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Thread: Cheap "insurance"?

  1. #1

    Cheap "insurance"?

    Skulduggery reportedly rampant in the industry

    While there are very few reports about this in the industry, we would be foolish to turn a blind eye towards it and think that it does not occur. Recent reports from a Durban based consumer journalist profiled the case of a Pinetown insurance company who was happy to take premiums from its customers pretending to be a reputable company while harbouring no intentions of paying out claims.

    Reports show that Model Insurance has been operating since 2011 and prides itself on the fact that it offers low premiums and incentivises existing clients to refer new clients to them.

    According to at least six clients, the company gave the go-ahead for repairs to accident damaged vehicles; but failed to follow through on payments to panelbeaters and towing companies once the repairs had been completed. Media reports point out that at least two consumers are still waiting for payments on claims submitted and authorised in February and May 2012 respectively.

    The Financial Intermediaries Association of South Africa (FIA) adds that this means that as many as 884 clients countrywide have been paying insurance premiums to Model Insurance totalling around R250 000 per month arguably without cover. It has since emerged that Model Insurance, owned by Pieter de Wet, was trading without the required license from the Financial Services Board (FSB). De Wet, meanwhile, alleges that the company is just five months from receiving it licence.

    The experiences that clients have allegedly suffered at the hands of Model Insurance are wholly unacceptable,” says Barry Taylor, FIA Chair of the Short-Term Insurance Executive Committee. But he warns that such incidents are on the rise in a market where consumers increasingly transact for low cost motor vehicle insurance products without the benefit of financial advice.

    “While we applaud attempts by both insurer and insured to reduce the cost of their motor insurance premiums we would urge both parties to make sure they understand the terms and conditions – including exclusions – in their policy wordings,” he says.

    “The first line of defence for a consumer transacting for short-term insurance is to transact with an FSB licensed insurer, preferably a member of the South African Insurance Association (SAIA). From an FIA perspective we would urge consumers to transact with the assistance of an FIA broker.”

    How was Model Insurance allowed to operate in the first place? Surely there are controls and measures in place to ensure that all companies operating within the industry are doing so legally? As the industry regulator, the FSB has a duty to monitor and put a stop to these practices before they affect the public, no matter how big the industry is.

    This is also a clear indication that there is very little awareness as to what the public needs to look out for when it comes to potential red flag situations. And when this is the case, scammers have a platform to take advantage of the public.
    PHIL COOPER
    Phil Cooper Insurance Brokers (Pty) Limited
    198 Jutlander Road, Beaulieu, Midrand.
    PO Box 31114. Kyalami, 1684.
    (P) 011-702-1328 (F) 011-702-1360 (C) 082-903-4754
    www.philcooper.co.za
    Authorised Financial Services Provider - Licence No. 17239

  2. #2
    _________________
    Andries Herholdt

    Real++
    Software Engineering & Consulting
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  3. #3
    My ex-missus works(ed?) in insurance. Her motto was always, rate on claims performance. A low premium generally means the underwriters will nickel and dime you to death.
    ______________________________
    Iain Robertson
    Eala Bhan IT Services cc
    Umhlanga Rocks
    Republic of South Africa
    E: bm@ealabhan.co.za
    T: 031-561-6842
    F: 086-609-4609
    C: 082-492-1055

  4. #4
    Yep.

    Either that, or have exclusions / limitations not on better products.
    PHIL COOPER
    Phil Cooper Insurance Brokers (Pty) Limited
    198 Jutlander Road, Beaulieu, Midrand.
    PO Box 31114. Kyalami, 1684.
    (P) 011-702-1328 (F) 011-702-1360 (C) 082-903-4754
    www.philcooper.co.za
    Authorised Financial Services Provider - Licence No. 17239

  5. #5
    A Pinetown short-term insurance broker, who has allegedly raked in more than R5 million in premiums from hundreds of clients in the past three years, is under investigation by the police and the Financial Services Board (FSB).

    It is alleged that his company is unregistered and that he is committing fraud and is not paying out claims.

    The FSB has secured an interim order, in the Durban High Court, directing Pieter de Wett, of Model Insurance, which trades from Crompton Street, to stop acting as a broker, disable the company’s website and give the board details of his estimated 900 clients.

    The company has been under investigation since September 2010 and, according to an internal police memorandum attached to court papers which came before Acting Judge Glenn Thatcher, in spite of collecting premiums “there is no evidence that he is paying the money to an insurance company”.

    A Lieutenant-Colonel Mo-han said in an e-mail to the board that “it seems he is spending the money for his personal use”.

    In just one complaint to the short-term insurance ombudsman, client Rouan Pillai said he had been trying for two years to claim R35 000 for his stolen car.

    “All my calls are ignored. They swear at me telephonically,” he said, alleging that when he went to the office De Wett had become aggressive.

    David Mbetse said he had insured his Mercedes-Benz for R300 000 in June. On July 1, after another vehicle crashed into his, he contacted Model Insurance and was told by a “Ria de Wet” that she would e-mail forms to him.

    Four hours later he received a call from a rude “white gentleman” who said his claim would not be honoured “because I had not taken the car for inspection”.

    The FSB, represented by advocate Vishalan Naidu, said in its court application that the first complaint about the company’s lack of a valid licence was received three years ago.

    The complaint was referred to De Wett, who gave the assurance that Model Insurance had stopped conducting short-term insurance business.

    FSB executive Jonathan Dixon said this was not true and in December the next year the board again wrote to him warning that unless he stopped, the matter would be referred to the police and National Prosecuting Authority.

    The e-mailed response was: “Please note that we will be registered by Mei (sic) 2012.”

    Not satisfied, the FSB referred the matter to the police for investigation. It was discovered that the company was already under investigation because of a complaint from financial services providers.

    In spite of a press statement warning the public about the investigation, Model Insurance continued trading and reeling in clients. And, Dixon said, the complaints continued.

    One client, Sabelo Khuzwayo, said: “There is only one lady working at reception – the call centre is not functional.”

    Another, Aadil Malek, complained that the company had refused to pay out for his stolen vehicle.

    He said after “two weeks of constant contact”, he had received a two-line e-mail “from the lady at the front desk, not management”, stating that due to negligence “they will not be paying me”.

    Dixon said that in July the police applied for a subpoena to be served on a company called Netcash which would provide evidence of premiums received. The evidence was to be handed to Model Insurance.

    “Our registrar then received a letter from Lieutenant-Colonel Mohan saying that, to the surprise of the SAPS, it had been established that the company had almost 900 clients, not 85 as was originally believed.”

    In the letter, Mohan said between October 2010 and April this year, the company had received about R200 000 a month from Netcash – a total of about R5.2 million.

    He suggested that the FSB seize files and computers and close the business before more unsuspecting people were defrauded.

    Dixon said the court application was urgent because the company continued to dupe unsuspecting members of the public, exposing them to financial loss.

    De Wett has until October 22 to file opposing papers.

    tania.broughton@inl.co.za
    PHIL COOPER
    Phil Cooper Insurance Brokers (Pty) Limited
    198 Jutlander Road, Beaulieu, Midrand.
    PO Box 31114. Kyalami, 1684.
    (P) 011-702-1328 (F) 011-702-1360 (C) 082-903-4754
    www.philcooper.co.za
    Authorised Financial Services Provider - Licence No. 17239

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