Expect your insurance costs to rise
2007-02-01
ACCORDING to Angelo Haggiyannes, director of Auto & General Insurance, South Africans are going to be tightening their belts in 2007 as the economy toughens and the cost of living goes up.
“Not only are food prices expected to escalate this year by an estimated 15%, but already there has been an eight cent per litre jump in the petrol price.
“With crude oil prices being as volatile as they are, this won’t be the last petrol price hike of the year. Rising interest rates are also putting pressure on people who are now paying more for their homes and vehicles each month.”
Unfortunately, medical aid and insurance premiums are also inevitably increasing in 2007, placing further strain on the pocket.
Haggiyannes explains that numerous factors, including currency fluctuations, a number of recent local natural disasters and high levels of crime have contributed to the rate increases by most short-term insurers.
Another determining factor is the fact that the number of motor vehicle accidents has amplified due to the increased number of cars on our roads, the deteriorating infrastructure, high traffic volumes and the large number of new and inexperienced drivers.
“The profile of the vehicle fleet that short-term insurers are covering nowadays has also changed drastically,” says Haggiyannes.
“Not only is it a younger fleet, but a great percentage of these new vehicles are imported and contain advanced and expensive computer systems and sensor monitoring equipment.
“The impact this has on the short-term insurance industry is that the parts available to repair these new, technologically advanced vehicles are more expensive.
“In addition, the value of the Rand has slipped since the beginning of 2006. This means that the cost of purchasing these imported, high tech parts has increased as well. All of this translates into much higher claims costs for the insurer and increased premium rates for the consumer,” Haggiyannes says.
Some people may argue that since their vehicle is depreciating year on year, their insurance premiums should decrease too. However, Haggiyannes points out that although a lower value would be applicable in the case of theft, it would not be appropriate in the case of a car accident due to the high cost of parts and labour.
Haggiyannes recognises that insurance is a grudge-purchase so it is very often one of the first items to be scrapped from the monthly budget. However, he advises those who are thinking of cancelling their insurance to think wisely before they do.
“Burglaries, robberies, hi-jackings and petty theft are at an all time high in South Africa so insuring your valuables has become a necessity.
“Aside from the risk of having your car or any other possessions stolen, there is the possibility that something else could go wrong, such as a burst geyser or even a fire.
“Not many people have the cash in-hand to replace a stolen car or furniture and appliances ruined in a fire. Those who think that insurance is an unnecessary cost should consider the costs of not being insured before cancelling their short-term insurance,”
concludes Haggiyannes.
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