Are you in doubt about insurance?

BY: Isaac Yeboah

By Bernard Otabil

A few weeks ago, l teased you that if you have followed reports in the media about the recent fire outbreaks then you should be worried about your properties if you haven’t taken an insurance policy to cover your risks.

As l have repeatedly stated in this column, insurance is a means through which one could actually mitigate risk.

The basic understanding should be that whenever you take up an insurance policy, it gives you the peace of mind to carry on your day-to-day activities without fear.

Take the example of fire insurance. If you insure your goods and properties, including buildings against fire, it doesn’t mean that it is going to prevent the fire from occurring.

No. What it rather means is that, you are admitting to the fact that fire could accidentally occur but since you do not know when this will happen, you are taking steps against its occurrence; this time working towards loss minimisation.

So, what happens is that should you experience a fire outbreak, because you are insured, the insurance company will indemnify you, that is, bring you to the state you were in before the unfortunate situation occurred: This applies to the different insurance classes too. It also means that your policies define your limit of cover.

It must be emphasised also that even though the fire outbreaks seem to be more rampant in some of the key markets in the country, it is gradually becoming a problem for most households too.

Houses and other properties have also been destroyed by fire in recent weeks: And where they are not insured and the properties are destroyed, the owners lose everything; they will have no indemnity because they were not insured in the first place! The story would be different if they had insurance policies covering fire.

I must, however, say that actions and perhaps, in actions on the part of some insurance companies have caused a large section of the population to shun insurance products. In fact, generally, it is the bad experiences with some insurance companies that have no doubt caused people to shun insurance products.

This has been evident in a number of e-mails that l have received from readers. Readers have expressed in no uncertain terms, how they have had to struggle with some insurance companies to get a legitimate claim paid, when they have suffered a loss.

To aid this discussion, l am going to reproduce below one of such e-mails. This e-mail was first used in this column several months ago.

“Dear Bernard, The pleasure is mine to get in touch with you today. Frankly, I cannot state anything different from what other readers have already told you, but just to add that this column is indeed important to our lives.

More grease to your elbows! I know it is a lot of sacrifice and commitment that you are able to, week in and out, bring us insightful knowledge from the field of finance. My beef today is about an insurance experience that l had, which l believe most people may have experienced something similar but seems not bothered to voice it out.”

“I took an insurance policy, a comprehensive motor insurance for that matter some time back. Unfortunately, about six months ago, l got involved in an accident which required that l make a claim. First of all, the accident was not life threatening so l was able to exchange details with the other driver and we both drove off peacefully.

In effect, there was no police involved. We both agreed to sort out our problems ourselves, so naturally, l got in touch with my insurers. It was their demands for further documentation, ostensibly to prove the occurrence of the accident that upset me.

There was the need for a police report, which l told them categorically that l didn’t have because l did not give a statement to the police.

“The insurance executive even went further to say it right in my face that ‘failing to report an accident in itself is a crime’. I was gobsmacked!  The person who was supposed to help his client was rather making it difficult for him.

I thought to myself: How many people in Ghana know this? At least, in my case, he could see the damage on the car so to me throwing the rule book at me at that time was not right.

Then came the next shocker about ‘excesses’ that l needed to pay, which was almost half the total cost of fixing the car”.

“My point is that there is nothing wrong with paying for what you know you have to pay but a lot wrong when surprises are thrown at you because you did not know. How many people know about these ‘excesses’ and police report?

How come the insurance companies are not doing a lot more to educate the public on insurance products? How come that they have settled on  the statutory requirement for car owners to have insurance cover to make all their money, without making sure that there were other innovative products in the market?

In fact, l have had to battle this issue for quite some time so I would be relieved to hear something from you. My take now, though, is that insurance, after all could be a rip off!”

This e-mail has been heavily edited for meaning and clarity. As stated earlier, l have had similar e-mails about the conduct of some insurance companies, with regard to their poor customer service approach, especially when it comes to the payment of claims.

Understandably, no one wants to pay money for just anything, so it is right for the insurance companies to verify the authenticity of claims before making good their promise to indemnify clients when they suffer a loss.

There are fraudsters everywhere and you can find them in the insurance industry as well so it is critical for such insurance crimes to be prevented to avoid the total collapse of such a fine system that helps to mitigate our risk.

That is why the insurance companies take the trouble to verify claims from clients. Nonetheless that should not affect the claim of genuine people. And l agree too!

The issue to be considered, therefore, at this point is that no matter how some shenanigans in the insurance industry would behave, it wouldn’t reduce the importance of insurance products to our well-being.

Consider a practical example, like motor insurance as per the content of the e-mail above. All car owners have to have an insurance cover, be it comprehensive or third party, but it doesn’t necessarily mean that all of them will be making a claim.

The insurance company in actual fact does not expect this to happen so will estimate what it could possibly be the case at any given time.

What do you think would have been the effect if insurance was not introduced? No matter the problem you may have with your insurance company, it can never be worse than stopping insurance entirely.

As l have already mentioned, insurance gives the peace of mind you need to be able to go about your day-to-day activities with confidence. Take the case of the example of fire insurance which most people have ignored at their own peril.

The problems of most of the traders that suffered losses during the recent fire outbreaks in key markets were felt the more because they had no insurance policy in place.

I believe strongly that you will agree with me that insurance is indeed a good thing and something that one should take seriously. It is as important as investing money for your retirement so don’t let the few bad lots spoil their appeal.

The Mirror/Money Matters

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