Car premiums rise when they should come down
The financial advice ombud says insurers and brokers should be telling you about the depreciation in the value of your car, writes Neesa Moodley-Isaacs
November 29, 2008 Edition 1
The Financial Advisory and Intermediary Services (FAIS) ombud, Charles Pillai, has put the brake on insurers and brokers who have been jacking up car insurance unnecessarily to earn higher premiums and commissions.
Pillai this week ruled against Absa Insurance Brokers for failing to inform a client, Anthony Naidoo, that bringing the insured value of his Toyota RunX into line with its market value would reduce his premiums and save him money.
Thousands of motorists pay premiums based on the original retail value of their vehicles without realising that, in the event of a claim, they will receive compensation based on the market value of their vehicles at the time of the claim.
Pillai also criticised the insurer for not mentioning in Naidoo's contract renewal letter that a reduction in the value of the vehicle could result in lower premiums.
Pillai says he is confident the Financial Services Board (FSB) will take appropriate regulatory action to stop them from doing this.
Dube Tshidi, the chief executive of the FSB, says he has not yet studied the determination. "If I find this issue merits further investigation, I will definitely be taking it up with the insurance industry," he says.
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