IT IS TOO LATE AFTER THE EVENT

[Phil Cooper]

A client's Brother in law insured his House and Contents via Outsurance.

I was asked to quote, but was "too expensive". I warned of potential problems, but was told he had had his car there, and their claim had been handled "fine".

Outsurance sent out valuators, who valued the property and contents at R6,000,000.

The house was subsequently gutted in a fire - burnt to the ground - 100% destroyed.

NOW - Outsurance are saying that the sum insured was inadequate, and are only prepared to offer R4,000,000.

FIRSTLY - I query how they can say there is under-insurance when THEY valued it (but they do say it is up to the client to ensure sums insured are adequate)

BUT - Insurance 101 - there is NO average applicable in the case of a total loss! Insurers pay out the sum insured, as Average is "Automatic", in that you are in for the uninsured portion. This is just their way of ducking paying BIG claims - as per the Noseweek article attached.

The problem is - one only finds the flaws when the brown stuff has hit the oscillating object!

OUTSURANCE4 - Noseweek.pdfOUTSURANCE3 - Noseweek.pdfOUTSURANCE1 - Noseweek.pdf

[IanF]

Phil
What are the chances of Outsurance responding to this? I am sure they would get google alerts or a similar service to inform them of what is written about them. I have been with them a long time, and my take on the outbonus is that it is a "benifit" which is an oxymoron in terms of insurance. They want to stop you claiming when it is the other parties fault so you don't lose it. Then you have to try and deal with the other guys insurance and they are also full of the brown stuff. I don't care about the outbonus anymore.

[Phil Cooper]

Well - they refused to respond to the Noseweek article - so why respond here? The more you respond, the more the issue lives on - so ignore it, and it goes away.

Of course the Outbonus is a gimmick. I give an example where a guy gets a quote saving him R250 a month with them.

In month 11, he has a windscreen claim - cost R2,800. To protect Bonus he repairs himself. Saving year One R200.

In 2nd year, he loses a watch - R2,500. Again, no claim, so saving now R700 over 2 years.

In 3rd year, week 51, he is involved in MAJOR car accident - NO WAY can he not claim. Bonus gone, plus R5,300 out of pocket...

STATISTICALLY - 1 in 3 people have a claim every year. So statistically, you are going to lose your outbonus, or carry a claim or two out of your own pocket.

ALSO - they quote purely on price - their policy wording IS more restrictive than many other "conventional" Insurers' policies, and this can more than eat up the premium saving when the claim arises.

They do "bump up" their premiums by the few percentage points periodically - and over a period, you find you are paying more than you would with a conventional market.

BUT - when you phone to cancel, suddenly they will reduce the rates to keep you. So why charge so much in the first instance.

They are clever marketers - they spend more on advertising than Insurers pay Brokers in commission (or within a point or two) - so, while they are not paying Broker Commissions (though their teleoperators are paid comm) - you are realistically NOT saving premium - you are just paying for TV and Newspaper and Magazine adverts instead.

Go via Broker and for that money you get advice, the Broker will ensure you have the RIGHT covers for your exposure (if he is a good broker) - and represent you when you have a claim to ensure you get the most that you are entitled to get when you do have a loss. Happy client - retained client!

The person you are dealing with at a Direct Insurer wants to minimise your claim to maximise their profits. A slight conflict of interest?

[IanF]

Thanks Phil what you say makes sense, it would be a pity if Outsurance doesn't respond. I find this interesting

They are clever marketers - they spend more on advertising than Insurers pay Brokers in commission (or within a point or two) - so, while they are not paying Broker Commissions (though their teleoperators are paid comm) - you are realistically NOT saving premium - you are just paying for TV and Newspaper and Magazine adverts instead.

[Phil Cooper]

I have asked the client for copies of correspondence, so I can look at what has actually happened and been said.

Promised to let him have comments / report that he can refer back to the OutLaws.

I know what I have been TOLD - but I want to see the ACTUAL - sometimes layman misinterprets what is said.

(Which is why you need a Broker)! :-)

[Nickolai Naydenov]

Well Phil it seems as if you are in the game, then you should know that there is a FAIS Ombud that deals with those matters which and it won't cost a thing.

For the rest I agree with you and yes people do fall for all the nonsense, many think very irrational with all the crap they advertise and the price beating bull they cut the cover, I've seen many different policy wordings, exclusions, conditions and etc on their policies, things that the ordinary people don't understand. We had a wholesale vehicle dealership that the client was not insured for fire and there are on average about 150 vehicles in there, can you imagine that

[Phil Cooper]

Hi Nikolai

The problem is the FAIS Ombud only deals with matters in breach of the FAIS Act - this does not - and the Short Term Ombud's authority ceases at losses on R800,000.

So only route is legal route.

