Insurer punishes unemployed teacher

Ellen Fedele of Plumstead was a client of Outsurance for 10 years but cancelled her insurance policy when they said her premium “would almost double” after she told them, during a security question phone call, that she was unemployed.

“I can’t complain to the Ombudsman for Short-Term Insurance (OSTI) but I would like to register my vocal displeasure about Outsurance and their tactics when they heard that I was not working. I disclosed this honestly during a security question phone call,” Ms Fedele said.

“Not only did they say that my premiums would practically double but that my excess would increase from R2 500 to R7 500. I have not been working as a teacher for two years yet never once have I missed a premium payment. The last time I claimed was nearly seven years ago and I have never caused an accident. I am 41 and my car is a nine-year-old Polo. I am the only driver so my car is still in very good condition. How can they justify doing this? As one gets older and your car gets older, premiums should go down, not so? I am not a 21-year-old driving a Bugatti Chiron (a hyped up supercar),” said Ms Fedele, who had to listen to three consultants, each supposedly more “senior” than the last, explain how she was a risk as she was not working.

“I have paid my premiums religiously since I have been with this company, which is over a decade. No more. I cancelled my policy with immediate effect and went to 1st for Women, whose service, so far, has been excellent.

“Not only is the premium lower, even though they know I am not working but they came to my home to install a tracking system. The consultants have been very helpful, professional and friendly throughout. It took less than 15 minutes to get a new policy on my car which was a huge relief.

“Please ask Outsurance if this is the way they treat loyal clients? I see so many complaints about them not wanting to pay claims. I am grateful I am no longer bound to them,” Ms Fedele said.

Natasha Kawulesar, spokesperson for Outsurance, said the explanation the agents gave to Ms Fedele is not easily understood or accepted, “especially when you are on the receiving end of the information”.

“From a client’s point of view, we are hitting them when they are down by increasing their premium because they are unemployed. There is, however, business sense behind the decision that an unemployed person attracts a higher premium than an employed person.

“Based on our own large volume of past claims data, people who are unemployed claim more than most other occupations. The increase was exaggerated as Ms Fedele’s previous occupation was a teacher which is one of the occupations with the lowest claims frequency. Just like your age or your previous claims history, your occupation is one of the many factors that has statistically been proven to predict future claims experience and therefore premium levels,” said Ms Kawulesar, who explained that the result of not increasing premiums where the risk increases, is that other policy holders would need to subsidise the costs of those clients who are potentially a higher risk for an incident.

“We do not believe in that model of business. Our model is that each client should be rated correctly according to their risk exposure. We thus ask that clients inform us of any change that may affect their cover,” she said.

“As a result of the change in status from employed, with the occupation of a teacher, to unemployed, Ms Fedele’s premium increased from R575.96 to R788.13. This is an increase of R212.17.

“We attempted to reduce the premium by applying a higher excess. The excess was R2 500. At an excess of R6 000, the premium would have been R681. It is not accurate that both the premium and the excess increased. At the premium of R788.13, the excess would have remained R2 500.

“Having said that, given the information that Ms Fedele had been unemployed for a while already and had not claimed for any incidents, we should have gathered further information and referred her situation through to our underwriting department to review.

“We did not do that and can understand Ms Fedele’s concerns that her loyalty was not acknowledged. We apologise for the impression we created,” Ms Kawulesar said.