The price of peace of mind: When insurance becomes a gamble

What price loyalty? What price peace of mind?

It’s a question a pensioner in the Eastern Cape is asking this week after decades of an impeccable claims record with the same short-term insurer.

Last year, he suffered three separate calamities: A drunk driver crashed into his perimeter wall.

Then a hadeda smashed into a bedroom window, shattered it, shat on the floor and shredded the curtains.

Finally, a violent hailstorm, wholly unusual for the area, wrought havoc on the village. The insurers paid out on two of the claims but welched on the bird shit on the carpet.

When the time came for the automatic policy renewal, he got another surprise – the premium had increased 27% – based on his “new” risk profile.

He was sent a 77-page contract full of hedging clauses for a short-term insurance policy that covers nothing more than a pensioner’s house, contents and car.

The insurer was deaf to pleas to look at his claims record and the length of time he had been a client, so he shopped around.

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The very next insurer offered him precisely the same coverage at a premium less than he had been paying last year.

It was an obvious choice to make, though not an easy one for a person steeped in the values of a forgotten age, loyalty and fairness.

But this is the world today, one where those archaic concepts have been sacrificed on the altar of the instant gratification and cheap profits, spawning a frenetic merry-go-round of chasing bargains and cost-cutting until the whole edifice is revealed as nothing more than an elaborate Ponzi scheme.

Short-term insurance is a grudge purchase on the same level as private security and often medical aid – some underwriters even package all three in an added incentive to lure the punters because, ultimately, that what’s we all are.

We have stopped being clients and we have become gamblers.

We hope our premiums will cover us when catastrophe hits, although recent reports have proved how wrong that thought is – if you are unlucky enough to contract the wrong type of cancer or have your appliances implode through load shedding.

The question is how do recalibrate this carousel? In an era of increasing state incapacity and often failure, private solutions for those who can afford them will always create their own market.

How long will it be until those corporate giants squander that through their own greed?

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