Insurance premiums will probably shoot up once the Consumer Protection Act, a piece of legislation that aims to increase public accountability, will be implemented.

It is expected that when the Act comes into operation, companies will be exposed to more possible claims and will have to insure themselves against these extra claims. This will be reflected in the premiums, which are therefore to increase.

Furthermore, individuals will have to fork out higher premiums because the act places a heavier burden on the shoulders of the insurers. Insurance companies will for instance no longer be able to get away with insurance policies that treat the consumer unfairly in one way or another, or that are misleading.

While consumers will benefit from this, they will have to pay the price for these changes.

Amelia Costa, an associate at legal firm Deneys Reitz, says the Consumer Tribunal - which is instituted in terms of the act and has the task of acting as watchdog - will have to set certain standards as to how the Act is to be enforced. "The act has incredibly wide application and I fear insurers and the insured will realise this when it is too late."

According to Costa, policies may still contain exclusions - but let the insurer beware if he has not very explicitly explained it to the insured, and in simple language.

There are significant questions about how the act will ultimately be interpreted, she added: "What is clear enough, what is simple language, what comprises sufficient opportunity to understand the terms of a contract, and what constitutes quality service are extremely subjective concepts," Costa points out. The tribunal will have to be totally au fait with the act's provisions to be able to take a view on the concepts."

Source: Sake24.com