By Wendy Knowler
The long wait: This damaged Toyota RunX, belonging to Aarvarn Rajcoomar, was subsequently repaired by a panel beater, but Model Insurance failed to settle the bill.
Many people assume they will be "covered" if they have an accident in their car, or if the car is stolen or hijacked, when in reality they are violating a key provision of their policy which will see any claim being rejected by their insurance company.
Things like the car being unroadworthy, having failed to disclose a previous accident when taking out the policy, or not being the "regular driver" listed in the policy.
But here’s an even worse scenario – what if the insurance company you’re paying your premiums to every month is just pretending to be an insurance company, treating clients’ premiums as pure income, going through the motions of claim approval and then just not paying?
That’s the story of Model Insurance, based in Pinetown, KwaZulu-Natal. They have been in operation since at least 2011, offering low premiums and incentivising existing clients to refer new clients to them.
The company’s website claims: "We offer by far the lowest car, motorcycle and business insurance premiums, so why pay more when you can pay less, save money today and make a difference in your life. We can help."
In fact Model Insurance, owned by Pieter de Wet, was never a bona fide insurance company. And the difference the firm made in the lives of those who claimed, and the lives of many panel beaters, was indeed big – but not in a good way, in most cases.
On hold: Liz de Gee of Bruces Panel Shop in Pietermaritzburg, with the Nissan Tiida of Model Insurance client Sharon Prince. The company owes more than R40 000 for the repair.
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Complainants say the company didn’t quibble about or reject their claims – they made all the right noises, but then just failed to pay.
Model Insurance has never been registered with the Financial Services Board, as required by the FAIS Act, and is not underwritten by a registered insurance company, and has therefore been conducting business in contravention of the Short-Term Insurance Act.
Acting on complaints, the Financial Services Board referred the matter to the SAPS for investigation.
Police spokesman Colonel Jay Naicker says the company has or had 884 clients around the country, and their premiums, paid into Model Insurance’s bank account via debit order every month, ranged between R200 000 and R250 000.
"There is no indication that the money has been paid to an insurance company," Naicker said.
Investigating officer Lieutenant-Colonel RR Mohan has taken six statements from victims, who have not had their claims settled – including several in KZN, one in Pretoria and one in Port Elizabeth – with another four pending.
"We are in discussion with prosecutors on how we can proceed with this matter," Naicker said. "Any other victims out there, or those who can assist police in their investigation, are requested to contact Lieutenant-Colonel Mohan on 079 5000 074."
I last spoke to De Wet, and his mother, Ria – an employee who "lodges claims" – as she put it, early last week in connection with the case of Sharon Prince. (See Case 2.)
That was before I learnt of the police investigation into his business, but I have not been able to reach him by phone since. The office number rings unanswered, and my e-mails have not been responded to.
De Wet admitted the company was not registered with the FSB, adding that it was going to be liquidated "in about five months".
He appeared unrepentant about the failure to pay claims, saying he had a long list of payments to make, that people had to wait their turn, and he had a family to think about.
He blamed the firm’s woes on false reports and a vendetta against the company on the internet – there are several complaints about Model Insurance on consumer complaints website HelloPeter – saying he’d lost "over 700 policies" as a result.
In March 2012, the SA Motor Body Repairers Association sent an e-mail to members urging them not to release repaired vehicles authorised by Model Insurance until the company had made payment.
This was as a result of complaints from the association’s members about non payment of claims by the "insurance company".
CASE 1: Aarvarn Rajcoomar
Newly graduated, Rajcoomar bought his car, a 2005 Toyota RunX, in April 2011 and took out a policy with Model Insurance on the recommendation of a colleague.
"I did my research on them but at that stage there were no complaints on the internet," he says."I was swayed by the fact that they were associated with the Automobile Association, giving their policyholders free AA membership and roadside assistance."
But a few months later all policyholders were informed by Model Insurance that the company was no longer associated with the AA, and that they could use any towing service after an accident.
