What's Happening?

Could the ‘stripped-down’ policy become the new normal?



There’s a widely held understanding in the insurance industry that clients expect absolutely everything to be covered under their short-term insurance policies. And when a claim gets repudiated, the small print gets blamed. Or the insurer is seen as unwilling to pay out. 

CIB’s Executive Head: Sales and Marketing, Jon-Jon Smit, believes this is changing. 

“The consumer is becoming more educated in the insurance process,” he says. “There is a growing understanding among policyholders that an insurance policy isn’t a maintenance contract, or that all eventualities can simply NOT be covered.” 

It is important, however, to provide customers with the best cover for the best premium. 

“That is why it is essential to do a full needs analysis and record of advice… and a qualified CIB broker is key to this process,” says Jon-Jon. 

On the whole, insurance is becoming more flexible to keep up with customer demand, as well as social and economic trends. Think about the inclusion of losses arising as a result of loadshedding. 

CIB’s Underwriting Operations Manager, Carl Radley, says many insurance policies have been enhanced in recent years to include losses that were traditionally not covered under a standard policy. 

“To remain competitive, insurers have added covers and increased limits on benefits to attract business,” he says. “This has obviously had a direct impact on the cost of insurance premiums.” 

On the other end of the spectrum, policyholders have the choice to opt for limited cover, where any bells and whistles – as well as losses that they are willing to self-insure – can be stripped out. 

“Clients don’t always have the means to pay when an incident occurs,” says Carl. “For example, clients simply can’t afford to go out and replace or repair household appliances in the case of accidental damage.” 

Carl says most families have little to no disposable income as it is, and points out that the initial purchase of white goods is usually done on credit, or through special savings. 

“These are important items in a household, and we have come to rely heavily on them to improve our standard of living. Consumers therefore want to ensure they are adequately covered and so will spend that ‘little bit extra’ on insurance.” 

But there are signs that this is changing. 

“During the national lockdown, many domestic and commercial clients reduced the covers on their insurance policies, retaining cover only for catastrophic events and extremely large losses,” says Carl. “This approach to insurance could become the new way of doing things.” 

Jon-Jon concurs, stressing the importance of careful guidance from experienced insurance professionals when making such decisions. 

“Each family and each business has its own specific needs and income profiles,” he says. “Affordability will always be a concern. However, highlighting the risks and deciding on the covers is something that needs to be taken seriously, and should always be done in consultation with a qualified risk advisor. 

“‘Stripping down’ a policy to save on premium should be considered extremely carefully, and always in consultation with a broker.”

 One of CIB’s main aims is to take the grudge out of the insurance purchase and provide the client with the best possible value for money. 

“We only deal with qualified, professional brokers,” says Jon-Jon. “Together, we help to construct and maintain bespoke insurance packages for various segments in the personal and commercial market, specifically designed around customers’ needs. 

“CIB’s value lies in our products, our competitive pricing and the peace of mind we provide at claims stage. We strive to make it ‘very hard not to deal with CIB’.”