Cedric E. Stephens Question:
I obtained my driver's licence in Germany 35 years ago. I have lived here for 15 years. I have never been involved in an accident - either here or in Germany. The same company has insured the five vehicles I have owned since I came here. A tree fell on my car in Port Antonio last year. It was written-off. I got a 20 per cent No Claims Discount when I replaced it. The company said it was because I bought a "new" second-hand car. Before this, I earned a 60 per cent discount. Why am I being punished for driving carefully and defensively and not like a road hog? Is the company biased against me because of my gender?
- P.P.Z.,
Long Bay P.O.,
Portland
Answer:
You are not being punished. Your insurer is not biased against persons of your gender. After all, they have insured you for the last 15 years. Your problem has nothing to do with either law or unfair competition. You are a victim of poor service. Why do I say this? Your insurer was named as one of 21 companies, which according to a poll conducted by the Consumers Affairs Commission on March 15 of this year, providing "the worst customer service" in Jamaica.
It was one of the sole non-life insurer (of 15) that the commission listed. The poll results are not untrue. This company had 12 per cent share of the motor insurance market in 1999. Its customers have consistently been the largest group of complainants to Insurance Helpline.
Here is a comment from a column that I wrote about them two years before the CAC poll: "The actions of this company do not surprise me. They have a wonderful advertising slogan; their service, on the other hand, is just plain LOUSY." The views of separate groups of consumers cannot be just a coincidence.
It is primarily because your insurer provides such rotten service why you feel that they are punishing you. The reduction in your no claims discount is not connected with your driving record.
It has more to do with the type of coverage and of your car. Generally, only vehicles falling within certain age groups are eligible for comprehensive insurance. Insurers reward holders of this type of policy with no claims bonuses (or discounts). The aim is to give drivers a financial stake in the policy over and above the excess. The discount is meant to encourage safe driving. Premium discounts can go as high as 70 per cent.
When you replaced your previous car with the VW, last year, I believe that it was not eligible for comprehensive coverage. It was nearly 30 years old. My guess is that it was at this stage that the company's awful service culture took charge. Someone assumed that you knew, or should have known, that comprehensive coverage was not granted on 1972 VWs. Alternatively, that since you could only buy a "new" second-hand car, you were not a Very Important Customer! They were doing you a favour. You had to take whatever they offered. No one in the company was willing to look beyond the obvious. Your loyalty was unimportant. The income and contributions you made to the company's financial results over the last 16 years were history. It was a waste of time to write you explaining why third party coverage was the only option available to you.
You lost your 60 per cent discount last year when your coverage was switched from comprehensive to third party insurance. It is that simple. Discounts under third party policies range from between 20 and 25 per cent. The reason is quite logical. The "damage" portion of the premium of a comprehensive policy is generally bigger than that for the "liability". Losses connected with the former are more frequent than those for the latter. Liability risks though rare, have a tendency to be extremely large. Discounts for liability only policies are therefore lower than those for comprehensive.
Neither your lawyer nor the FTC can help you to get back your 60 per cent discount. The company is unlikely to charge you a net premium of $6,000, instead of the $12,000 they requested. I suggest that since your renewal date is five weeks away that you go elsewhere for your coverage.
Cedric E. Stephens is the founder of Insurance Help-Line, a telephone advisory service and co-host of Risky Business, a radio programme that deals with risks and insurance. If you need free advice, write to the Financial Editor or Mr. Stephens at: aegis@cwjamaica.com