Rajcoomar’s accident happened in April last year. While travelling in the Ladysmith area, his car was side-swiped by an SUV, the unlicensed driver having lost control on a bend at high speed.
He submitted the claim to Model Insurance, the repair was authorised on May 8, with a promise to pay in 30 days, and carried out by Concorde Panel Beaters. Five months later, Model had still not made the payment.
"Hundreds of calls to the insurance company got me nowhere; they kept saying that they were working on it and that they would pay at the end of the month, but this never happened."
Concorde refused to release the car until they were paid, and began talking of selling it to defray costs.
"In October 2012 my father went to Model Insurance’s dodgy looking basement office in Pinetown to meet Pieter de Wet on my behalf. He said they were having a hard time financially as panel beaters were not releasing clients’ vehicles until they paid. He said they had many clients waiting for their vehicles, and thus there was a shortage of funds, strongly implying that the panel beaters were in the wrong."
Letters sent by Rajcoomar’s uncle, an attorney, to Model were ignored. Finally Rajcoomar borrowed R25 000 from a relative to pay Concorde and get his car back.
"Today no one from Model Insurance answers my calls or replies to my e-mails," he says. "In fact, they didn’t even respond to my policy cancellation and have since debited my bank account several times, which I have reversed.
"I am now seriously in debt, which is going to take me years to recover from."
CASE 2: Sharon Prince
Sharon Prince, who’s from Durban but is working as a trainee supermarket manager in Pietermaritzburg, got her first car, a Nissan Tiida, in 2011.
She took out a premium with Model Insurance based on their premiums being low and a friend having recommended them, and began paying about R450 a month.
Last February the car was badly damaged in an accident. Prince contacted her insurer, submitted the relevant paperwork and the claim was approved.
The car had been towed to Bruce’s Panel Shop in Pietermaritzburg and on March 9 Model Insurance wrote to the panel shop authorising R45 000 worth of repairs.
Model was to pay Bruce’s Panel Shop R41 750, and Prince, as the policyholder, the excess of R3 250.
By early April the car was repaired, and Prince paid that excess amount. But Model Insurance just never paid.
"They never said they wouldn’t. They kept saying they would… next week, next month… for 16 month now!" Prince says.
As Liz de Gee of Bruce’s Panel Shop had been warned about Model Insurance by the SA Motor Body Repairers Association, she wasn’t prepared to release the car without getting payment first.
"We feel desperately sorry for Sharon, and I have never given up trying to get the money out of the De Wets, we can’t afford not to be paid for the car," she said.
Prince had to walk to work in the dark and cold of winter, and finally bought another car, having been unable to get a personal loan to pay the R42 000 she owed the panel beaters.
That car is costing her R3 500 in repayments, which has put paid to her plan to buy a flat.
Pieter de Wet appeared unmoved by her story when I confronted him with it last week.
He undertook to "sort it out", then contacted De Gee and offered to pay R20 000 on October 5, and the balance on November 5.
She refused, given that all the De Wets’ promises to pay since last April have come to naught, not a single cent has been paid, and now there’s talk of liquidation.
She demanded a payment of the full amount immediately.
De Wet, however, claimed the moral high ground for making an offer which was rejected.
WHAT TO DO
A red flag number one when considering car insurance: a very low premium. Check out the company’s credentials first, starting with FSB registration.
Then go on to the Ombudman for Short-Term Insurance’s website and look at claims statistics.
The Ombud’s office this year revealed how the 51 competing insurers dealt with their claims in the preceding year. Their claims statistics were laid bare in the Ombud’s 2012 annual report, including the number of repudiated claims which the office overturned in favour of the consumer, for each company. To see all the stats, go to www.osti.co.za and click on Annual Reports, 2012.
Before committing to a car insurance policy, read the small print, paying particular attention to the excess amount and the exclusions.
Source: IOL service
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