Discovery Insurance fined

Top insurance company Discovery Insurance, has been fined R100 000 by the Financial Services Board (FSB) for promoting rewards which they say are unrelated to actual benefits. According to them, Discovery was “unlawfully inducing consumers to take up its short-term insurance policies.”

Discovery Insurance Fined by FSB

All of this came in the wake of Discovery Insurance’s advertising that people using the Gautrain a certain number of times during a given period would get a premium waiver or “free insurance” for a month if they bought a Discovery policy before a specified date.

It is felt that this offer was in contradiction to the Short-Term Insurance Act which prohibits any person from providing a customer or potential customer any valuable consideration, such as a reward, to “induce” them to enter into an insurance policy. By inducement, one means an incentive which is not related to the benefits of the policy, making potential customers more likely to choose that particular insurance company.

FSB’s head of insurance compliance, Farzana Badat, felt that the month of free insurance offered by Discovery Insurance, in this case, does not necessarily improve the benefits that the customer would get by choosing Discovery.

It was noted that this contravention was not intentional, but was as a result of Discovery Insurance’s misinterpretation of the applicable legislation. Discovery responded by expressing regret for its actions and gave its full co-operation to the Registrar.

The CEO of Discovery Insurance, Anton Ossip, explained the motivation behind this offer put forward by Discovery, stating that their analyses showed that frequent Gautrain users reduce their driving kilometres on our roads substantially. This reduction in exposure to the insured vehicle reduces the accident risk and to some extent, the theft and hijacking risk, meaning that frequent Gautrain users cost Discovery less in claims.

He went on to explain that “A core part of our pricing philosophy is to reduce cross-subsidy where possible and as such we wanted to reward these clients for their reduced risk exposure through a once-off premium holiday. Less than 100 clients were awarded a premium holiday in January 2015.”

Despite this, the R100 000 fine still stands, with Discovery maintaining its global reputation for being a unique insurance option with offers benefits and rewards to customers based on their healthy lifestyle choices, thus encouraging a healthy way of life.

 

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Discovery Insurance fined
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Discovery Insurance fined
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Top insurance company Discovery Insurance, has been fined R100 000 by the Financial Services Board (FSB) for promoting rewards which they say are unrelated to actual benefits.
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Likemoney.co.za


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