Brokers

Short Term Ombudsman ruling highlights importance to highlighting policy considerations to clients

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A recent Short Term Ombud determination highlights an important lesson to all brokers.
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A recent Short Term Ombud determination highlights an important lesson to all brokers.

A dealership sold a motorcycle to a client and short term cover was provided by a third party, a brokerage. As sometimes happens, the brokerage neither saw nor spoke to the client and the insurance contract was concluded at the dealership.

The client claimed a while later for loss of the bike, but the claim was repudiated because the motorcycle was not fitted with a tracking device.

The brokerage claimed that no advice was given and that the client should have read the policy document. This would have contained all the requirements for the cover.

The Ombud ultimately found in favour of the client with the reasons given clearly indicating the importance of highlighting pertinent points to clients and ensuring that proper recordkeeping is in place.

What is interesting, is that the Ombud is starting to refer to "treating customer's fairly".... bearing in mind that one of the definitions of a complaint in terms of the FAIS Act, includes "unfair treatment".

Read the full case here.

Proactive risk management through assessments and valuations

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One of the most common mistakes consumers make is to confuse market value for replacement value. A home insurance policy should not be calculated on what the client paid to purchase the house but rather on what it would cost to rebuild the property.
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One of the most common mistakes consumers make is to confuse market value for replacement value. A home insurance policy should not be calculated on what the client paid to purchase the house but rather on what it would cost to rebuild the property.

If the rebuild cost of a property is inaccurately assessed this can result in severe underinsurance, potentially leaving a homeowner facing a massive financial shortfall in the event they need to file a claim.

While underinsurance poses serious financial problems for consumers, the confusion between market value and insurance replacement value can also result in the over-insurance of property. It's not uncommon for clients to pay very high premiums on a property purely as a result of the inflated cost of the land.  For example, a property situated in Clifton, Cape Town, can easily cost upwards of R40 million, however the cost of replacing the actual building may only be R20 million. By insuring on the market value, clients can end up paying an inflated premium and they will not be paid out a higher value in the event of a loss.

The high net worth (HNW) market faces a greater risk of underinsurance as their assets are worth far more than the average consumer. However, by implementing proactive risk management (traditionally reserved for commercial risks) into the insurance process MUA ensures the sufficient level of cover required by its clients is achieved.

We conduct a thorough risk management assessment at the inception of the policy in order to mitigate the risk of claim rejections in the future. Not only does this allow for areas of weakness to be identified upfront, giving the client time to address these areas to enjoy full cover, but it also ensures the asset is fully covered for the correct value.

When a new client requests a quote, we set-up a full risk assessment and valuation to be conducted by an independent and qualified assessor and/or valuator. A report is then compiled containing proactive risk management advice that will enable the client to make informed decisions about implementing risk improvements which, if not addressed, could lead to claim rejections.

Implementation of the Binder regulations

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We are proud to say that we have successfully implemented the binder regulations offering our brokers one of two options for those who continue to assist with the policy administration.
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We are proud to say that we have successfully implemented the binder regulations offering our brokers one of two options for those who continue to assist with the policy administration:
  • Brokers who prefer to collect their own fees will receive policy schedules net of admin fees. They will charge clients a broker fee and our schedules to reflect a 10% broker fee which overrides any previous broker fee
  • Brokers who prefer to have the admin fee included into the premium will receive policy schedules reflecting this and their previous broker fee will still reflect on the MUA schedule.  
Obviously, both options will not impact clients as they will still pay the same bottom-line premium. Our direct brokers will also now receive a schedule, which no longer includes any fees as this has been incorporated into the monthly premium.

Legal Liability Cover has increased from R25 mil to R30 mill

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Please be advised that the cover for the Legal Liability on the MUA policy has been increased to a cover up to R 30 million. Compass covers the first R 1 million and then Chartis picks up for R 29 million, giving the insured a total cover of R 30 million for Legal Liability cover.
 
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Please be advised that the cover for the Legal Liability on the MUA policy has been increased to a cover up to R 30 million.  Compass covers the first R 1 million and then Chartis picks up for R 29 million, giving the insured a total cover of R 30 million for Legal Liability cover.
 
As a result please bear the following in mind:
 
When the client has Building/Contents cover:
  • Includes Personal Legal Liability Cover up to the amount of R 1 million.
  • Includes Top Up Personal Legal Liability cover up to R 29 million.
 
