Little savings add up

I once attended a negotiation course where the presenter told us that if you intentionally set your alarm clock earlier than you need to get up so that you can snooze, you are negotiating with yourself first thing in the morning, and you are losing. Busted!

It’s time to start talking about your negotiation skills. When you receive notice from your medical aid, car insurer, household insurer (just think all kinds of insurers) that your premiums will be increasing, do you just accept it, or do you try negotiate a better rate? At a minimum, do you consider whether the stated increase is justifiable? If not, it’s time to negotiate.

The insurers are generally the easier ones to negotiate with. Often, a mere phone call saying you are not happy with the x% increase will result in you being offered a lower premium. If not, be bold and say you will move somewhere else. Phone another provider, get a comparative quote, and then phone your provider back and give them the opportunity to counter-offer. If they don’t – make a change! Yes, it might appear to be a time-consuming practice and a hassle making the change, but generally, your new provider will make that transition as pain-free as possible. Just continually remind yourself of the cash saved and that you are not willing to accept the status quo.

When it comes to car insurance, use your common sense. It perplexes me how every year my car insurer sends me a letter stating my premiums have increased. How does this make sense?

The value of my car has decreased, therefore my premiums should come down. And so far – every time I make that point I hear some very interesting argument to the contrary (the increased wear and tear theory comes to mind) but I eventually succeed in reducing my premiums with my argument winning over.

Now, do not just accept the reduced premium under the illusion that you have won – check the details first.

What I usually find is that they increase the excess payable to allow a lower premium. Bring that to their attention as well, although I generally appease. You decide which concerns you more.

Regarding medical aids, these are generally standard increases and you won’t be able to negotiate too much. However, you can check the rates on other medical aids and move.

One of the very first articles I wrote for this magazine (‘The thing with medical aids’ – November 2013) would be a useful recap at this point. Assess how much you have been spending on medical bills and reassess whether you are still on the right plan.

Do not just accept every increase that comes your way. There are ones we cannot control (like the interest rate), but others that we can. The little savings here and there add up.

Please note that the author of this article (Gizelle Willows CA(SA)) is not a certified financial advisor in terms of the Financial Advisory and Intermediary Services Act  37 of 2002. Accountancy SA and the author cannot be held liable for any loss (including indirect and consequential loss) arising from your reliance on the opinions given in this article. Should you nevertheless elect to rely on this article, you do so at your own risk and agree to indemnify Accountancy SA and the author from any loss or damage that you may suffer as a result.

Author: Gizelle Willows CA(SA) MCom Finance is Senior Lecturer in Financial Reporting at the University of Cape Town