A past colleague of mine had a favourite warning to ‘not accept a FREE offer as it is creating an opportunity to sell for the advertiser’. To this we can now add the ‘low premiums’ and ‘best buys’ or ‘best brand’.
I start the illustration with a story from the handy man I employ from time to time. In 2015 he bought an old bakkie for his business that cost R30 000 – the price for an old Nissan 1400 in good usable condition. He insured the vehicle with Budget insurance having secured the best rate there.
At the time I warned him that he must beware that the direct insurers reflect the sum insured as ‘market value’ and that he had no guarantee that they accepted his value. He may get far less in event of write off or theft. In December this happened and he received a pay-out of R7 000; the value according to M&M ‘value bible’. He had no argument and had to accept. Even the ombudsman office would have agreed with the insurer as they were technically correct.
The full value of the unrecovered loss is his – R23 000. By comparison the likes of a Santam, Mutual and Federal, Hollard or Zurich would have reflected the value of insurance as the sum insured. Yes, he would have paid more as he was insuring a higher value. The argument would have become easier when he could prove what he paid and what they insured for.
His consumer action: to insure with Santam next time. He no longer trusts the best buy or best price option.
In insurance we should not be buying cash back rewards and low premiums but rather the ability of the insurer to reimburse as according the value of the loss we sustained. The dead give-away to the contrary in this instance will be any schedule of insurance that reflects your sum insured as ‘market value’. Check yours and if it reflects that get the insurer to insert the actual value in R-value; or, get requotes to one that does reflect value.
Insurers that show values are now compelled to inform you each year what their new value would be – increasing household cover and reducing motor value, each time reflecting the R-value. This will grant you better protection as a consumer every year, each time giving you the opportunity to adjust value.
The action taken by this consumer is called ‘voting with your feet’ and means that you walk away from the supplier where you received poor service and go to another. This action can be exercised in other areas of consumerism in all different industries, as my wife applied recently.
She bought two batches of rotten eggs from two different suppliers: Shoprite and Pick ‘n Pay. The sell by date looked OK, but obviously was not. Perhaps it was incorrectly supplied as such by the supplier Nu Laid.
As consumer, we have just recently taken a 0,5% increase on bond and car interest rates, because that is what the reserve bank do to cool down consumer inflation. The consumer inflation was caused in December when different suppliers joined the band wagon and loaded prices, as they do each year.
No one is taking action to control price and increases. It is easier to give the consumer the hiding.
In the USA a pensioner organisation named Grey Power acquired this function. Not only do they fight on prices but do full investigations into the entire value chain to see who did what. Who is taking the increase in Avo’s that increased from R11 to R42 in December? Was it the supplier or the retailer? They have work groups that will argue with the reserve bank and law makers – testing the reasons and the amounts.
Grey Power South Africa, where are you in this? You have the time and can create a better consumer environment not just for your benefit but for every other South African consumer.
Until then, we as consumers can argue our case with the suppliers, or chose the easy way by voting with our feet and taking our business elsewhere. My wife is not a fighter and elected to vote with her feet and she no longer supports the two perpetrators. Their convenient access is no longer an advantage as she is willing to drive a bit further and even pay marginally more but know that quality will be better – not having to sustain losses for dumped foodstuff.
Each of these examples is robbing us of an opportunity to save and is impacting on our personal finance and provisions for loved ones and old age.
Deon Hattingh is a financial adviser who reports on events that readers should be aware of in their most important quest – to save! He may be written to on email@example.com.