When the client has Motor cover:              
  • Includes Third Party Legal Liability Cover up to the amount of R 1 million.
  • Includes Top Up Third Party Liability Cover up to the amount of R 29 million.
 
When the client has Building/Contents and Motor cover:
  • Includes Personal Legal Liability Cover up to the amount of R 1 million.
  • Includes Third Party Legal Liability Cover up to the amount of R 1 million.
  • Includes Top Up Personal Legal Liability cover up to R 29 million
 

REMINDER - CAR HIRE

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MUA has an extended car hire option from 30 days to 45 days. This option is available at an additional premium at renewal and for new business. Please must make sure that your clients have the correct car hire option to avoid any problems at claims stage.
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MUA has an extended car hire option from 30 days to 45 days. This option is available at an additional premium at renewal and for new business. Please must make sure that your clients have the correct car hire option to avoid any problems at claims stage.
 
STANDARD CAR HIRE OPTIONS:
 
30 day car hire Standard R40.00
All policies include this basic cover unless otherwise stated. The type of vehicle the client receives is a group “C” vehicle which is a manual car with air conditioning, ABS and power steering
 
30 day car hire Automatic R60.00
An additional premium of R20.00 is levied on the policy. The client receives a group “D” vehicle such as a Chev Aveo Auto, with airbags, air conditioning, power steering and ABS.
 
30 day  car hire  Upgrade  R80.00   
An additional premium of R40.00 is levied on the policy. The client receives a group “H” vehicle such as a BMW 3 Series or an Audi A4 automatic with airbags, air conditioning, power steering and ABS.
 
Points to bear in mind:
  • If the client drives an automatic vehicle he will have to choose either option two or three should they wish to continue driving an automatic vehicle
  • All new business requests for quotes should indicate which option the client desires
  • The type of car hire will be stated clearly on the schedule
  • All the car hire contracts include the following unlimited kilometres, car accident damage cover ,car theft cover, airport and tourism levies (no additional cost to the client)
  • Fuel deposit for the insured’s own account
 
As an added bonus under MUA’s new policy, should the client be involved in a motor vehicle accident in the hired vehicle and the excess is greater than the excess payable under his MUA policy, we will reimburse the client with the difference.
 
 
EXTENDED CAR HIRE OPTIONS TO EBENFIT YOUR CLIENTS:
 
45 Day Car hire - Standard
This cover is limited to a Group C vehicle as available through the insurer for a maximum of 45 days. A fee of R60.00 p.m is payable for this benefit and is included in your premium.
 
45 Day Car hire – Model Upgrade
This cover is limited to a Group H vehicle as available through the insurer for a maximum of 45 days. A fee of R120.00 p.m is payable for this benefit and is included in your premium.
 
45 Day Car hire - Upgrade to automatic vehicle
This cover is limited to a Group D vehicle as available through the insurer for a maximum of 45 days. A fee of R80.00 p.m is payable for this benefit and is included in your premium.
 

REMINDER - ALL RISKS

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All risks specified items, as defined below, no longer have to be specified and will automatically be covered under the Unspecified All Risk Section of the policy, provided that the Unspecified Sum Insured is sufficient.
 
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All risks specified items, as defined below, no longer have to be specified and will automatically be covered under the Unspecified All Risk Section of the policy, provided that the Unspecified Sum Insured is sufficient. 
 
All risk specified items include the following:
any personal belongings that are worth more than the amount stated under unspecified all risks in your schedule;
  • items used for business or professional purposes; 
  • mobile communication equipment, cellular phones, laptops/notebooks/palmtops/portable computers;
  • DVDs or compact discs, MP3 players, iPods, portable playstations and portable GPS navigation systems;
  • firearms and guns;
  • pedal cycles; and
  • parachutes, paragliders and hang-gliders.
 
Please note that an excess of R1 000 will apply to each item which is defined as a specified item and is not specified at the time of loss. If the client elects not to have an excess (Nil Excess) attached to the above mentioned items, the items will have to be specified. 

The Unspecified item cover remains unchanged.

The Limits that apply to jewellery have been enhanced to restrict the safe warranty application to only unspecified jewellery items.

Therefore, all items that are not specified and worth more than R50 000 each must be kept in a locked safe that is fixed to the building when:

  • the buildings in which the jewellery or watches is kept is unoccupied; or
  • the insured or any persons covered by the policy are not actually wearing or carryingthe items.
 
