Premium Undercutting

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Premium Undercutting Premium undercutting is the practice of an insurance company offering clients unrealistically low premiums in order to gain a competitive advantage. This is often done by secretly offering lower premiums to certain clients, or by offering lower premiums for certain types of policies. Premium undercutting can have a number of negative consequences for the insurance industry. It can lead to: -Insurers being unable to pay claims when they are due. -A decrease in the quality of insurance products. -An increase in the cost of insurance for consumers. -A loss of confidence in the insurance industry. It must be emphasised that the practice is not only unethical but criminal, as the insurance regulatory bodies are against such practice and may revoke a defaulting insurer's licence for such practice. Companies practicing premium undercutting then raise their prices to control levels in the long-term to recoup their losses. Research has proven most companies practicing premium undercutting find it difficult to pay claims because their risk exposure is higher than those selling with regulatory premium rate. If you are considering purchasing insurance, it is important to be aware of the risks of premium undercutting. Here are some tips for avoiding premium undercutting: -Get quotes from several different insurers. -Ask about the terms of the policy, including the deductible, the maximum payout, and the coverage limits. -Be wary of offers that seem too good to be true. -If you are unsure about a policy, ask an insurance intermediary (agent or broker) for help. #benewinsurance #insurtech #inclusiveinsurance #insurance #reinsurance #takaful

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