Outsurance reduces car premiums, but many competitors aren't matching parked car boon

Direct insurer Outsurance on Tuesday announced an across-the-board 15% reduction in its existing car insurance policies for May, joining those of its competitors which “recognise the reduced kilometres travelled and claims frequency during the lockdown”.

“We understand that many of our clients are under immense financial strain during this unusual time,” said Outsurance CEO Danie Matthee.

Two weeks ago, the insurer said it would reduce excess payments on claims between April and June, but said that it felt that a blanket premium discount was not warranted.

“From an expense point of view we are still fully operational and incur all our normal expenses, importantly having guaranteed staff incomes in this period — as such we cannot simply stop charging premiums,” it said in a statement at the time. “If the lockdown continues for longer than expected, or claim volumes observed are lower than expected, we will review the premium position.”

That has now happened.

MiWay got in early on March 26 with an announcement that it would reduce its clients’ April premiums by 10%.

Discovery Insure will discount its clients' April premiums by 25% in the case of those who drive less than 500km during the month, and 15% in the case of those who add more than that to their car’s odometer.

And Standard Bank Insure will refund its clients 25% of their April premiums when lockdown is over.

Motor insurance newcomer Naked has used its agile app-driven business model to give its clients the most consumer-friendly lockdown relief — dramatically reduced premiums on the days they do not drive their cars, effective from March 27 to June 30 or longer, if the pandemic continues to affect driving patterns. That means a 90% saving on premium for most of their clients.

SA’s largest short-term insurer, Santam, has not bowed to pressure to grant across-the-board premium relief, in keeping with the vastly reduced risk of a mostly parked-off vehicles and near-empty roads. Instead, it has created a fund “to assist clients facing difficulty during this current crisis”, including “premium support”.

Another insurance giant, Hollard, has made no announcement about premium reductions, saying its broad range of products and sales channels means that “it’s impossible for us to issue a one-size-fits-all response”.

When a Momentum client asked her broker about reducing her car insurance premiums, she was told, in writing: “The reality is that the premiums are already costed for the risk of the car and all these risks are not mitigated by the car being used less.” No mention of the reality that a car parked in someone’s property poses far, far less risk of a claim than one being driven daily on busy roads, as usual.

The best Momentum could offer was allowing her to “downscale” her cover and then reinstate full cover within 10 business days of lockdown ending, “keeping the premium the same as it was before”.

Old Mutual iWyze has told its motor insurance clients that by completing a pledge on its website, they’d be eligible to have their next three premiums discounted by 7.5%.

The Telesure Group (Auto & General, First for Women, Budget Insurance, Dialdirect), along with others not offering blanket premium relief, is under fire on social media for its stance. Those who request premium reductions are told they need to sacrifice key cover to get it. Relief is in the form of no excess payments, in some cases, in the event of a claim.

King Price is offering to switch its comprehensive cover clients to third party, fire and theft cover, with accident cover at no extra cost.

GET IN TOUCH: You can contact Wendy Knowler for advice with your consumer issues via e-mail: consumer@knowler.co.za or on Twitter: @wendyknowler.