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Small firms put pressure on short-term insurers
Friday, 11 September 2009 17:02
Small firms failing to pay their insurance premiums has put pressure on the revenues of many a short-term insurer, according to an article posted by Business Report. SMEs facing pressure from the economic crisis that began to bite in December last year has companies like Mutual & Federal.

Country-wide calamities such as fires and excessive rain has resulted in increased claims and the loss of insured properties. As a result, a first-half underwriting deficit of R96 million was experienced by the second largest short-term insurer in the country. Gross premium fell by 7 percent to R4.3 billion.

Similarly, Santam was unable to achieve proper premium rate increases for SMEs. The financial crisis has left the largest short-term insurer with two choices, offer lower premiums or lose clients.

Statistics SA confirmed the difficulty with their latest report of liquidated organisations. A hefty 35.8 percent more business closed down between January and July this year than during the same period last year. As a result, insurers have lost more than small premiums, but entire clients.

The solution until now has been close co-operation between brokers of SMEs and insurers to come to mutually agreeable terms for policies instead of forcing higher premiums and losing clients.
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