Question: I insured my car comprehensively last year under the civil servants' plan. The premium was about $21,400. The insurance will be up this month. When I called my broker they informed me that the premium was now $28,400. The increase was said to be due to a revision in the civil servant plan rate from 2.00 per cent to 3.00 per cent. Is this rate increase justified? I have had no claims or accidents since last year.
- M.W.
Answer: Check the yellow pages. Write down the names of five insurance brokers. Give them details about yourself, your car, driving record and insurance history. Ask them to send you quotations to insure your vehicle. Why? You need to find new insurance advisers. The existing brokers are 'wutless.' They have done nothing to show why they should keep their job! It is time to say bye, bye.
Brokers have a fiduciary duty to their clients. Fiduciary is derived from a Latin word that means trust. "A person (or business) who has power and obligation to act for another under circumstances which require total trust, good faith, honesty (and, in my opinion, independence) says dictionary.law.com. Can you trust a firm that supposedly has more knowledge and expertise about insurance than you, but wants you to hug up a 50 per cent increase in the rate on which your premium is based without a shred of information?
Would you be better off buying insurance on your own with another insurer instead of remaining as part of the group? This is another question that your brokers appear not to have answered. Buying insurance as part of a group should, in theory, benefit consumers. The goodies come in two packages. Coverage should be wider than you could get on your own. Secondly, your premium should be lower than the amount you would have paid by buying a separate policy. If these benefits are non-existent, what is the point of buying coverage as part of a group?
Finally, answer the following question. Whose interest is being served if you were to accept the increase in premium from $21,400 to $28,400 - the insurer's, the broker's or yours?
Cedric E. Stephens provides independent information and advice about the management of risks and insurance. If you need free information or counsel to help you solve a problem write to The Financial Editor or contact Mr. Stephens directly at aegis@cwjamaica.com.