If these unspecified items are lost or stolen while they are not in a locked safe under the above mentioned stipulations, the item will be limited to R50 000. Please note, the other terms and conditions for jewellery cover, such as valuations, remains unchanged.
 
The MUA approach to items stolen from unoccupied vehicles has been amended to cover unspecified items in full when the insured can prove that access to the vehicle was a result of the car jamming scam. Alternatively, these items will be limited to R5 000 cover with an additional excess of R1 000 if there are no signs of forcible or violent entry / exit to the vehicle.
 
 

RECOVERIES PROCESS

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This process has caused numerous amounts of frustration in the past. As a result, we have decided to note the process for your information.
 
It is imperative that you, as the broker, ensure that the third party details are completed on the claim form; this includes a clear sketch and details of the accident.
 
  • Please submit ALL supporting documents (i.e. SAP report), if available at the time when claim form is sent to MUA or as soon as possible thereafter.
Content: 
This process has caused numerous amounts of frustration in the past. As a result, we have decided to note the process for your information. 
 
It is imperative that you, as the broker, ensure that the third party details are completed on the claim form; this includes a clear sketch and details of the accident.
 
  • Please submit ALL supporting documents (i.e. SAP report), if available at the time when claim form is sent to MUA or as soon as possible thereafter.
 
NB: It needs to be stated that a recoveries process is a legal process and not an insurance claim.  The process has to adhere to the timeframes set by law.
 
Internal Process:
  • MUA will send the claim form and supporting documents received from the broker to ResQ for registration of the recovery claim on their side
  • Internal staff member and the broker will be copied in on the notification email to ResQ
  • This will allow ResQ to update the broker directly and keeping MUA informed by copying MUA in on all correspondence
 
ResQ Process(This is the outsourced company responsible for all recovery matters):
  • This process can only proceed as soon as the own damage quantum documents (i.e. invoices / repair costs) are received
  • Merits of the recovery claim will be assessed in terms of the South African Law of Collisions
  • When the recovery merits are in favour of the insured, a FIRST Letter of Demand will be sent to the Third party/ third party insurer
  • The third party / third party insurer will be given 30 days to respond to the first Letter of Demand;
  • If no response is received from the Third party  / Third party insurer, a SECOND Letter of Demand will be send with a further 30 days response time frame
  • If a response was received after the first or only after the second LOD, the process can continue and will depend on the merits
 
Apportionment:
 
When the recovery is apportionable (where both parties have contributed, in terms of the law, to the accident) and the TP has accepted liability (being more liable, based on the law), settlement has to be negotiated based on varies factors:
  • Precedent set in law on the merits of the recovery;
  • Damage amounts to both vehicles;
  • Available witness statements;
  • Available assessors reports;
  • Photographs of the vehicles;
  • Repair costs of both vehicles.
  • All relevant quantum documentation needs to be submitted to the Third party / TP insurer to negotiate settlement
 
NOTE: in some instances an apportionment can lead to an each-party-to-bear-their-own-cost situation.  This will be due to the repair costs to both vehicles – for example, the insured (ResQ) receives a settlement offer of 70 – 30 % in the insured’s favour from the third party / third party insurer.  The insured repair costs of the insured vehicle is R 50 000; the repair cost for the third party vehicle is R 150 000.  70% of the R 50 000 amounts to R 35 000.  The 30 % of the R 150 000 amounts to R 45 000.  Thus, the difference is R 10 000 in favour of the Third Party.  If the Third party is prepared to walk away from the R 10 000 owed by the insured, each party will have to bear their own cost and the matter is abandoned.
 
Rear enders (normally the only types of recoveries where one can expect a full recovery):
  • When the third party collided with the rear of the insured’s  vehicle, these matters normally are settled in full
  • Once again it is important that this would depend on the specific circumstances surrounding the accident (i.e. sudden emergency situation such as heart attacks etc. will not be settled at all)
 
Abandonments:
  • Recoveries will be abandoned where the merits, in terms of the law, does not validate a recovery; or
  • Where no response is received from the Third party (i.e. incorrect contact details/ insufficient contact details / foreigners ; or
  • the own damage amount does not allow for legal action; or
  • Where the insured and the third party have contradicting statements and NO independent witness statements (witness not in the vehicle of either party at the time of the accident) to confirm either version, each party will have to bear their own cost as there is no conclusive proof and therefore the recovery will be abandoned.
 
