By: Siyakha Masiye, spokesperson at Miway

In recent years, short-term insurance premiums in South Africa have grown significantly. In 2022, gross written premiums reached R140.1 billion, reflecting a 9.7% increase from the previous year. This upward trend continued, with an average premium increase of 2.2% from the third to the fourth quarter of 2023.^[1]

As many South Africans are still recovering from overspending in the festive season, financial pressure is a reality. Some may consider cutting back or stopping their monthly insurance premiums to save on expenses. However, this would be a mistake, as it leaves them vulnerable to greater financial risks in the future. Instead, they should discuss their options with their insurance provider.

According to Siyakha Masiye, spokesperson at Miway, careful financial planning and budgeting involve securing high-quality products and services at the right price. “When faced with financial pressure, it’s natural to look for ways to cut expenses. While many cash-strapped South Africans may view insurance as an unnecessary cost, it’s really one of the most effective tools for achieving financial stability and preparing for unforeseen events.  The question is not whether you can afford insurance, but rather whether you can afford to be without it.”

When it comes to how to negotiate a premium that suits your budget, while still providing the best coverage for your needs, Masiya recommends the following:

Understand your insurance needs

Financial pressure can lead to rushed decisions, and when it comes to insurance, clear thinking is essential. Before negotiating your premium, take the time to understand your specific insurance needs—whether for your vehicle, home, or business.

“Knowing exactly what you need cover for will help you avoid overpaying for unnecessary add-ons,” explains Masiye. “Too often, people settle for the first deal they come across instead of comparing policies from multiple insurers. Taking the time to explore your options can secure the most competitive rates.”

Leverage preventative measures

One of the most effective ways to negotiate a better premium is to demonstrate that you have taken proactive steps to protect your assets. Insurers consider safety and security measures when calculating risk.

“Simple actions like installing an advanced security system in your home or vehicle can significantly lower your premium,” says Masiye. “Regular maintenance checks, fire prevention systems, and even parking your car in a secure location can also result in cost savings.”

Bundle your insurance policies

Insurance providers are often willing to negotiate, especially if you have a strong track record as a policyholder. Many companies offer discounts to customers who bundle multiple policies—such as home and vehicle insurance—with the same provider.

“Bundling insurance policies not only simplifies your coverage but also gives you greater negotiating power,” explains Masiye. “For example, combining car and building insurance can lead to savings of up to 25% on the cheapest car’s premium and up to 15% on building cover. Additionally, many insurers offer loyalty rewards or lower rates for clients with no claims history.”

Consulting with a financial adviser can also help you navigate the negotiation process effectively and maximise your savings.

Adjust your excess

Increasing your excess—the amount you pay out of pocket before insurance covers the rest—can lower your monthly premiums. However, it’s essential to ensure you can afford the excess amount in the event of a claim.

“Opting for a higher excess can be a great way to lower your premiums, but it’s a trade-off,” says Masiye. “It means paying less every month, but if you need to claim, your upfront costs will be higher. This is a good option for low-risk drivers who don’t claim often.

Review your policy annually

Insurance needs change over time, so reviewing your policy annually is crucial. Premiums can fluctuate based on inflation, market conditions, and even changes in your neighbourhood.

“Your risk profile can improve over time, and that should be reflected in your premium,” Masiye advises. “If, for example, you’ve moved to a safer neighbourhood, installed a security system, upgraded your roof, or reduced your annual mileage, you may be eligible for lower premiums. Staying informed about these factors ensures you’re not overpaying for coverage.”

Secure the best deal without compromising protection

Negotiating the best insurance premium is not just about reducing costs but ensuring that you have the right coverage in place to safeguard your financial future.

“By taking proactive measures, engaging in informed discussions with your insurer, and reviewing your policy regularly, you can secure the best possible deal for your budget, without compromising on essential protection,” Masiye concludes.