8 July 2009

Short Term Insurance Affected by Crime

Insurance premiums will climb as crime does
Insurance premiums will climb as crime does
The higher the crime rate, the more you can expect your insurance premium to go up

With South Africa infamous for its high rates of crime, nearly every sector of the country is affected in one way or another - and the short term insurance industry is no exception.

According to the Director of Auto and General Insurance, Angelo Haggiyannes, if crime was dealt with affectively in South Africa, there could be some positive turnarounds in the currently spiraling short term? insurance costs.

"Unfortunately, short term insurance premiums will continue to increase as long as crime, violence and fraud continue to escalate," he warned. "That's because insurance companies must account for the risk on crime in their premiums."

The higher the crime rate, the more insurance policyholders are expected to pay in premiums.

"If crime could be tackled and curtailed successfully, resulting in a reduction in claims, we would certainly see premiums coming down," explained Haggiyannes.

The rising cost of insurance has seen many consumers left with no choice but to cancel their cover.

Haggiyannes is against this type of action and said: "Obviously, this is not ideal since insurance is essential for managing risk in today's crime riddled society. Aside from the risk of a robbery or hijacking, there are other risks against which your short term insurance policy is designed to protect you. Serious losses resulting from natural disasters such as fires or storms can be financially crippling."

Haggiyannes believes that insurance companies need to need together in order to fight crime and limit the impact that it is has on society. "No company can afford to be complacent and sit back," he warned. "Crime is costing the industry and consumers dearly."

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Story Highlights »
  • Crime is one of three main factors that influence the cost of insurance in South Africa
  • Premium prices could come down if crime is tackled correctly

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