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Choosing a car insurance company



There are many short-term insurance companies offering car and home insurance in South Africa.

Most of these companies are well established in the short term insurance market with many years of experience, some as much as 30 years.

They all try to offer a different value proposition to individuals in order to differentiate themselves from the rest of the market.

It is hoped that this article will give you a different way to think about insurance companies based on popularity and their unique offering, thereby highlighting the wide range of options that you actually have to choose from!

Broker Model

In the past most insurance companies used to obtain business via a broker business model for personal lines insurance − which required them to pay a broker commission built into the client's premiums.

Many insurers still use their broker model by partnering with carefully selected owner managed insurance brokerages around South Africa offering the insurers range of products. The broker model is strongest for business clients that require a whole host of additional services that a broker company can provide.

Please take note Go the broker route if you believe brokers' expertise can help you make better decisions with more options. Thus reducing long run costs and minimizing effort on your part.

Direct Insurers

With the advent of the internet and direct access to information, personal lines insurance has taken the direct insurance route en masse.

Companies can market to individuals instantly and individuals can shop online at the click of a button. Selecting insurance has never been easier.

Currently there are many companies that offer direct car insurance. This dispenses with the broker and its commission structure, attracting clients directly by offering them a lower premium value proposition.

These companies market massively in order to attract new business. Direct insurance targets mainly personal markets products such as car, home and life insurance - that is simple risk cover relative to the nature of other insurance products.

The benefits of direct insurance are very compelling − individuals can compare insurance premiums online, as well as submit and manage claims online.

Please take note Go direct if you believe you can make the most informed decision for yourself, without the added middleman costs associated with brokers.

Trustworthy Operators

Whatever route you choose to go, make sure that your insurer or broker is a registered financial services provider in South Africa. This gives you peace of mind that they are trustworthy operators within the bounds of the law and adhere to governance processes that protect South African consumers against unscrupulous providers and during any disputes.

Please take note Your first check is to see if the company you are dealing with is licensed under the Financial Advisory and Intermediary Services (FAIS) Act. This Act is aimed at protecting consumers by regulating those who give advice on financial services products.

Drivers that differentiate the company

The value proposition of a company is that single quality statement that a company makes that can sway a consumer to choose their company over their competitors.

Segmentation

Companies can differentiate themselves by offering products and expertise in certain segments only. Companies such as First for Women offering gender-based insurance.

Broker relationships

Santam for example has positioned itself as a trustworthy and experienced insurer that often scoffs at the direct insurance model − although they do own Miway, so they have a presence in this market − but the point is they make a value proposition to customers that their broker relationships are one of their core strengths and promote it as a channel of choice.

Product Innovations

Increased competition has really helped consumers by enriching their product choices.

Consumers can choose Hollard's Pay as you Drive product that has a monthly premium based on the kilometres that they drive − thereby appealing to work from home customers that won't use their car as much as the average motorist.

To King Price Insurance that caters to clients' gripes about sticky premiums but declining motor values − with their product proposition of premiums that decrease monthly as the value of their car depreciates.

Product Enhancements

It is not uncommon for people to pay premiums for 15 years without ever claiming.Compare Car Insurance

That has brought about product enhancements such as the Bonus − which offers something back to clients after a certain number of claim-free years.

Insurance companies offering the Bonus feature in their products are Outsurance, and Dial Direct.

Apart from getting anything back, clients also grudgingly pay excesses or 'first payable amounts' at claims time. This has led Virgin Money to offer a no excess feature for claims under a certain amount, thereby appealing to customers that don't like the concept of excesses.

Tackling structural industry problems

With nearly 500 000 accidents and 140 000 thefts and hijackings on SA roads each year, choosing to drive without car insurance is a risky decision. Yet millions of South African motorists choose to ignore vehicle insurance every day simply because the traditional comprehensive car insurance is just too expensive.

According to SAIA research, approximately 70% of all SA motorists are uninsured. Prime Meridian Direct has positioned itself to tackle this apathy by creating products offering partial, affordable insurance − covering biggest risks only − with the aim of getting more insured motorists out there.

Summary

It can be seen in this study that there are no big surprises when it comes to the top of the list − it's the insurance names that actively market direct to the public via online, print media, tv campaigns that are getting the most attention from web savvy customers.

While appreciating that Online is only one channel to market and distribute insurance products, the extensive network that a company relies on, can always be linked back to their website and the interest that it generates.

These are the names that people are familiar with. But this exercise also reveals the many other insurers out there that you can call upon to meet your unique and varied needs!

We hope that this article has given you ways to think about your next insurance purchase, whether it be popularity or proposition. Ultimately we urge you to consider the company that offers the best total package and expertise that you require, and not just gravitate toward a one dimensional view of price only.

Whoever you choose to insure with, make sure they are trustworthy, meet all your requirements, and not just offering the 'best deal' in town.

Valuable tips It is always advisable to only deal with reputable trustworthy insurers. The FSB has a list of registered short-term insurers on their website.

Being frustrated with corporate greed and its unwillingness to change and improve for the good of consumer needs, King Price Insurance was born from the seed of hope that things could change for the sake of the greater good!
Since they started in June 2012 King Price has seen growth by the thousands each and every month in South Africa.
King Price car premiums decrease monthly as your car depreciates. As an example a Traditional insurance total premium over 36 months would result in R29 349, but King Price the total premium over 36 months amounts to R23 520. An instant 20% saving of over R5 829!
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