What do you do when your firm faces a projected 24% increase in insurance premiums in a single calendar year? That is what our client of four years, a significant transport operator with operations in the North-West and Gauteng regions with a fleet of over 50 buses and support vehicles, faced recently. Fortunately, Afric Cover was able to step in and negotiate a more equitable arrangement on their behalf.
Our client filed 13 insurance claims because of a single theft incidence affecting their fleet. This resulted in a significant insurance claim amount and a subsequent 4% increase in their insurance premium due to the portfolio's poor performance. According to the insurance provider, the premium modification was made to safeguard the overall viability of the insurance portfolio in the face of the clients claim, inflationary cost pressures, and a fluctuating exchange rate. This was an understandable increase given the large insurance payout earlier in the year.
A few months later, on the anniversary renewal date, the client was faced with another 20% rate increase by the insurance provider. The typical growth rate of insurance premium is influenced by the portfolio's performance and can range from 4% to 15%. This 20% increase indicates that the insurance company would have imposed a total 24% increase in just one year, notwithstanding the policy's 13% overall loss ratio.
Afric Cover intervened on behalf of our client. Our team assessed the portfolios loss ratio versus the insurer's planned increase, considering the portfolio's current performance, historical increases, and proposed increases. Our team contacted the insurance provider on our clients' behalf and proposed an alternative increase of 5% instead of the 20% proposed by the insurance company. The insurance company responded quickly to the proposal with an offer to open negotiations with our client. As a result of our intervention, the client’s insurance premium increase was reduced to a total annual increase of 8.8% from a proposed increase of 24%, saving our client hundreds of thousands in insurance premiums.
For businesses and people in similar situations, we recommend that you maintain all your records so that you can utilise them while negotiating with your insurance carrier. This example also highlights the value of having a skilled broker on your side. Despite popular belief, a broker is paid by the insurance company rather than by you, yet they act as your agent, understand your contract, fight in your corner, and defend you when your insurance company has adopted a stance that disadvantages you.
