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CRA Insurance News – South Africa

BY Jaco van der Merwe

“We foresee that many of our clients will migrate from other products to chilli”.

With South Africans feeling the financial pinch amid the Covid-19 pandemic, short term insurance is a monthly expense that will become increasingly difficult to afford.

Insurer King Price hopes to ease car owners’ financial burden by introducing a “drive less, pay less’’ product called chilli, which offers comprehensive insurance at a very competitive monthly rate.

The cover starts at a minimum monthly rate of R299 per vehicle valued at less than R500 000 travelling less than 100 km a month. The monthly premium will be determined by a sliding scale, with the maximum cover costing R999 per month for vehicles valued at over R1.5-million.

“Chilli isn’t a lockdown product. The idea started during lockdown when we did offer Covid-19 cover whereby we reduced the monthly premiums of our normal products. But we don’t think that simply discounting premiums is a sustainable solution and came up with a product that makes sense,” explains Gideon Galloway, King Price CEO.

“People are stressed and will look at reducing their insurance premiums as their financial outlook changes. Most of our clients we asked if they would go back to paying full premiums or rather opt for an alternative, said that they are interested in chilli.

“We foresee that many of our clients will migrate from other products to chilli, but if we don’t offer them an alternative we’ll end up losing them altogether.’’

Galloway says that although tracking devices will feed clients’ mileage straight into King Price’s system, telematics isn’t a pre-requisite for chilli cover. The insurer will rely on clients uploading a regular picture of their car’s odometer to its app to keep track.

“We have opted not to monitor a client’s driving style through telematics. The most important thing that contributes to the risk factor is time on the road and therefore this product is purely based on distance covered every month,’’ adds Galloway.

“We just want the clients to be able to prove their average monthly distance falls within the limitation set out by the specified cover. We will still allow you to stay on the less than 100 km per month even if you make the odd trip to Durban and back, as long as we can determine that your average normal mileage fits the bill. This will be determined over the course of time with clients uploading regular pictures of their odometer readings. But there are measures in place to counter possible fraud and clients will be moved into a higher bracket.’’

Galloway concedes that the chilli product won’t be a viable option for motorists doing regular high monthly mileage, but that it nonetheless caters for a wide range of clients.

“To only pay for the kilometers you drive is not a new insurance concept at all. But less time on the road reduces the risk and therefore allows us to offer competitively priced comprehensive insurance. If you cover less than 300km per month, you will no doubt save between 50 and 70% on your current cover with chilli. For the foreseeable future, many people will still work from home and not use their cars a lot,’’ he says.

‘’Also families that own two to three cars do not use all of them that regularly and in those cases chili will make a lot of sense. And then of course for people who own vintage of classic cars it’s a very good option because of the limited distance these cars travel each month. Especially at this price. Did you ever think it will be possible to get comprehensive insurance cover for a Ferrari for less than a R1 000 a month?’’

The chilli product is available through King Price’s mobile app which allows you to buy a policy and get instant cover without even speaking to an agent.

Credit to Citizen.