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The FNB/BER Consumer Confidence Index (CCI), a telling marker of SA’s economic health, dropped to its second-lowest CCI reading on record since 1994, -25 index points in the second quarter of 2023. According to the report released late last week, consumer confidence remains "extraordinarily" depressed, deeply affecting the buying power of South African consumers.
Unfortunately, when it comes to culling unwanted expenses, terminating “grudge purchases” such as insurance policies, or reducing cover, often occurs during trying economic times. “This is extremely concerning, especially when you consider that almost 80% of South Africans are underinsured for the value of their possessions by more than 50%,” says Neptal Khoza, Head of Market Development at SA’s largest insurer Santam.
To put this into perspective, Khoza explains that if you insure your home for R800k, but its actual value is R1,6m, you are underinsured by 50%. While you save on premiums, if you had to suffer property damage of R500k, you would only be paid out for 50%, R250k, because you are underinsured by 50%. “This means you would need to find the other R250k somewhere – which not many of us have lying around”.
Khoza says that while it’s incredibly hard to cover expenses each month, let alone actually manage to save any money, he suggests rather looking at ways to get better value from your insurance premiums, rather than cancelling or reducing cover. “Insurance coverage should never be compromised – even in extremely tough economic times like the one we’re in now. It’s critical, firstly, to have a reliable insurer – and then to find clever ways to save without compromising the strength and reliability of your coverage. This way you can ensure that your cover meets your needs and that you avoid surprises at claim stage.”
He shares some smart ways to save on your cover:
Khoza concludes that speaking to your broker or insurance provider can help you to assess your options. “Your broker or insurer will help you find the best ways to safeguard what you value the most, while saving on your premiums where possible.”
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