, with the imminent termination of the deemed kilometre method, employees who were previously taking advantage of this method will only be able to claim a tax deduction against their travel allowance to the extent that actual business kilometres are travelled. In this regard it should be noted that travel between home and work is regarded as private travel and not business travel.

Companies who have historically permitted employees who undertake little or no business travel to structure a travel allowance as part of their remuneration packages will now be forced to reconsider their travel allowance policy and approach.

In addition, those employees who are required to travel regularly on business (for example, sales agents), and relied on the deemed kilometre method to calculate their tax deduction, will be harshly affected by the changes. This is because they will now be required to keep a detailed logbook in order to justify their tax deduction claimed at the end of the tax year. Information required to be recorded in a logbook is the date of travel, destination, purpose of travel and number of kilometres.

Increase in portion of travel allowance subject to employees’ tax

From 1 March 2010, 80% of a travel allowance will be subject to employees‟ tax, as opposed to the current 60%.

The changes mean that those employees with genuine business travel will need to bear the cost of the tax until such time as they receive their refund from SARS (which would be some time after year end, depending on how quickly they are assessed). For employees who undertake a great deal of business travel and whose travel allowances are a genuine part of their packages and impact on the total cost to the company, the changes could also have a significant impact and could increase the cost of employment to their employers.

Employees will also need to carefully monitor their actual travel, and will no longer have the fall-back position of the deemed kilometres if they fail to maintain a proper logbook.

May all our visitors drive safely and purchase affordable car insurance premiums with the money saved through correct tax planning!!

Related posts:

1. Do we have the correct death toll on South African roads for December 2009?
2. Insured vehicle owners need a reality check about drunk driving
3. South African Insurance Crime Bureau tackles insurance fraud

How can technology – and more specifically Hi-Tech solutions assist in combating and reducing car insurance fraud?

Hi-Tech Security Solutions spoke to the Chief Operating Officer of the South African Insurance Crime Bureau, Hugo van Zyl. This interview appeared in the February 2010 edition of Hi-Tech Security Solutions and we were given permission to share these insights with our readers on the car insurance blog.

In a bid to address the matter of short term insurance fraud in South Africa, the South African Insurance Crime Bureau (SAICB) came into being in July 2008.

In the short 18 months since its inception, the bureau can give testimony to the fact that organised crime and fraud are rife in the industry.

Hi-Tech Security Solutions: Can you expand on the challenges that you have had to face as well as the rewards?

Hugo van Zyl: The acquisition of data has been the biggest challenge. However, we have put in place measures to ensure that we will have the necessary data in our system by early 2010. The cooperation of the member companies and industry as well as the policing organisations has been phenomenal. We are seeing results with savings for the industry topping the R2 million mark already in preventive measures and cases to the approximate value of R60 million to date.

Hi-Tech SS: What is the role that the SAICB’s 11 member companies play and who else have you partnered with?

HvZ: The SAICB was formed to address the problem of syndicated and repeat offenders committing fraud in the insurance market, ie, organised crime. The need to adopt a unique approach was essential, because multiple companies are normally involved in this kind of fraudulent activity. The SAICB is a not-for-profit company so funding comes entirely from its member companies. Our data comes from the member companies who share their underwriting and claims information with us. In addition, we have other information part-ners like Tracker, South African Police Service (SAPS), Johannesburg Metropolitan Police Department (JMPD), National Prosecuting Authority (NPA), South African Fraud Prevention Society (SAFPS) plus others that work with us by sharing infor-mation to assist with investigations.

We also work closely with the South African Banking Risk Information Centre (SABRIC), the South African Insurance Asso-ciation (SAIA), the Financial Intermediaries Association of South Africa (FIA), who are important in ensuring that we can make a difference in the fight against crime and fraud.

Hi-Tech SS: How do the SAICB and its partners intend to change the dynamic of fraud in the sector?

