Why you need to scrutinise insurance contracts critically
Aug 05, 2011
According to the Uganda Insurance Commission, 23 complaints were lodged in the Complaints Bureau in 2009.
According to the Uganda Insurance Commission, 23 complaints were lodged in the Complaints Bureau in 2009.
The complains were about the delay and amount offered in the settlement of claims.
This is not a true reflection of the extent of dissatisfaction in the market because few people are aware of that facility offered by the commission.
However, if you were unhappy with the number of claims insurers have refuted, then you had better fasten your seat belt because according to my radar, unpaid claims are bound to increase.
Here’s why.
Until recently, property, liability and medical policies were the most commonly sold insurance covers locally.
Even with vague facts, and having never seen the actual insurance contract, many people have an idea of what these policies offer.
For example, with comprehensive motor insurance, it is near common knowledge that the insurer will pay out when the policyholder’s car is involved in an accident.
Further still, a sales person need not inform a holder of a fire policy to contact their insurer when fire has gutted their premises.
Unfortunately though, the new popular life assurance covers are not as straight forward, and if misunderstood, could cost the industry great credibility.
Take Eva, a young and successful career woman, who has faithfully paid the monthly premiums on her life policy for the past three years.
Faced with an acute financial constraint, she confidently demanded that her premiums be refunded.
When regrettably informed that this was not possible, she furiously swore never to insure again! By their very nature, life assurance premiums are non refundable.
Most insurers are offering a level of cover that does not require a thorough assessment of the client’s medical, occupational and financial situation.
This means that the main determinant for the level of premium charged is the client’s age, and thus explains why sales agents sadly parade a modest three-page document meant to ‘detail’ the policy offered.
A sales agent recently walked into a friend’s office saying (I paraphrase)...‘insure with us, and if you happen to die, we will pay out; should you become incapacitated, we’d pay out too’.
He then confidently inquired her age, so that he could read off her required premium.
The term “incapacitated†may have one or a variation of the following meaning;
If by reason of illness or accident you are;
totally unable to follow your own occupation
totally unable to follow your own occupation and any occupation for which you could reasonably be considered suited from past experience, education or training
totally unable to follow any occupation whatsoever
unable to perform a certain number of specified activities.
For example, if an experienced pilot cannot operate an aircraft due to sight impairment, they would have a valid claim under the first definition of incapacity.
However, since they could still be used in another capacity in the airline for example training, they would not have a valid claim under the second and third definitions.
An agent who is less interested in the details of the insurance contract, has no business engaging you on merely the premiums on offer.
It may all appear very simple and straight forward, but the mask does, and will come off at the claims stage!
Save yourself the trouble later, and take some time to comb through the details of the policy contracts on offer. After all, it is therein that the devil resides.
The complains were about the delay and amount offered in the settlement of claims.
This is not a true reflection of the extent of dissatisfaction in the market because few people are aware of that facility offered by the commission.
However, if you were unhappy with the number of claims insurers have refuted, then you had better fasten your seat belt because according to my radar, unpaid claims are bound to increase.
Here’s why.
Until recently, property, liability and medical policies were the most commonly sold insurance covers locally.
Even with vague facts, and having never seen the actual insurance contract, many people have an idea of what these policies offer.
For example, with comprehensive motor insurance, it is near common knowledge that the insurer will pay out when the policyholder’s car is involved in an accident.
Further still, a sales person need not inform a holder of a fire policy to contact their insurer when fire has gutted their premises.
Unfortunately though, the new popular life assurance covers are not as straight forward, and if misunderstood, could cost the industry great credibility.
Take Eva, a young and successful career woman, who has faithfully paid the monthly premiums on her life policy for the past three years.
Faced with an acute financial constraint, she confidently demanded that her premiums be refunded.
When regrettably informed that this was not possible, she furiously swore never to insure again! By their very nature, life assurance premiums are non refundable.
Most insurers are offering a level of cover that does not require a thorough assessment of the client’s medical, occupational and financial situation.
This means that the main determinant for the level of premium charged is the client’s age, and thus explains why sales agents sadly parade a modest three-page document meant to ‘detail’ the policy offered.
A sales agent recently walked into a friend’s office saying (I paraphrase)...‘insure with us, and if you happen to die, we will pay out; should you become incapacitated, we’d pay out too’.
He then confidently inquired her age, so that he could read off her required premium.
The term “incapacitated†may have one or a variation of the following meaning;
If by reason of illness or accident you are;
totally unable to follow your own occupation
totally unable to follow your own occupation and any occupation for which you could reasonably be considered suited from past experience, education or training
totally unable to follow any occupation whatsoever
unable to perform a certain number of specified activities.
For example, if an experienced pilot cannot operate an aircraft due to sight impairment, they would have a valid claim under the first definition of incapacity.
However, since they could still be used in another capacity in the airline for example training, they would not have a valid claim under the second and third definitions.
An agent who is less interested in the details of the insurance contract, has no business engaging you on merely the premiums on offer.
It may all appear very simple and straight forward, but the mask does, and will come off at the claims stage!
Save yourself the trouble later, and take some time to comb through the details of the policy contracts on offer. After all, it is therein that the devil resides.