What to look for in an insurance company

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Insurance companies, as is often said, is all about paying claims and paying their service providers. If a company is not doing those topmost two, then only a winding-up can save the public from such an organisation. 

Members of the public often get free advice from our organisation on the companies to insure with and those to avoid. We do this because most insurance consumers are basically ignorant of the goings-on in the industry and getting insurance from a company that is basically insolvent is very easy.  

In the years between 2000 and 2010, several insurance companies collapsed and the joke in the industry then was on those clients who were demanding to be served even as the doors were being shut for good. But industry insiders, like yours truly, knew companies that were in the red and it was only a matter of time before they were shut down. Most insurance consumers did not have a clue as to what was going on.

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Some tips on what insurance consumers should be looking for when they decide to insure is not selecting an insurance company by price alone. It is important to choose a company with competitive prices. But be sure the insurer you choose is financially sound and provides good customer service. The insurance awards that we conducted recently have a category on Best Customer Service signifying the importance of this particular service. It is nonsensical to contact an insurance company only for one to be taken for a ride and given the run-round without finally not even getting served. A better way to go around this is to check the financial health of a company with independent rating agencies and ask friends and family members about their experiences with insurers. Select an insurance company that will respond to your needs and handle claims fairly and efficiently. 

When insuring a home one should not check for its real estate value rather than for the cost of rebuilding. When real estate prices go down, some homeowners may think they can reduce the amount of insurance on their homes. But insurance is designed to cover the cost of rebuilding, not the sale price of the home. One should make sure they have enough coverage to completely rebuild their home and replace any belongings regardless of what the real estate market is doing. 

Another issue experienced in the motor industry is only purchasing the legally required amount of liability for a car. The minimum in this country is just that—the least you can get away with by law. The minimum motor liability cover required by law in Kenya is third party insurance cover. Buying only the minimum amount of liability means one is likely to pay more out-of-pocket later. If one is sued, those costs can jeopardize one’s financial well-being.

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Insurance consumers should also be guided on the best motor repairers in case of an accident. Experience in this country is that most repairers do very shoddy jobs and the fact that they are still retained by insurance companies in their panels speaks volumes on the level of corruption in this industry. It is not surprising for one to have to get rid of a car after it has been to these garages because of the level of shoddy repairs that have been done on it. But the garage will still get paid for the shoddy work. This has prompted our organisation to come up with a category of Best Motor Repairer in our insurance awards in a bid and as a guide to motor insurance consumers as to the best place, one can take their car in for repairs.  

Neglecting to buy renter’s insurance is another important insurance that most ignore. A renter’s insurance policy basically is a domestic insurance package that covers one’s possessions. It also has an important addition to it called Public Liability cover that provides liability protection in the event someone is injured in one’s home and decides to sue. 

Getting the right insurance agent or broker is a must in this industry that has been beset by a lot of quacks masquerading as insurance intermediaries. It is rather annoying to hear a complaint from an insurance client about a claim that cannot be paid because they got the wrong advice from their agent. Maybe they insured with the wrong company that does not pay claims, or they did not get advice that buying a cheap motor insurance cover could mean spending more money later in case of a claim.  

The regulator has tried making insurance agents professional but these efforts have been hampered by selfish interests in the industry that has seen quack agents survive and even thrive. The biggest problem in protecting our clients is having wrong intermediaries in the market as almost 99.0 per cent of the problems emanate from them.  

Our organisation has a challenging task ahead of fighting corruption in the industry and it is a difficult task fighting the cartels in the sector as we try to right the many wrongs being ignored by the regulator. 

Washington Ndegea is the Chairman, Bima Intermediaries Association of Kenya (BIAK)

Opinions by contributors are views of respected thought leaders in the respective industries they operate in. The Exchange is a close partner with each of the various opinion contributors.

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