Consumer insurance seen as scam says judge

CONSUMER credit insurance in SA has a bad name and is seen by many as a scam or a rip-off, Judge Peet Nienaber noted in a report on an inquiry into the industry released yesterday.

However, not all the reasons for this are necessarily valid, and it is always necessary to distinguish between different insurers and different insurance products, he continued.

While the industry fulfilled a definite need, its potential deficiencies lent themselves to the exploitation of consumers by practitioners more intent on profit than service.

“Such deficiencies, if not neutralised, will substantially detract from the value proposition of consumer credit insurance.

“Therefore, what is needed is not an outright and self-righteous condemnation of consumer credit insurance, but the elimination of its potential abuses.”

The inquiry, instituted in July last year, suggested, among other things, that the servicing fee be deregulated, as should the introduction fee as it was the “only effective measure to combat improper incentive payments”.

The inquiry also noted that the problem lay with the monitoring and the investigation of non-compliance. — Sapa

http://www.dispatch.co.za/article.aspx?id=195703

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Consumer insurance seen as scam says judge