HvZ: Through the sharing of information, we are able to identify and track fraudulent activities and syndicates over multiple companies. Through our investigative unit we can coordinate the resultant investigations incorporating all the relevant companies and policing authorities. The investigations are coordinated from investigation stage through the policing authorities and prosecution, with our investi-gators overseeing the whole process to ensure all the relevant information is submitted to facilitate successful prosecutions. We have very close ties with the relevant SAPS divisions and the NPA to help us achieve this. Our approach is aimed at discouraging fraud syndicates from operating in the insurance and financial space, by letting them know that we can and will identify their activities and that we will prosecute to the full extent of the law. The industry is very serious about zero tolerance when it comes to fraud, and even though the SAICB is focused on serial offenders and syndicates, we are also assisting the member companies in identifying opportunistic fraudsters.

Hi-Tech SS: How has the sharing of criminal intelligence with the central information management system worked out?

HvZ: We are using Memex, which is an intelligence data mining system that is able to take information in multiple formats, but allows you to search for very specific information. The SAICB has written about 50 business rules, which allows us to search the information for very specific trends that we know indicate syndicated behaviour. The resultant information is analysed by our analysts and verified by the member companies. Our investigators then take over the cases to coordinate the investigation and collection of the relevant information; they liaise with the relevant policing and prosecution organisations once the cases have reached the stage of prosecution.

Hi-Tech SS: Is the technology effective?

HvZ: The technology is effective because it is able to take in data in any format. Because of how it searches the information, it allows us to very effectively check our information and identify the patterns and trends that indicate fraudulent activity. It then allows us to map the links between the parties involved, to build the cases in Memex, so we can show how the case developed, plus its auditing process allows us to justify the processes. All in all, the whole process ensures that we can build the whole case in Memex, ready for hand over to the police and prosecutors for finalisation.

Hi-Tech SS: What is the technology revealing?

HvZ: This technology shows that the problem of insurance fraud is as far reaching and elaborate as we expected it to be, and that it needs to be addressed as a matter of urgency.

Hi-Tech Security Solutions: Are companies responding well to this?

HvZ: The cooperation received so far has been extraordinary.

Hi-Tech SS: What else has the SAICB initiated to curb fraud?

HvZ: We have begun to receive commercial information and will be receiving life information shortly. We are also developing a staff dishonesty database to identify staff members involved in assisting fraudsters with their activities.

Hi-Tech SS: What are insurance companies themselves doing to control the problem?

HvZ: Most insurance companies have their own internal investigative units that deal with opportunistic fraud. Syndicated and repeat offenders require a different approach because multiple companies are normally involved. This was why the SAICB was formed, to address this specific problem.

Hi-Tech SS: So often we talk of fraud committed by policyholders. But are brokers and insurance companies not sometimes also guilty of perpetuating fraud? Is the law doing what it should be doing with regards to irregular activities within institutions?

HvZ: We cannot answer this, but the involvement of brokers and staff are definitely investigated and to some extent form part of our investigations.

Hi-Tech SS: Does this crime run far deeper into the tentacles of organised crime and big business than meets the eye?

HvZ: We are currently busy with investigations into this issue and will only be able to answer this in the near future.

Hi-Tech SS: What impact is fraud having on the insurance industry in this current economic downturn?

HvZ: Fraud is having a very bad impact on the industry at present. Some member companies experienced a 27% to 36% in-crease in fraudulent burglary/robbery claims, an increase of up to 12% in fraudulent hijacking and vehicle theft claims and about a 10% to 15% increase in the so-called smaller claims (theft of cell phones, laptops, cameras, binoculars, jewellery, watches, etc).

This interview appeared in the February 2010 edition of Hi-Tech Security Solutions – Thank you to Leigh Yorke-Smith for permission to use this article. For further information please contact her on: yorkesmith@worldonline.co.za – website: http://www.securitysa.com

Related posts:

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3. Be alert to the types of Car Insurance Fraud

But who are all these people writing about insurance – and to be more specific – car insurance? Are we all passionate about this rather less than glamorous topic –or is there some method behind the madness?
I have decided to attempt something rather unique -write something about those who write something about car insurance. I believe we can identify a few categories of writers and would like to share this with the 20 readers [hoping..!] of this blog post!