[Nickolai Naydenov]

Exactly, so get the 4 mil payout and refer the case to the ombud, the 800 000 won't cost you anything but you'll get an idea of what will happen in court and judge from there if you wana go to court, besides if they approve you get 800k more than now

[Phil Cooper]

When you sign the Agreement of Loss, it is in full and final settlement.

And no Insurer pays the claim until AOL is signed!

[murdock]

all insurance companies are thieves...i did work for an insurance company...and over heard them discussing clients and claims...the bottom line "you claim you are screwed" like you say a goggle alert comes up...well the same thing happens with insurance...you claim...they make their money back and some...and it seems they are linked...people say price fixing is an issue maybe they should look into insurance screwing customers...

i give you an example...i take out insurance on my property...and guess what someone drive my gates off the hinges...totalled the motor the works...insurance pays out no problem...rain comes and washes the tar off my driveway...i am now told that the tar was not thick enough and therefore have no claim...so being the type of person i am...i start digging a little deeper and enquire about my retainer walls and other stuff like alarms...security gates...yes you guessed right...the money to insure the retainer walls and house contents etc come off my bank account every month..."BUT they are not insured because...as the new owner of the property i dont have the plans for the retainer wall nor are my security gates of an approved type...not forgetting my gates are no longer insured because they are swing gates and dont have sensors...and this is just the tip of the ice berg...

another big issue "BEWARE OF WHAT YOU SAY TO AN INSURANCE ASSESSOR" their primary goal is to catch you out...they will seem like the most friendly pereson you have ever met...ask about your family and kids...drink tea with you...the minute they walk away from you...they take an axe and start hacking you to pieces...ever word you said will be used against you in an attempt to get out of paying the claim.

when dealing with insurance assessors be it for your motor vehicle house anthing...you must say as little as possible...even if you may seem rude...answer only questions asked and keep them as short and to the point as possible...they are not your mate and dont for one minute get drawn into their out going friendly presentation they offer to catch you out...DONT SAY I DIDNT WARN YOU.

[Phil Cooper]

Murdock

Depends on the Insurer! I deal with guys who do NOT look for ways OUT - but HOW to pay!

Have a current case where they are paying R96K ex-gratia because the "intent" was there - even though the letter of contract excluded the covers.

Assessors are NOT there to catch you out - unless you give them reason to doubt legitimacy of your claim.

BUT - you do need to READ policy to know what is, as is not, covered!

As for "BUT they are not insured because...as the new owner of the property i dont have the plans for the retainer wall nor are my security gates of an approved type...not forgetting my gates are no longer insured because they are swing gates and dont have sensors..." - that is cr*p unless you are dealing with Insurer near the bottom of the barrel!

[murdock]

i beg to differ...

one thing about insurance comapnies...they are quick to insure but reluctant to actually visit the property or site they actually insure...hence the problem with under insuring...parts not covered etc...etc.

unfortunatelty i have been burnt one time too many and now before i put in a claim...i make sure everything is as it should be before i call out the assessor...i make sure i have done my homework...know what to say and not to say...right down to the little details...like the tyres on my vehicle...if they even look like they might be a little smooth which the insurance use as an excuse not to pay out for accidents...i first put a good second hand set on...such a silly thing but if you want to make sure you get paid out do your homework.

insurance companies must be the only ones that i know of which have millionare clubs and its not their client i am talking about.

[Phil Cooper]

Hi Murdock

You speak as someone who has been burned, and has been with companies with restricted covers!

A number of Insurers I use these days send out valuators and they carry out DETAILED inventories of contents, which is presented to client to accept.

After that claims are a snip. Average NEVER applies, and there are no arguments when a claim occurs - it is just settled. And fast!

The only Insurer I know of with Millionaire Clubs are LIFE insurers - never seen such a thing with Short Term!

Short Term Insurers generally make around a 3% to 5% underwriting profit, so they are not making HUGE money returns. The exceptions are the Direct Insurers - their profits are in the 25% to 30% mark.

Why? I leave that to you to work out!

[Nickolai Naydenov]

Whole lot of crap Murdock, I completely disagree with 99.9% of what you are saying. Our company started doing short-term insurance 5 years ago(prior to that we didn't offer tha service) and in that time we have had 0 repudiated claims and last year we collected R12 000 000 in premiums, this is considered a small book but a million a month in premiums is quite a few vehicles, houses and contents to have 100% pay out rate in claims. I'm not in a mood to argue but I'll tell to to cancel your insurance and save your money and when you have a loss you take the risk, as simple as that. I don't see why you have insurance if that's what you saying.

[murdock]

unfortunately i had to have insurance when i got a bond..and hp on one of the vehicle(which requires i have insurance)...otherwise i have managed to be insurance free for more than 12 years.