| A cheaper alternative to buildings insurance - SA's leading originator launches own product |
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8 May 2007
MortgageSA, South Africa's pioneering bond originator and former winner of the non-listed company of the year, has launched its own building insurance product aimed at providing homeowners choice, and an alternative to the bank products that have traditionally been forced upon consumers. Rhys Dyer, Executive Director at MortgageSA, says the move was facilitated by recent FAIS Ombudsman rulings and the new National Credit Act that was tabled into law in June 2006, which now allows the consumer the freedom of choice when it comes to house structure insurance. "Buildings insurance is a compulsory condition of the granting of the home loan and homebuyers have historically been forced to swallow the bank?s prices if they wanted finance". "But homebuyers are now no longer obliged to make use of the product prescribed to them by the bank and can therefore choose where they want to purchase buildings insurance and be free to shop around for the best value. "This freedom of choice will give homeowners great savings, with premiums available in the open market often significantly cheaper than the rates offered by bank insurers and in many cases with more comprehensive risks covered." Dyer also points out that being able to offer buildings insurance makes for a sound strategic fit for MortgageSA because their business model is based on removing the hassle and paperwork for consumers and streamlining all aspects of the home financing and insuring process. "It dovetails with our home loan, mortgage protection and household insurance offerings and takes us closer to a one stop, personal finance product and advice platform. "We hope that like the advent of bond originators, which have to date saved homeowners billions through increased competition, the introduction of free choice around buildings insurance will also result in massive savings for consumers. We estimate that the increased competition in the market will save homeowners R650 million annually in premiums. "The cost of bricks and mortar insurance is going to be cheaper as the days of the building insurance pricing monopoly historically enjoyed by the banks are over." Dyer says that while buildings insurance typically covers risks to the immovable structures of a residence and its domestic outbuildings, including all the fixtures, fittings and the improvements thereon, consumers should be aware that there is a lot of variability in what risks are covered. "For example, subsidence and landslip cover is specifically covered by some insurers but often excluded on other policies. The same can be said for geyser wear and tear cover." |
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