More players entering the affordable car insurance fray

The South African economy is proving to be a brutal equaliser. Whereas a year ago many car insurers were punting no claim bonus payouts and loyalty benefits, it would seem that many of them are now relooking their insurance offering carefully.

Whereas insurance companies such as Budget have always punted cheap car insurance, rather than “lifestyle” car insurance, companies such as OUTsurance and DialDirect are now investing heavily in advertising the better car insurance deal, the lower rate or strong suggestion that you could be getting a substantial discount on your car insurance premiums by contacting them; and in many instances you well may be able to clinch more affordable car insurance – by simply getting one or more car insurance quotes online!

Back to basics for car insurance

Car insurance is and will always be a bit of a grudge buy – much as healthy people aren’t over the moon about spending a grand a month on medical aid that they never end up using. When the economy is booming, doing window dressing to make such products look like a million bucks was pretty much pioneered by Discovery.

Car insurance loyalty rewards… not so much

Spend a little bit more, and you could get free gym membership, free this, complimentary that, and the healthier you get (Read: less you claim) the more lifestyle rewards you’ll get to enjoy whilst you’re prancing around being vital. Then get into bed with institutional employers, and you’ve got a really good thing going that works for everyone. Until the interest rates start going up, that is. All of a sudden, everyone is forced to rework their budget. With a hack saw. All non-essential expenses are reviewed, and anything even remotely resembling frivolous expenses gets the chop.

Car insurance: Price again the key determining factor.

Welcome to a market environment where price starts mattering to the middleclass. Yes, it’s not the coolest branding, but if they’ll pay out when I have an accident, if my claim is processed fast and efficiently, I don’t care what they do with their logo and offices.

Thus, while many other industries are cutting marketing budget, economics-savvy insurers are spending even more on communicating to the consumer. Gone are the celebrity endorsements – right now, South Africans are concerned about good deals and value for money, whilst still expecting a good level of service.

Whilst the market holds many challenges for car insurance companies, it certainly also holds many opportunities for capturing a segment of the population that had temporarily lost touch with the exact nature of their economic situation.

I would say insurance companies should at least not be hating Tito Mboweni and his interest rate adjustments – it’s opened the perfect opportunity to gain greater market share by undercutting the competition.

Viva Tito Viva!

More broad-based financial services players such as Ooba are going in with a more broad-based marketing approach, promoting their bonds, insurance and credit card facilities fairly even-handedly, rather than going for broke in pushing one product into an uncertain marketplace. But, if you’re business is car insurance, you’re in for a penny and in for a pound.

For what is fundamentally an underwriting service, price and peer experience is already playing a growing role, and rewards program driven brand loyalty is no longer looking like a watertight solution to retaining market share in car insurance. Tell us about your cheap car insurance – out there, the consumers are listening and ready to put contending brands to the test.

Find out more about car insurance in SA here.