The what, when, and how it works
6 years ago, the concept of decreasing premiums was introduced to the South African market by newcomer, King Price. Expecting this offering to result in major losses for the insurer, both the public and bigwigs in the industry watched and waited for the king to be dethroned.
But, King Price is still around and still offering decreasing car insurance premiums. So, what’s the deal? How does it actually work, how are they getting it right, and will you actually save? Or is it just a few cents and all talk?
We’re going to do a deep dive so that you know what’s happening in their kingdom and can decide whether it’s worth it to get a quote.
When and why decreasing premiums were introduced
King Price was founded by Gideon Galloway in 2012 and is reinsured by the world’s largest reinsurance company, Munich RE. Galloway had grown dissatisfied with the way car insurance was (and still is) traditionally offered. His argument is that if a person’s car decreases in value (as cars do, every single month) then this should be factored into their premium and they should pay less every month.
It’s a fairly simple reason, but it’s this exact thinking that launched King Price and their decreasing premiums.
How the science behind this premium model works
The first thing you need to know is that the decreasing premiums are offered on their comprehensive car insurance policy. From there, the royal insurer uses the average rate of depreciation of a policyholder’s car to recalculate their premium. These calculations are performed every month to make sure that you’re always paying a premium that accurately corresponds to the true value of your car.
Here’s some basic maths to show you how much you might save:
- When you join: Super cheap insurance.
- After the first month: Your premium decreases by R10.
- After the second month: You’ll save R30, because this premium is calculated at R10 less than the first month.
- After 12 months: Save R660.
- After 3 years: Save R6,300.
(Bear in mind that your premium and monthly discount are unique to you as they’re based on your individual risk profile and insurance history.)
Essentially, the savings seem small at first. It’s quite interesting to receive SMSs informing you of the R2 or R3.56 or R5.04 decrease to your premium… But the real value comes in by not cancelling your policy, because the longer you stay, the less you’ll end up paying and the more you’ll save in the long-run. These are what King Price refers to as ‘compound savings’ and have already added up to more than R100 million for their policyholders… And counting!
It’s definitely worth checking out, so if you want a super cheap quote online in a few minutes, just click here or you can talk to a friendly consultant by calling 0860 50 50 50.