Cedric Stephens, Contributor
Question: My partner had an accident in April 2009 while driving my vehicle, a 2002 Type R Honda Civic. At that time, my premium was about J$60,000. My insurer paid the claim and gave me a cheque for the value of the vehicle minus the five per cent excess. Based on the police report and what an eyewitness said, the accident was the fault of the other driver. The third-party insurer offered me a 50% settlement. I refused. Their argument was that the date the eyewitness had on the letter was incorrect. Also, the police were not present when the accident occurred. Their client is also refuting liability. Initially, he didn't remember the accident and then said the stop lights weren't working. In 2011, I bought a 2006 Toyota Runx. My premium was J$270,000 because it was 'padded'. Can I do anything to speed up the claim process at the other insurance company? The broker said that the loading is a one-time event. Is this true or, will they will find some other reason to justify another huge increase?
HELPLINE: Motor premiums are rising. Many different sources confirm this. They include insurance company officials, brokers and motorists. Evidence can also be found in insurers' financial statements.
What also contributes to present market conditions but is less known is that the number of companies selling coverage is getting smaller.
When there are fewer suppliers in the market, there is less competition.
Consumers - especially those who have had the misfortune to be involved in collisions, young and inexperienced drivers, particularly men in the 18-35 age group - are having tough times. Insurance companies are now calling the shots!
The 350 per cent rise in your premium between 2009 and 2012 is partly due to some of the factors that I have listed.
The other side of the story
The increase in your premium tells only one part of the story. The other part involves the claims process, the policies, practices and procedures that support it.
Stingy offers, red tape and long delays are some of the tools that unscrupulous companies use to dictate the outcome of claims.
The absence of experienced, well-trained and highly motivated claims staff often creates additional problems. The service delivery chain - the broker, your insurer and the third-party insurer - is affected by all of these things.
Brokers earn more commissions when premiums get higher. Three years ago your broker would have earned only J$6,000 off the premium of J$60,000 that you paid. If you were to pay J$270,000 this year, their earnings would be 3.5 times higher, or J$21,000 more than they were in 2009.
Given these financial incentives, only an ethical intermediary would put your interest above his and try to find a lower premium at another insurer.
Do these comments put the broker's remarks about the premium loading as a one-time event in a better context?
Three years have passed since the collision occurred. Your main challenge concerns proving that the third party was solely to blame.
You have not succeeded in doing so over the course of three years. This is in spite of a police report and a statement from an independent witness. How likely are you to gather additional evidence to prove your case now given the passage of time?
Given all that has happened in the past and the time value of money, it may be wise to accept the 50 per cent compromise that the third-party insurer offered and that you rejected. After all, half a loaf is better than no loaf!
Cedric E. Stephens provides independent information and free advice about the management of risks and firstname.lastname@example.orgSMS/text message to 812-7233