Insurance: What You Need to Know

How to Choose the Right Insurance Policy for Your Needs

Insurance is a way of protecting yourself from financial losses due to unexpected events. Insurance policies are contracts between you and an insurance company, where you pay a regular fee (called a premium) and the company agrees to pay you a certain amount of money if a specified event happens (such as an accident, illness, theft, fire, etc.).

There are many types of insurance policies available in South Africa, such as life insurance, car insurance, home insurance, travel insurance, health insurance, and more. Each type of policy has different benefits, costs, and conditions. Therefore, it is important to understand what you are buying and what you are covered for before you sign up for any policy.

In this article, we will explain some of the basic concepts and terminology related to insurance policies, such as:

• What is indemnity insurance and non-indemnity insurance?
• What are the main components of an insurance policy?
• What are some of the laws and regulations that govern insurance in South Africa?
• How can you compare and evaluate different insurance policies?
• How can you report and resolve any issues or complaints with your insurance company?

Indemnity Insurance vs Non-Indemnity Insurance

In South African law, we have two types of insurance, namely indemnity insurance and non-indemnity insurance.

Indemnity insurance is taken out to indemnify oneself against a loss. In other words, insurance is taken out so that one is reimbursed if one suffers a loss. For example, if your car is damaged in an accident, your car insurance will pay for the repair costs up to the limit of your policy. Indemnity insurance is based on the principle of restoring you to the same financial position you were in before the loss occurred. Therefore, you cannot make a profit from indemnity insurance.

Non-indemnity insurance is taken out to provide a fixed benefit in the event of a specified occurrence. For example, if you die or become disabled, your life insurance will pay out a lump sum to your beneficiaries regardless of the actual financial loss you or they suffered. Non-indemnity insurance is based on the principle of compensating you for the loss of potential income or quality of life due to the occurrence. Therefore, you can make a profit from non-indemnity insurance.

Components of an Insurance Policy

An insurance policy is a legal document that contains all the terms and conditions of the agreement between you and the insurance company. It usually consists of several parts, such as:

• The policy schedule: This is the part that contains your personal details, such as your name, address, contact details, policy number, etc. It also specifies the type of policy, the amount of cover, the premium amount and frequency, the start and end date of the policy, and any special conditions or exclusions that apply to your policy.
• The policy wording: This is the part that contains the general terms and conditions that apply to all policies of the same type issued by the same company. It defines what is covered and what is not covered by the policy, what are your rights and obligations as a policyholder, how to make a claim, how to cancel or amend your policy, etc.
• The endorsements: These are additional documents that modify or supplement the policy schedule or wording. They may be issued at the start or during the term of the policy to reflect any changes or updates that affect your policy.

It is important to read and understand all these parts carefully before you sign or accept any policy. If there is anything that you do not understand or agree with, you should ask for clarification or seek professional advice before proceeding.

Laws and Regulations Governing Insurance in South Africa

Insurance in South Africa is regulated by various laws and authorities that aim to protect the interests of both consumers and insurers. Some of these laws and authorities include:

• The Insurance Act 18 of 2017: This is the main legislation that governs the licensing, supervision, and conduct of insurers and intermediaries (such as brokers and agents) in South Africa. It also sets out the minimum standards and requirements for insurers and intermediaries to operate in a fair, transparent, and sound manner.
• The Financial Sector Conduct Authority (FSCA): This is an independent statutory body that regulates and supervises all financial institutions and services providers in South Africa, including insurers and intermediaries. It also enforces compliance with various laws and codes of conduct that apply to the financial sector.
• The Financial Services Ombud Schemes Act 37 of 2004: This legislation establishes various ombud schemes that provide independent dispute resolution services for consumers who have complaints against financial services providers, including insurers and intermediaries. Some of these ombud schemes are:

1. The Ombudsman for Short-Term Insurance (OSTI): This ombud scheme deals with complaints relating to personal lines (such as car and home) and commercial lines (such as business) short-term insurance policies.
2. The Ombudsman for Long-Term Insurance (OLTI): This ombud scheme deals with complaints relating to long-term insurance policies (such as life and funeral) policies.
3. The FAIS Ombud: This ombud scheme deals with complaints relating to advice or intermediary services provided by financial advisers or brokers regarding any financial product or service.

