Car insurance about to hit roof

CAR owners could be in for a nasty shock following confirmation from two leading short-term insurance companies that vehicle insurance premiums are soon likely to rise.

Managing Director of Mutual & Federal Gerson Katjimune said the pending increases were not linked to the inflation rate, but rather to the weakening of the Namibian dollar since most vehicle parts are imported.
Economic difficulties and financial turmoil in countries that Namibia and other Southern African countries import car parts from, would inevitably translate into higher parts prices in Namibia and other countries in the region.
He could not say by how much car insurance premiums would rise in percentage terms, saying this would depend on the risk profile or “loss ratio” for each individual insured client.
“It will depend on the portfolio of the individual client and whether or not they have a high loss ratio,” he noted.
As early as June this year, the South African Insurance Association warned that insurance premiums could increase by as much as 15% due to the worsening economy and rising motor-related claims — the major source of insurance claims.
With the further weakening of the exchange rate, the possibility exists, that motor vehicle premiums for some motorists may increase well above the projected 15%.
South African newspaper Business Report recently quoted figures showing that locally manufactured vehicles had an average local parts content of 35%.
This means that almost two-thirds, by value, of parts fitted to all vehicles after accidents were imported.
“Before the industry used to impose across the board blanket increases, but the system is now far more sophisticated and depending on your profile you might not have to pay much more than you do now,” Katjimune said.
Santam Chief Executive Riaan Louw said profitability of the motor account (motor insurance) of the short term insurance industry in Namibia had been under pressure for some time now.
“Although we tried to manage the increase of cost of claims with segmented increases and underwriting measures per clients portfolio, the N$/US$ exchange rate can influence the cost of repairs even more,” he said.
Santam, he said, monitors the situation on a weekly basis and the company makes continuous corrections according to trends.
“We suggest to our clients/policy holders that are under pressure with higher premiums to ask their broker for a higher first amount payable to help keep the premium affordable.
“Clients also need to make sure the insured value of their motor vehicle is at replacement value and not more, because this has an effect on premiums and clients can save on insurance costs by insuring for correct value,” he said.
He suggested people call their broker for advice, cautioning that in these tough financial times it had become even more important than ever to have insurance for unforeseen risks.

Car Insurance Source