Amid the escalating financial pressures faced by many South Africans, particularly following the festive season, the rising trend of short-term insurance premiums comes as both a concern and a reminder of the necessity of comprehensive coverage.
In 2022, the gross written premiums for short-term insurance soared to R140.1 billion, marking a significant 9.7% increase from the previous year. This momentum has continued into 2023, with an average premium increase of 2.2% from the third to the fourth quarter.
As households evaluate their budgets and consider which expenses to cut, the idea of halting monthly insurance premiums can be tempting. However, industry experts warn that such a decision could expose individuals to greater financial risks.
Siyakha Masiye, spokesperson at Miway, advises South Africans to think twice before eliminating insurance from their financial plans.
“While it’s natural to seek ways to trim costs in challenging times, insurance is one of the most effective tools for achieving financial stability and preparing for unforeseen events. The question isn’t whether you can afford insurance, but rather whether you can afford to be without it,” Masiye cautioned.
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Understanding your insurance needs
In an environment rife with financial challenges, it’s vital for individuals to approach their insurance needs with a clear mind. Masiye emphasises the importance of understanding precisely what coverage is necessary—be it for vehicles, homes, or businesses. “Understanding your specific insurance needs will help avoid overpaying for unnecessary extras,” Masiye pointed out. Many individuals rush into decisions, settling for the first policy they encounter rather than exploring options from multiple insurers. “Taking the time to compare policies can help secure more competitive rates,” he added.
Leverage preventative measures
Proactive measures can significantly influence the insurance premiums one pays. Masiye asserts that insurers consider safety and security practices when assessing risk.
“Simple actions like installing a high-tech security system can greatly reduce your premium,” he noted.
Furthermore, regular maintenance checks, employing fire prevention methods, and securing vehicles can yield additional savings on premiums.
Bundle your insurance policies
For those maintaining a strong insurance record, bundling policies presents a productive avenue for savings. Masiye points out that many providers offer discounts on combined policies, such as home and vehicle insurance.
“Bundling simplifies your coverage and enhances your negotiating leverage,” he explained.
Combining multiple policies can often result in savings of up to 25% on car premiums and 15% on building cover, alongside potential loyalty rewards for clients with a claims-free history.
Adjust your excess
Adjusting one’s excess—the out-of-pocket amount paid when making a claim—can also aid in reducing monthly premiums, as long as the excess remains affordable in the event of a claim. “Increasing your excess might lessen your monthly expenses, but it’s a trade-off. It could work for low-risk drivers who rarely claim,” Masiye remarked.
Annual policy review
With changing personal circumstances, reviewing your insurance policy annually is essential. Factors such as inflation and shifts in local conditions can influence premium rates.
“Your risk profile can evolve over time, and conditions such as moving to a safer neighbourhood or enhancing security measures should reflect in your premium,” Masiye advised.
Staying abreast of these changes helps policyholders avoid overpaying for coverage that no longer suits their needs.
Secure the best deal without compromising protection
Ultimately, negotiating a favourable insurance premium requires a focus on not just reducing costs but securing comprehensive coverage to protect financial wellbeing.
Masiye advocates for proactive engagement with insurers and regular policy reviews.
“By adopting smart strategies and maintaining informed discussions with insurance providers, you can find the best deal that aligns with your budget, ensuring you are well-protected,” he concluded.
IOL