Over the years, we have engaged with hot water specialists and other industry experts with a view to finding the best ways to mitigate rising geyser claims and its negative effect on sectional title scheme’s claims ratio.
Insurers have three blunt tools to manage negative geyser claims ratios – there are:
- Increasing the geyser excess
- Limiting the cover
- Increasing the premium
What can trustees do?
There are quite a few boxes trustees can tick, particularly in respect of longer-term planning, such as ensuring that geysers are properly maintained, implementing a higher spec or longer lasting geyser replacement program, engaging a hot water installation specialist to oversee all repairs and replacements, and engaging with the insurance advisor to structure geyser insurance appropriately.
Let’s consider these individually.
- Ensuring that geysers are properly maintained
Theoretically, the maintenance of geysers is the most obvious way to prolong the life of the standard mild steel geyser. If this is practiced from day one, this certainly does have its merits.
This involves the regular changing of anodes, valves and other components such as thermostats and elements. Changing of anodes can be successful but if left too long, threading may also rust and corrode to such at extent that this is no longer viable. Regular maintenance can also be costly for owners and often, regular maintenance of geysers gets neglected.
- Implementing a higher spec or longer lasting geyser replacement program
Trustees can implement a geyser replacement program whereby owners are encouraged – and even incentivised – to replace their geysers once it has failed with a stainless-steel geyser. Products such as the WaterLite 444 stainless steel geyser can last up to four times longer as a mild steel geyser and have no need for anodes, making it cheaper to maintain. Over the longer term, the claims ratio will also improve.
- Engaging a hot water installation specialist to oversee all repairs and replacements
There is usually an immediate improvement to claims ratio when a specialist hot water installation is contracted to service and maintain the scheme’s geysers with the honesty factor being the major mitigation factor. All too often plumbers will advise to replace geysers rather than repair which comes at a much higher cost when a simple flush of the geyser could have sufficed. Making use of a reputable geyser servicing company, preferably one with insurance company credentials, can save the scheme some money and will often have an immediate positive impact on claims ratio. It also means that there are not multiple plumbers fiddling with systems and that geysers are installed correctly and compliant.
- Engaging with the insurance advisor to structure geyser insurance appropriately
A well-versed insurance advisor will be able to structure your existing policy or find an appropriate matching product to suit your geyser needs. Instead of serving up a standard policy with standard geyser excesses and limits, a little tweaking of the policy can go a long way. For example, sometimes when a geyser is replaced with a higher spec geyser it will have a minimal impact on the premium per owner, but in the long run it may save the owner thousands in repair, maintenance and future replacement costs.
Author: Mike Addison, Addsure
Addsure is South Africa’s leading sectional title insurance brokerage. Obtain fit and proper advice from advisors who understand sectional title. Contact our head office, Cape Town (021) 551 5069 who will put you directly in touch with one of our nationwide advisors.