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New insurance policies making much greater use of technology, including artificial intelligence (AI), are coming on to the market, and they just might reduce premiums on one of your biggest grudge purchases.

SA's short-term insurance industry is plagued by a lack of transparency around pricing and a conflict of interest between providers that make profits when you don't claim and policyholders who want benefits, the new kids on the block say.

These factors have contributed to the situation where an estimated 32% of all claims in SA are fraudulent, says Marnus van Heerden, a co-founder of Pineapple, which is offering community-based cover for household goods via a digital wallet.

Another new short-term insurance provider, Naked Insurance, says its fully digital car insurance prices more accurately for the risk you pose and offers you the ability to pause cover when you are not driving, which can save you up to 50% of your premium.

Meanwhile, the use of telematics to assess your driving habits continues to grow, with Liberty entering the short-term insurance market with discounted cover for those who drive safely.

Naked Insurance's vehicle cover uses automation and AI to provide accurate pricing of premiums, a digital claims process for claims under R15,000 and the ability to pause your cover when you are not using your vehicle, which can provide savings on your premiums of up to 50%, the company's co-founder Ernest North says.

He says Naked takes a fixed portion of premiums to run its business and therefore its income is not dependent on paying claims or not. The rest of the premiums go into a pool to cover claims.

At the end of each year, any money left in the claims pool is donated to charities nominated by all policyholders.

You can obtain a final quotation online without engaging with a call centre, and, using Naked's app, you can choose the excess, whether you wish to insure any extras added to your vehicle and whether you want a hire car when your vehicle is in for repairs.

You only pay your chosen excess, unlike many insurers, which, North says, have a range of additional excess payments for, for example, drivers under 25 or accidents after 10pm. These excess amounts can easily add up to R40,000, he says.

When you claim, there are no visits to an inspection centre - instead, the Naked app and chatbot guide you to take photos of the damage.

The CoverPause feature, a simple click on the app, saves you money by pausing your accident cover when you aren't driving your car for a couple of days or weeks.

Accident cover contributes the most to your premium, so pausing this cover saves you money while maintaining cover for flood, fire, theft and anything else that could happen to your stationary vehicle.

Naked Insurance is developing a scheduling function on its app which will allow you to schedule ahead when you want the cover to pause and resume.

Pineapple is not able to cover your vehicle or your home yet, but it allows you to insure your household contents through peer-to-peer insurance. You form a community and pay your premiums into a digital wallet on your cellphone, and from this wallet you contribute to claims made by other members of your group.

Van Heerden says after 12 months you get to keep the premiums that are not used for paying claims and can track in real time exactly how your premiums are being used to settle claims from other members.

Reinsurance ensures that if there is insufficient money in the wallets, all claims are covered. Pineapple is underwritten by Compass Insurance Company and reinsured by Hannover Re.

Through insuring with your community, Pineapple hopes to decrease costs, cap profits and deter fraud, Van Heerden says.

Pineapple uses an online or app application, and you need to send a photo of the goods you wish to insure, which will be identified by AI and a premium will be quoted, says Matthew Smith, Pineapple's other co-founder.

When a claim is submitted via the app, the AI algorithm tracks the claim and breaks it up into contributions for each participant and deducts it from their digital wallet.

A total of 30% of each premium is deducted to pay for the reinsurance, which costs 15% of the premium, and the remaining 15% is allocated towards the administration and running costs.

This way, there is no incentive for Pineapple to deny valid claims.

Participants in the Pineapple insurance model have the option to build via the app their own network with a lower risk profile which will bring down the premiums.

You can vet anyone who asks to join your network as you will see a high level of information about their claims history, such as how many days they have been claim-free.

Pineapple charges an excess of 5% of the value of the claim on lower-risk items and 15% on higher-risk items such as cellphones.

Liberty Short-Term Insurance's first policy is one for vehicles, and homeowners' cover will follow next year. Liberty is using the global telematics analytics provider The Floow to assess the way you drive and determine your premium.

Quotes are also via a chatbot on the Liberty app, website or social media, says Marty Epstein, CEO of Liberty Short-Term Insurance.

Your driving style is measured over 300km, during which time you get regular feedback.

Once you achieve the target driving score, you will obtain a competitively priced premium for the next year which is discounted between 15% and 30%, depending on additional factors such as your age and the type of car you drive. Continued safe driving is rewarded with Uber vouchers, Epstein says.

The excess charges on a claim is around R2,500 for less-expensive vehicles, but you can also take no excess for a higher premium.

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