Panel reviews consumer credit insurance

A panel of enquiry into consumer credit insurance in South Africa has revealed several problems in the furniture and motor industries. Retailers often don't disclose costs and charges when selling products. The panel has investigated how to close loopholes and raise consumer awareness.

Retailers often require consumers to take out special insurance when they buy goods like furniture on credit, even though consumers already have their own insurance policies which would pay out. In tune with tough economic times, there has been an increase in the number of people who have not kept up with their insurance premiums.

Consumers are feeling the pinch and it is beginning to filter through to payment of insurance policies. The Life Officers Association says it's not a crisis, but statistics for the second half of last year show a 14% increase in lapsed premiums compared with the same period in 2006. With spiralling inflation this year, this could worsen.

The panel is investigating whether all consumers should have to pay built-in insurance costs when they buy products such as furniture and cars on credit. This is to protect retailers in the case of death or retrenchment. The panel has urged consumers to be more aware of what they sign for. They say there is an urgent need for strong consumer organisations.