NTU’s:
  • Recoveries cannot be perused where the accident was a hit and run; or
  • Acts of God; or
  • Sudden emergencies; or
  • No third party details available.
 
Payments/signed releases:
  • Once the third party / third party insurer has agreed to settlement either being in full or an apportionment a release will be signed by the third party
  • This release will have to be returned to ResQ
  • ResQ now has an “agreement” for payment from the third party
  • Payment needs to be affected to ResQ (showing in their bank account) – payment of the agreed amount in the ResQ account depends on the internal processes of the third party insurer and may vary in time frames
  • Once the monies are receipted with ResQ, it has to be paid over to MUA before any refunds can be made to the insured
  • ResQ pays MUA once a month in a batch
  • MUA then has to load these individual payments on the relevant file and system for payment
  • Once a payment is loaded on the MUA system it has to be verified and release by varies different staff for control purposes.  Once released from the MUA’s system, it might take 3-4 days to reflect in the bank account of insured.
 
For updates on recoveries MUA suggests to diarise the matter on monthly intervals, if no update has already received in that specific month. Updates directly from ResQ will be sent to you, as the broker on a monthly basis via a spreadsheet will all the claims for your brokerage.
 
Trust this clarifies the recoveries process and allows you to manage the expectations of the policyholder.
 
Your assistance is highly appreciated.
 
 
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FOREIGN LICENCES AND INTERNATIONAL DRIVING PERMITS

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When a policyholder is a South African citizen who returns to South Africa to resume permanent residence, the international license (or foreign license) shall no longer be valid under two legal circumstances:
  1. if it becomes invalid in terms of the applicable laws of the country that issued the license (for example, the license expires after 3 years of date of issue) while in SA, or;
  2. if the license is valid for a longer period than 5 years then the Act will apply and the license will no longer be valid after 5 years from the date the policyholder returned to the Republic. In other words if the applicable laws do not invalidate the license within 5 years from the date on which the client returned to South Africa, the license will expire after the 5 year period.
 
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When a policyholder is a South African citizen who returns to South Africa to resume permanent residence, the international license (or foreign license) shall no longer be valid under two legal circumstances:
  1. if it becomes invalid in terms of the applicable laws of the country that issued the license (for example, the license expires after 3 years of date of issue) while in SA, or;
  2. if the license is valid for a longer period than 5 years then the Act will apply and the license will no longer be valid after 5 years from the date the policyholder returned to the Republic. In other words if the applicable laws do not invalidate the license within 5 years from the date on which the client returned to South Africa, the license will expire after the 5 year period. 
  
When the policyholder obtained permanent residence in the Republic and from this date when permission was granted (which is unknown but which date will have to be obtained to apply these provisions) the foreign license will no longer be valid if it becomes invalid in terms of the foreign laws (for example, the license expires after 3 years of date of issue) while permanent resident in SA, or, if the license is valid for a longer period than 5 years then the Act will apply and will the license no longer be valid after 5 years from the date when the client was granted permanent residence in the Republic. In other words if foreign (country where license was issued) laws do not invalidate the license within 5 years from the date on which the client obtained permanent residence in SA, the license will expire after the 5 year period. 
 
The MUA policy wording will not cover a claim where the driver’s license no longer complies with the National Traffic Act. Therefore, it is of utmost importance that a foreign license is converted to a South African card license within 5 years of becoming a permanent resident of South Africa (or the earlier date of expiry of the foreign license).
 
 

MUA APP MAKES BROKERS’ LIVES EASIER

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According to Apple’s App Store, downloads have doubled over the past year alone to reach 40 billion in January 2013. In line with this shift, local underwriter MUA Insurance Acceptances has now launched a new mobile App that provides its brokers with instant access to the company anytime, anywhere - a first of its kind for the South African executive short term insurance market.
 
Brokers are incredibly busy people and are constantly on the move from client to client so they need to be able to communicate with the company at a time that is most convenient to them. The App breaks down the traditional communication barriers between brokers and MUA by offering an easy and quick way to interact at any point of the day or night.
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According to Apple’s App Store, downloads have doubled over the past year alone to reach 40 billion in January 2013. In line with this shift, local underwriter MUA Insurance Acceptances has now launched a new mobile App that provides its brokers with instant access to the company anytime, anywhere - a first of its kind for the South African executive short term insurance market.
 