How to Compare and Evaluate Different Insurance Policies

When choosing an insurance policy for your needs, it is important to compare different options from different providers and evaluate them based on various factors such as:

• The cover: This refers to what is included and excluded by the policy. You should check what events or risks are covered by the policy (such as fire, theft, accident), what are the limits or caps on the cover (such as maximum amount payable per claim or per year), what are the excesses or deductibles (the amount you have to pay out of pocket before the insurer pays), what are the exclusions or exceptions (the events or risks that are not covered by the policy), etc.
• The cost: This refers to how much you have to pay for the policy. You should check what is the premium amount (the regular fee you have to pay for the policy), how often you have to pay it (monthly, quarterly, annually), how it is calculated (based on factors such as age, gender, health, value of property, etc.), how it may change over time (due to inflation, claims history, etc.), what discounts or bonuses are available (such as no-claim bonus, multi-policy discount, etc.), etc.
• The service: This refers to how well the insurer or intermediary provides customer service and support. You should check how easy it is to contact them (phone, email, online chat, etc.), how fast they respond to queries or complaints, how helpful they are in providing information or advice, how efficient they are in processing claims or payments, how transparent they are in disclosing fees or charges, etc.

You can use various source of information to compare and evaluate different policies, such as:

• Online comparison tools: These are websites or apps that allow you to compare different policies from different providers based on your needs and preferences. They usually provide quotes, features, ratings, reviews, etc. for each policy option. Some examples are Hippo.co.za, CompareGuru.co.za, InsureAfrica.co.za, etc.
• Brokers or agents: These are intermediaries who represent one or more insurers and offer their products or services to consumers. They usually provide advice, recommendations, quotes, etc, for different policies based on your needs and preferences. They may charge a fee or commission for their service. You should check their credentials, qualifications, experience, etc. before engaging them. Some examples are Outsurance.co.za, KingPrice.co.za, Budget.co.za, etc.
• Direct insurers: These are insurers who sell their products or services directly to consumers without using intermediaries. They usually provide information, quotes, applications, etc. on their websites. or phone lines. They may offer lower premiums or better benefits than intermediaries due to lower overhead costs. Some examples are Discovery.co.za, Momentum.co.za, Liberty.co.za, etc.

How to Report and Resolve Issues or Complaints with Your Insurance Company

If you have any issues or complaints with your insurance company or intermediary regarding your policy or claim, you should follow these steps:

1. Contact them directly: You should first try to contact them directly via phone, email, online chat, etc., and explain your issue or complaint clearly and politely. You should also provide any relevant documents or evidence to support your case. You should ask them to acknowledge your issue or complaint in writing and give you a reference number for future follow-up. You should also ask them how long it will take them to resolve your issue or complaint and what steps they will take to do so.
2. Escalate internally: If you are not satisfied with their response or resolution within a reasonable time frame (usually 30 days), you should escalate your issue or complaint internally within their organisation. You should contact their senior manager or complaints department via phone, email, letter, etc., and refer to your previous communication and reference number. You should also state clearly what outcome you expect from them and by when.
3. Seek external assistance: If you are still not satisfied with the outcome of your complaint after escalating it internally, you may want to seek external assistance from a consumer protection agency or ombudsman. These organizations can help you mediate your dispute with your insurance company and may be able to help you get a fair resolution.

Here are some additional tips for resolving issues or complaints with your insurance company:

• Be persistent: Don’t give up if you don’t get the resolution, you want right away. Keep following up with your insurance company until you get a satisfactory answer.
• Be polite: Even if you’re frustrated, it’s important to be polite and professional when dealing with your insurance company. This will help you get a better outcome.
• Keep records: Keep copies of all correspondence with your insurance company, including emails, letters, and phone records. This will help you track your progress and make sure that your complaint is being handled properly.

By following these tips, you can increase your chances of resolving any issues or complaints you have with your insurance company.

Disclaimer:

The information contained in this article is for general information purposes only and does not constitute legal advice or opinion. The author is not a lawyer and does not guarantee the accuracy, completeness, or reliability of the information. The author is not liable for any errors, omissions, or damages arising from the use of the information. Readers should consult a qualified lawyer before taking any action based on the information in this article.