Part 1: The Book of Numbers
How much do you expect to pay for repairs when you ding the front offside corner of a L405 Range Rover Vogue? A hundred grand? Half a million? A million? How about the sum total of those three figures – Sh1.6 million?
Right now, you can get yourself a used W221 Mercedes-Benz S Class saloon car in good nick for about three-and-a-half million shillings. So how much would you expect to pay for suspension work and new headlamps? No damage, just what looks like preventative maintenance. Is two-thirds of the car’s asking price – Sh2.3 million – good? That isn’t too ridiculous, is it?
Sticking with the three-pointed star, we now go to one of my all-time favourites: the W212 E Klasse. Picture one with a “Camry Dent”, a phenomenon observed by an American car blogger in which an inordinate number of Toyota Camry cars have a dented rear bumper, with the dent usually off-centre, but only this time on a relatively new Mercedes. How many thousands do you expect to fork out to fix that damage? Six, like I would for my Subaru? Ten? Twenty? A hundred? How about 357, like a Magnum “Desert Eagle”? Sounds fair?
Now that we are talking of rear-end damage, picture a Mk. VI Golf, yes the same Volkswagen Golf we all know and love, in its sixth iteration. Someone rams one from the back, meaning it has to be fixed. It is a small car, it is fairly ubiquitous and it is not a Mercedes-Benz, so it shouldn’t cost too much to repair, yes? You can buy a very good Mk. V Golf for Sh650,000, but that same six-fifty is what it will cost to repair the rear-end damage on the Mk. VI.
(Granted, the Mk. VI is a Golf R, but it’s still a Golf!)
Four wheels good, two wheels bad, I always say, but that is just a personal idiosyncrasy because I have a distaste for heavy bicycles powered by chainsaws. Some other people like motorbikes, and they assure me that the BMW Motorrad 1200 GS Adventure R is a fine example of the breed. It is so good that it is the top-selling model for the marque. A quick online window-shopping spree shows that if I want to get one from South Africa, prices range from about 61,000 rand (roughly Sh412,000) for a 2007 bike, which I can’t bring in because it flouts the eight-year import age limitation, to R209,000 (Sh1,412,000) for a metal horse wrought in 2018 with plenty of bells and whistles. So, factoring in taxes and whatnot, that 2018 bike should cost just under Sh3 million on the (Kenyan) road.
Why then does the repair bill of a similar motorbike add up to Sh7,767,174.78, inclusive of VAT? That’s enough to buy three 1200 GS Adventure Rs of varying ages, by Toutatis!
(Funnily enough, that repair bill includes quotations for a complete engine at Sh2 million plus change, and a frame chassis for about half that, which begs the question: a motorbike is basically the engine and the frame. If you are replacing those two, among other things, you may as well just buy another bike.)
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Part 2: F. U., Pay Me!
Those numbers up there are very intimidating and sound fictional – particularly for the BMW – but some are verifiable. I got the Golf quotation from a close friend who should know, so there may be a grain of truth to the rest of them as well. I find it unlikely that anyone actually shelled out those astronomical sums out of pocket to do the needful to their highly covetable automobiles, and for one very simple reason – insurance.
Comprehensive insurance covers exist solely to mitigate such bankruptcy-inducing quotations from ambitious garages (more on this flouting of corporate social mores later) whereby the insurance company to which you pay some guineas every season puts those guineas to good use by stepping in when your goods are no longer what they used to be... or where they used to be, in the case of TWOCcing (Taking Without Owner's Consent, a.k.a. Grand Theft Auto).
This brings to light an open secret that few mention in broad daylight, but everybody is well aware of: when you present a damaged motor vehicle to a garage for extensive patchwork, the first question asked as the vehicle is being booked in is this: is this an insurance case or will you be paying for the repairs yourself?
Yes, many garages have two sets of prices for the same job, the same way some dealerships I know have two sets of prices for the same vehicle: one for government and fleet sales, one for private buyers. You see, these garages are run by human beings who, despite their fleecing ways, have a touch of empathy in them.