The Journalist / Financial reporter

These are those writers employed by the bigger media companies and newspapers. They might not have a passion for car insurance – but are employed and paid to follow and write about the financial markets. This includes writing about the financial reports and results from the big insurers and the effect that car accident claims could have on these numbers.

The “Sherlock Homes” writers

We will always find those who regard themselves as the criminologists or detectives. These are those people following the criminal investigative series on television and who spend hours seeking fraudsters around every corner. They will blog and write about the insurance fraudsters and the “hijacked” vehicle found neatly stored away for shipment to some cross-border destination.

The Experts / Financial reporter at the top of the corporate ladder

There are a few writers who are not merely journalists – but business owners in their own right who have created a specific niche for themselves in the financial sector. They are perceived as having a specialized knowledge in a specific field – such as insurance. They are highly sought after by the big financial websites and are often approached to appear as speakers at conferences. They will write to maintain and further their standing amongst specialists in the financial industry.

The “in-house” writer about car insurance

Some companies will require that a specific employee do some writing for the company. They are often the younger financial advisers or the certified financial planners. They are required to write for the company website or company newsletter with the objective of furthering the credibility of the company amongst existing clients and possible impress a few potential clients!

There are also employees working for the bigger insurance companies who will write for the website of the car insurer or the corporate circular or newsletter.

The “hired gun” or independent contractor

There are many writers who are not passionate about car insurance as such – but who are seduced by the allure of good remuneration offered by the big corporate institutions for articles on car insurance. Their main objective is to assist these insurers to achieve greater search engine optimization of “search-ability” on the internet and provide them with articles to be placed on the website of the car insurer.

The insurance aggregators are reliant on being found easily on the internet and gaining good search rankings. They will pay much to have good “in-bound links” from written contributions on the premier financial websites.

A new breed of “Media on demand” writers

The ability to make money online through written contributions on premier websites has created a new breed of writers. These are those benefitting from payment via Google Adsense and other reward systems. They might not have the required expertise in the specific field but are masters in search engine optimization and writing “keyword rich” pieces of content. They might even risk using the so called ‘black hat techniques” to ensure that blog posts are easily found via search engines.

They will analyze which keywords are worth the most in monetary terms and write to concentrate on getting those keywords across on their writing. These writers pose a risk to those searching for quality content – as the internet market is flooded by written contributions lacking depth – but rather focused on small bits and pieces with regular repetition of phrases such as “cheapest”, “affordable”, “best” coupled with car insurance.

Internet users will continue to search the internet for advice and guidance on finding car insurance. Search engines will continue to refine the way that they rank pages and content on the internet. We can only hope that quality content will be rewarded and that users find the correct information with ease.

It is our objective on the car insurance blog to assist these users, to concentrate on the key phrases used – and to use this to provide quality content in the specialized field of car insurance.

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We would however also like to focus on a small but important part of the process of gaining car insurance – the disclosures made by the insured client on the policy application!

Neglecting to make a full disclosure in your policy documents may lead to an invalid claim – and will allow the insurer to decline your claim. This is very important to understand – so let us explain this in more detail:

• A car insurer calculates the premium based on all the information that the client has provided.
• This information will reveal the risks or likelihood of vehicle damage or vehicle loss.
• Much of this information is only known by the client – such as previous accidents and claims or convictions for drunk driving etc
• Only the client is aware who the nominated drivers or regular drivers will be, whether the vehicle is to be used for private or business purposes etc.
• By not providing ALL this information – and the CORRECT information – you will be guilty of defrauding the insurer and placing the insurer in an unfair, perilous position!

It is important to understand that this is not a “back door” for the insurer to dismiss an insurance claim – but rather as recognition of a fundamental principle of insurance! It is only fair that the rights of the insurer and the legitimate expectation of full disclosure are respected as well.

What is the measurement of how much is to be disclosed?

Insurers are entitled to full and frank disclosure of all facts material to its assessment of the risk and the premium charged. The Ombudsman for Short-Term Insurance, Brian Martin says if you are unsure of your facts, rather ask for more time from your insurer to verify the facts or advise them that you are unsure.

