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Cedric Stephens | Value-driven auto insurance | Business

Phil Town writes for the global media company Forbes and is also a member of its financial board. This organization is an invitation-only fee-based organization for senior U.S. financial executives.

In his 2018 essay, “The Important Differences Between Price and Value,” Town writes: “One of Warren Buffett’s most famous sayings (via Benjamin Graham, former economics professor, investor and father of the value-driven investing) is: “The price is what you Pay; value is what you get ”. It is an idea that largely guides Buffett’s investment decisions and that he has used to achieve an unprecedented level of success. “

What exactly does this proverb mean? Does this apply to other types of decisions?

Mr. Town used the example of a US $ 5 gold bar to compare price and value. The actual price of a 400 ounce gold bar is now around US $ 757,895. The price of US $ 5, he argued, is arbitrary. It was chosen by the seller for reasons known only to him. Value, on the other hand, is fundamental. Even though the gold bar costs only $ 5, its intrinsic value to the buyer is far greater than the selling price.

The difference between price and value can also be used to guide other types of decision making, including purchasing insurance. Smart insurance buyers, in my opinion, invariably focus on perceived value, not price.

The Caribbean insurance company, ICWI, recently launched a new auto insurance product called Comprehensive Complete. Company officials say it was developed to focus on value. Its name suggests three things. This implies that “global” does not mean global, as many people believe. Complete Complete advises that not all comprehensive auto policies are created equal. They differ. And third, ICWI’s value proposition – the promise the company is legally bound to keep to customers if they choose to purchase its full comprehensive auto policy – offers better value than what the market offers. other auto insurers.

When asked about the assertion of the previous statement, the company’s vice president of marketing, distribution and human resources, Samantha Samuda, said the product development process was informed by data obtained from many sources. : the company’s engine portfolio; customer feedback, particularly on their expectations and challenges; and information collected from intermediaries and employees, including company complaints staff.

“Not all global policies are the same,” Ms. Samuda said. “In addition, we do not have complete control over the settlement process in situations where our insured is not at fault in a collision. So after doing a thorough study of what matters to our customers, especially at the time of a disaster, we knew we needed to do something different to meet their ever-changing needs. Comprehensive Complete is the result of these efforts. This gives the company more control over the claims process.


Alternative transport costs: the company will pay the cost of alternative transportation charges when the insured vehicle is destroyed, invalidated or otherwise unavailable due to a loss covered by the policy. The displacement of the replacement vehicle must not exceed that of the insured vehicle. ICWI will pay the actual rental charges for 14 days. My research indicates that other insurers offer such an improvement, but the amounts payable under their policies are set arbitrarily and do not cover the actual rental costs.

No-Claim Protected Discount: The discount will be retained indefinitely even when a claim is submitted.

Uninsured motorists: The value of this extra is best understood in the context where approximately one in four vehicles on Jamaican roads operates without insurance coverage mandated under the Motor Vehicle (Third Party) Insurance Risk Act. This means that in the event of an accident, it is likely that the other vehicle will not be insured. When this happens, the policyholder who is not at fault could end up incurring substantial costs with no prospect of recovering those costs. With this benefit, the policyholder will avoid much of the unforeseen costs associated with road accidents.

Key Replacement Fee or KRC: Motorists, especially owners of newer vehicles equipped with electronic keys, are unaware of the costs associated with key replacement. These costs, according to one company, can range from a low of $ 20,000 to a high of over $ 100,000, depending on the year of manufacture, model and type of vehicle. KRC is limited to $ 50,000 for the reasonable cost of replacing lost or damaged keys.

Excess eliminator: This improvement works like what bankers call a bridging loan. A bridging loan is a form of short-term loan that is used by a borrower as a continuous source of funds to “bridge” the period until the borrower obtains other funds to replace them. A claimant, for example, obtained a bank loan to repair her damaged vehicle. She got a loan in the hope that third-party insurers would compensate her and that she would use those funds to pay off bank debt. This does not happen.

More than 12 months passed before the other insurer paid its claim. The ICWI Excess Eliminator has been designed to eliminate the need for its policyholder to fund the deductible or excess. If, in the judgment of the insurer, the excess can be recovered from other insurers, ICWI will initiate the deductible. More succinctly: ICWI will pre-finance its policyholder’s deductible in situations where it concludes that these expenses can be recovered from the insurers of the offending motorist.


These product features of the new policy appear more attractive when combined with other measures taken by the company to improve its value proposition in handling claims. For example, ICWI representatives say the company sought to comply with the Financial Services Commission February 2019 market conduct guidelines, particularly those relating to complaints. It operates a call center dedicated to handling complaints. Policyholders regularly receive text messages to track their claims throughout the settlement process. Employees are specially trained to interact with policyholders and provide value-added advice in a timely manner.

Auto insurance is viewed as a reluctant purchase by many consumers. Complete Complete would not be for them. Risk-averse and value-based insurance buyers – especially those who prefer premium vehicle brands – should give this product a try. They might have a pleasant surprise.

Finally, I always study the fine print before signing on the dotted line. If you follow this rule and ask the service provider tough questions during the sales process, it will help you extract more value from your insurance contract.

Cedric E. Stephens provides independent information and advice on risk management and insurance. For free information or advice, write to: [email protected]

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