By Jan Vermeulen for MyBroadband
If you file too many claims against your car insurance policy, your insurer may fire you as a client and note the fact that they cancelled your policy in the national Insurance Data System (IDS).
Finding an alternative insurance provider if this happens is no simple task, as they will check the IDS database when you ask them for a quote.
Insurers may decline to cover you based purely on the information in the IDS. Having a cancelled policy against your name alongside an eventful claims history is a big red flag.
This is feedback from the South African Insurance Association (SAIA) and OUTsurance.
OUTsurance told MyBroadband it is generally more difficult to obtain insurance if your policy has been cancelled previously.
Although insurers may cancel your policy for claiming too much, for them it is a last resort.
“We cancel very few clients due to an excessive claims experience as a first action and would rather apply remedial actions such as increased excess or a higher increase at renewal stage,” said OUTsurance.
SAIA highlighted that the Insurance Data System is not used to explicitly flag individuals as problem clients, but confirmed that the IDS is used to store claims history data and whether you have had a policy cancelled.
It is then up to individual insurers to decide whether to provide someone with coverage or not.
OUTsurance explained that claims experience and cancelled policies are important factors that insurers use to decide whether to give you cover or not.
OUTsurance told MyBroadband that it looked at a few factors when determining if a client needs action to improve on their claims experience, or if a policy is to be cancelled.
These factors include:
- Number of risks on cover
- Claims frequency
- Value of claims
- How each client’s frequency and loss ratio compares to other clients
“Very few clients are actually flagged monthly for cancellation or other measures,” OUTsurance stated.