Brokers are incredibly busy people and are constantly on the move from client to client so they need to be able to communicate with the company at a time that is most convenient to them. The App breaks down the traditional communication barriers between brokers and MUA by offering an easy and quick way to interact at any point of the day or night.
 
Importantly, the App also enables MUA to react immediately to its brokers’ needs - whether for updating their client’s policy information or just submitting a claim - all they need to do is push a button.
 
One of the most important functions of the new app is the ability for brokers to locate the nearest police station or hospital in the event of an emergency. At the touch of a button, the user can locate and call the closest police station, hospital or be put through to the MUA emergency hotline Emergency Assist to acquire immediate assistance after a traumatic experience.
 
In addition to the emergency features, the broker can perform a number of administrative tasks via the App. Brokers can request a client’s policy schedule; receive a list of home and motor policy benefits; view the MUA Executive policy wording, excess and limits; or download the Road and Home assist brochures as well as MUA electronic brochures on behalf of a client or for themselves. At the push of a button the request is sent directly through to MUA and the broker is cc’d into the email in order for him/her to keep track of all client requests.
 
Brokers can speed up their daily tasks by requesting forms such as home and motor quote forms, proposal forms and claim forms via the App. Forms can become a major frustration for brokers as sometimes they are saved in different folders or the particular document a broker needs can be misplaced, the MUA mobile App helps to eliminate this kind of frustration by providing our brokers with another channel to communicate directly with MUA. Once a broker requests a certain form, it is sent straight to MUA where it will be processed immediately, saving them valuable time.
 
As soon as a broker finds out that one of their clients has found themselves in an unfortunate situation, from a motor accident or a burst geyser in the home, they will be able to submit the claim directly to MUA using a wizard that will guide them step-by-step as to exactly what information they need to capture in order for the claim to be processed successfully. This feature is hugely beneficial as it gives MUA a head start on the claims process, once again streamlining the communication between broker and the company and allowing processes to flow faster in order to make sure we keep our brokers and their clients happy.
 
Brokers can also use the App to inform MUA of any changes to their clients’ details, such as addresses, contact numbers, or bank details and even add or delete items from their client’s policy or cancel their client’s policy.
 
Users of the app will also be able to access MUA’s social media platforms, including Facebook, Twitter and YouTube, as well as the MUA newsfeed, says Fourie.
 
The app is dedicated to the smartphone market and will run on both Android and Apple iOS and will be ported to BlackBerry and Windows-operated phones later this year.
 
“MUA constantly strives to remain at the forefront of the industry by providing innovative solutions that make the lives of its brokers easier. We firmly believe that the new MUA app will enable interactions between MUA and its brokers to be more convenient as they now have all the information they need at their fingertips,” concludes Fourie.  
 

Important Announcement

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After serious consideration I can confirm that MUA Insurance Acceptances (MUA) recently took the decision to centralise its claims and underwriting functions to Cape Town in order to operate more effectively from one centralised location.
 
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After serious consideration I can confirm that MUA Insurance Acceptances (MUA) recently took the decision to centralise its claims and underwriting functions to Cape Town in order to operate more effectively from one centralised location. Our regional offices in Johannesburg and Durban will remain open with its main function being broker services and marketing underwriting.  We believe that centralising underwriting and claims functions in Cape Town will enable our branches to focus on the critical task of marketing and growing our market share and delivering great service to our brokers and clients.

While MUA does not foresee that there will be a reduction in employee numbers as a result of this restructuring, some MUA employees working in Johannesburg and Durban have been given the option of accepting an alternative position in Cape Town - with generous transfer and relocation costs provided by the company. Those staff who choose not to relocate have been made a voluntary retrenchment offer. The branches in Durban and Johannesburg are therefore not closing and will remain open and operational to service the respective regions.  The effective date for change in our service model is 1 October 2012 and more detail will be communicated to you closer to the time.

I want to stress that this change in operational structure is done to create a model which will service our market more effectively.  It is our absolute intention to maintain service levels throughout this period of change, but we also expect some turbulent times during the next 2 months and I ask that you bring any concerns you may have to my attention immediately.

MUA constantly strives to act in the best interests of its employees and clients and believes the above mentioned process is a business necessity.

Should you require any more information, may I ask that you  contact me to discuss in more detail.

 

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