When?
Insurance companies review their pricing, risks and products regularly.
In terms of pricing, your insurance premium is likely to increase when you renew your policy yearly, regardless of insurer or whether you have had claims or not.
Price increases, other than at renewal, occur when insurers are forced to take more drastic action based on increased risk exposure or frequency of losses.
South African Insurers Have Unique Challenges
In South Africa, the Consumer Price Index (CPI) is 7.8%, a 30 year record high level, while the rand has lost more than 20% of its value. Inflation is averaging out at around 7%.
So, what does this mean for insurance renewal premiums in 2023?
Virtually all insurers are looking to increase renewal premiums significantly in 2023, in response to inflation and other external factors.
Added to this, insurers are still reeling from catastrophic losses caused by the KZN Floods and Riots, and the aftermath of COVID (most insurers reduced premiums or froze price increases).
Power surge losses from loadshedding (and its ongoing negative impact on the economy), high crime rates, the cost of doing business and supply chain challenges, particularly the availability of parts, have put even more strain on insurance companies profitability.
Why?
You may be asking yourself, why do other people’s claims matter? Why is my premium increasing if I was fortunate enough not to have had claims?
The answer is that policyholders are all in this together – every month, millions of policyholders contribute premiums towards insurance pools and its from these pooled funds, that claims are paid. Premium increases to these pools, paid by all policyholders, are essential, to ensure that the pools remain solvent and ultimately, to ensure that insurers are financially able to pay out all policyholders future claims.
When external factors and risk events, like those mentioned above, combine in a perfect storm, higher than average premium renewal increases are necessary, to ensure insurance companies stay in business.
Staying Positive
We live in uncertain and challenging times – the purpose and value of insurance, through a professional broker, has never been more valuable or important.
On the plus side, Chadwicks continues to invest in new digital technologies, and in developing its staff, to ensure your INSURANCE experience is consistently Fast, Friendly & Simple. A good example of this, is our move toward digitizing the claims notification process. We plan on rolling out this innovation shortly.
Until next time, stay positive and stay insured.
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