I feel that, from a consumer affairs point of view, car insurance firms need a closer look. Every year there is an increased premium. My wife has received her yearly reminders with a Lm10 rise and an extra Lm1 on the stamp duty on a car which she had for 35 years comprehensively insured. She has a 60% no claims bonus, and never had an accident.
The insurance firm claims that the rising cost is due to accidents. So, why don't those who have the accidents pay more and those such as my wife pay less? While the value of the car decreases they still keep increasing the premiums. Moreover, although she has been offered Lm1,500 for her car, it has been valued at Lm500. Why? (T. Findley)
I referred the matter to the Malta Financial Services Authority:
Thank you for your letter addressed to the Customer Service Column of The Sunday Times (October 11), which was passed on to this office.
I do appreciate your disappointment at the fact that your motor insurance premium has increased, compared to previous years. Normally, there are basically two reasons for an increase in premiums - overall administrative costs and the surge in claims.
Insurance companies assess the risk that something will happen and the potential consequences which might arise as a result. Then, based on past experience and their own expertise, insurance companies calculate the premium that a customer needs to pay to provide cover against loss. When the insured event happens, the company pays out the agreed level of claim.
In principle, the total premiums must cover the total claims which may need to be paid out. However, when the amount of claims payable are high (and in the local market these are increasing substantially) insurance companies have to tighten up on costs (to the extent possible) and increase premia. Of course those drivers who make a claim will be penalised by a reduction in their no-claims bonus and the application of other conditions as determined by the insurer. I must add, however, that premia charged by companies are set by the market in accordance with prevailing conditions from time to time.
As to the value of the car, your car model should be insured on its market value. Insurance companies operating locally have guidelines, which they use to obtain the market value for various types of vehicles. The value of a car established by a dealer may differ from the guidelines established by an insurance company. However, in the event of a claim, the insurance company will base its costing and estimates on the market value of the ear and not on the price provided by the car dealer (which may differ).
Therefore, it is advisable that prior to insuring your car, you establish the value of the car according to the guidelines provided by your insurance company, and insure accordingly. If you don't agree with the value established by your insurance company, you can ask a professional motor surveyor for a valuation of your car and present that valuation to your insurance company.
You may wish to note that you are not obliged to take up renewal of your motor insurance from the same insurance which you have used year-on-year. There are many insurance companies who would be able to quote you alternative premia. If you wish us to provide you with a list of entities providing insurance business in Malta, please let us know.
If you still have a cause for concern or wish to discuss this matter further, please do not hesitate to contact us to arrange a meeting. (Geoffrey Bezzina, consumer complaints manager, MFSA)
I thank Mr Bezzina for his thorough explanation. He occupies a relatively new position in the MFSA, which he has filled in very well. Keep it up!