Car insurance clients will ask themselves “Do I need to inform the insurer about this?” We would like to advise that the client rather attempts to place himself in the position of a fictitious judge and ask – Would an independent judge regard that the insurer should have known about this when calculating the premium?”

When does the client have to make this full disclosure?

It is important to recognize that this is not a once-off disclosure or the purchase of a once –off asset! The agreement is based on continuous cover for an asset that needs to be protected from ever changing threats. If those threats are significantly altered – the car insurer needs to be made aware of this!

Consumers need to ensure that they advise their insurer or broker if circumstances have changed since the inception of the policy, for example, there is a new regular or nominated driver, the purpose of use has changed or you have had a change of address.

Decisions by the Ombudsman for Short Term Insurance

It is perhaps best to also to focus on the decisions of the Ombud pertaining to disclosures! How will the Ombud adjudicate disputes about the correctness of information disclosed?

An insurer relies upon the information furnished and bases its assessment on the truth and accuracy of that information. “If you have had prior claims or a judgement against you, make sure that you disclose this information. Rather adopt the policy of providing too much information then too little information”, says the Ombudsman for Short Term Insurance.

Example of partial disclosure made to a car insurer

The Office of the Ombudsman for Short Term Insurer dealt with a complaint where the insured had telephoned an insurance company enquiring about insurance cover for his vehicle and contents of his house. Based upon the responses given to a number of questions, the insurer provided a quotation which was accepted by the insured.

A few months later the insured filed a claim for damage to his motor vehicle which had been involved in an accident in a parking garage. The insurer rejected liability for the insured’s claim on the grounds of non-disclosure. The insured had submitted four accident claims against his previous insurer within a short period of time and which were of significant value. At the time that the insured took out the cover, he was asked whether in the previous five years there had been claims made against his vehicle, to which he only acknowledged one claim. Had the insured provided proper disclosure to his insurer, they would have declined the risk due to his history of claims.

The Ombud commented as follows:

“In this instance, we agreed with the insurer’s decision that they would declare the policy void from inception, but that they needed to refund all the insurance premiums that had been paid by the insured.

The insured knew that he had filed a significant number of claims within a short period of time against his previous insurer and that this information would certainly have affected the insurers assessment of the risk.”

Related posts:

1. Layered vehicle security needed for affordable car insurance
2. How do I lodge a car insurance complaint with the Ombudsman?

What do the numbers reveal?

• Drivers with five-year-old vehicles make the most claims (9.61%)
• Owners of four-year-old vehicles make the next most claims (9.56%), followed by drivers of cars six years old (9.08%).

Virgin Money Car Insurance spokesman Grant Bather believes that this provides some justification to the trend by vehicle owners to change their cars every three to five years.

“This is not to say that cars five years old are the most dangerous, but that they are more likely to be involved in an incident that leads to a claim being made. This may be a traffic accident, breakdown or theft.
“Looking at these statistics, people looking at buying a second-hand car should also make sure that they have taken the necessary action to ensure that the car meets all of the road standards.”

Why does the vehicle age result in more car insurance claims?

It is nice to have this information –but meaningless if we do not discuss the possible reasons for the increased claims percentage!

We could consider the following factors as contributing to this data:

• Vehicle owners are more alert and vigilant when driving a new car – they are perhaps more aware of the need to protect this asset.
• Effective vehicle maintenance is usually in place for new vehicles.
• Many new vehicles have a “car maintenance plan” for 5 years or 100,000 km’s – this result in effective maintenance and the roadworthiness of the vehicle.
• Owners of older vehicles might be less attentive to the vehicle components required for safety on the road – such as tyres, shocks, brakes, lights etc
• We also need to recognize that newer vehicles have more safety features such as ABS breaking, stability control etc.

The characteristics of the driver are also important. Few first time drivers will be able to afford a new vehicle – whereas older more experienced drivers will more likely drive newly purchased vehicles. Your younger less experienced drivers will more likely drive the older vehicle and this could lead to increased vehicle damage from accidents!

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2. Avoid car accident claims due to collisions with cyclists
3. Avoid car accident claims from crashing into pedestrians!