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Outsurance Ad Update

The original article published by RiskSA regarding a misleading advertisement elicited a response from OUTsurance.

The original article reported on a finding by the Code of Complaints Committee of SAIA that a particular OUTsurance television advertisement was “misleading, non-factual and non-verifiable” and was therefore in breach of the SAIA Code.

The direct insurer was instructed to publish details of the finding against it, on its website for 60 days.

Subsequent to this, Andy Mark, publisher of RiskSA, responded to correspondence they received from OUTsurance about the article. Please click here to read the full article.

One of the main points in the article, contended that the direct insurer claimed that its premium was lower than that of three competitors used in the comparison.

OUTsurance responded as follows:

“Our advertisement never stated that we are the cheapest in the market. We obtained quotes from our four largest competitors, and we were indeed cheaper than the average of these four quotes. The SAIA Complaints Committee did, however, find that we should have used a more rigorous and independent process to arrive at the comparison – a finding which we accept.”

RiskSA responds to this as follows:

Actually the committee found that, of the four competitive quotes canvassed by OUTsurance, no less than three were cheaper than OUTsurance – one by as much as 25 per cent. Only a single quote was more expensive, but this by a margin significant enough to skew the average in OUTsurance’s favour. The committee also rejected OUTsurance’s contention that it never intended to present its quote as the cheapest, pointing out that the image on screen was a price comparison purporting the ‘competitors’ quote to be R3 066 while the OUTsurance quote was R2 862.

In our story on the OUTsurance SAIA ruling yesterday (08/11/12) I said that no less than three of the four competitors canvassed were cheaper than OUTsurance. This is factually incorrect and we apologise for the error.

It is only when the three least expensive competitive quotes are AVERAGED that the result is lower than the OUTsurance premium. When the most expensive fourth quote is added to the mix, the results skew in OUTsurance’s favour.

To be honest, if one removes both the most expensive quote and the least expensive quote from the table and then averages the remaining two insurer’s quotes, OUTsurance comes out cheaper by R190 odd (assuming we’re comparing apples with apples as far as covers go). If I were the customer though, I would have been able to choose the least expensive insurer (a large and reputable insurer which employs broker channels) and save my business a whopping R702.01 per month. As the saying goes, there are lies, damn lies and then there’s statistics.

To be sure, Andy, to be sure.

Price comparison is an extremely dangerous way of advertising. My colleague, Paull Lawrence, kindly provided the following relevant excerpt from the General Code of Conduct regarding advertising:


1. An advertisement by any provider must –

  1. not contain any statement, promise or forecast which is fraudulent, untrue or misleading;
  2. if it contains-
    1. performance data (including awards and rankings), include references to their source and date;
    2. illustrations, forecasts or hypothetical data
      (aa) contain support in the form of clearly stated basic assumptions (including but not limited to any relevant assumptions in respect of performance, returns, costs and charges) with a reasonable prospect of being met under current circumstances;
      (bb) make it clear that they are not guaranteed and are provided for illustrative purposes only; and
      (cc) also contain, where returns or benefits are dependent on the performance of underlying assets or other variable market factors, clear indications of such dependence;
    3. a warning statement about risks involved in buying or selling a financial product, prominently render or display such statement; and
    4. information about past performances, also contain a warning that past performances are not necessarily indicative of future performances; and
  3. if the investment value of a financial product mentioned in the advertisement is not guaranteed, contain a warning that no guarantees are provided.”

As the FSB reacts to media reports on what may constitute transgressions of the regulations, one would like to know whether any further investigations will follow as a result of this advert campaign.

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