They may want to rip you off but not so as to punish you in the process, they therefore go easy (relatively) on you. However, an insurance company is a faceless corporate devoid of feelings and emotions, one that doesn’t have a family to take care of, or loans to pay off or indeterminate job security in these times of pecuniary uncertainty, so when these same garages see a chance to make some free coin out of them, the bloodletting will be as relentless as it is guilt-free.
I have gone through this myself some years ago when thundering down Lang’ata Road in my since-sold Mazda Demio. I took the Mbagathi Way turn a little faster than I should have and understeered into a bollard, splitting the car’s chin and puncturing the radiator, which promptly wet itself, splashing coolant all over the pavement. I had a passenger who smacked the rear view mirror (ouch!), cracking the windshield. It is not a moment I am proud of, needless to say.
The vehicle was towed to a garage that did an assessment and a day later I got a quotation: Sh150,000, give or take a few shekels. Wait, what? A hundred and fifty large for patching a radiator and bumper (it was plastic and it was sanded and fibred back into its original shape, it didn’t need replacement) plus installing a new windscreen? What did they think I did for a living, run a betting company?
I clearly recall some of the entries in that quotation, and one of the few that stood out was the cost of a new windscreen, at Sh30,000. Well, I went shopping by myself and got a similar windscreen for Sh6,500 along Nairobi’s (in)famous Kirinyaga Road, a.k.a. Grogan, complete with a mounted rear view mirror and sun visor tint along the top edge. So what was the big idea? I understand the concept of markups for the sake of profit, but there is a huge difference between a “markup” and the assumption that I am stupid.
It turns out they were not so much undermining my mental capabilities as they were acting on misinformation. It just happened that the fellows who towed the car, when asked by the garage bean-counters whether insurance would be holding fort as far as compensatory measures were concerned, said yes. Padding ensued, and what a padding that was. More like a paddling, to be honest.
Long story short, I recovered the vehicle from that enterprise and put it back into proper working order for a lot less than the six-figure invoice I was quoted initially.
Listen, we live in hard economic times in which a buck earned means getting to see tomorrow, sometimes quite literally, whether the buck earned was lawful or not. I kind of understand why a garage would puff up a repair bill beyond all reason if it won’t hurt anyone: the car gets repaired and they make their (large sum of) money. Everybody is happy, mostly. However, this leads to a vicious cycle. Stay with me and follow this logic:
The insurance company pays for the repair work without qualm. That inspires the garages to take liberties with their markups. However, the insurance company has bean counters of its own; in fact, it is made up of nothing but bean counters who go by the fancy title of “actuaries”, and these actuaries may notice when the payouts start crossing preset thresholds, which they would anyway – picture if all the vehicles in Part 1 above were covered by the same insurance company and all these claims showed up in the same week. Alarm bells would start ringing in the abacus room, right?
At the end of the day, the insurance company has to make a profit – it is a corporate. There are two ways of guaranteeing profit: reduce overheads, or increase margins. Overheads are claims which you legally can’t flat out deny, so they are left with one option: increase margins, the margins being inclusive in the premiums they charge their clients. This allows the books to stay in the black, but by paying out these claims, they are just making garages even more brave in their capitalist forwardness to the point someone thinks they can charge damn near Sh8 million to repair a motorcycle. That is an effing joke.
This cycle has to be broken. Something’s gotta give. And this leads us to the next section.
Part 3: Disruption
So, the cycle has to be broken. I have just confessed to having an accident several years ago, in Part 2. Other people have worse records than my single incident above, while yet others have flawless records with nary a citation nor an infraction, let alone an “event” like mine.
But if we all subscribe to the same insurance cover, and we all drive the same car, then we all pay the same premiums, right? Is that fair, pitting one crash-prone individual in the same hell-hole as an obsessive-compulsive, A-retentive stickler-for-protocol who has never even been hooted at in his 40 years of driving? Is it fair, I ask you.
Silicon Valley has given us two things, one being the term “disruption” which, initially, carried negative vibes around it because it basically meant “rudely interrupted”, but after the IT bubble, it has come to imply a change with a positive impact in that it forces society to rethink its position on certain matters and thus induce a massive paradigm shift with far-reaching consequences that realigns the path humanity has taken so as to sidestep what looks like an almost inevitable dystopian future. Tesla, Inc. is one such disruptor.
The second, more important thing Silicon Valley gave us is rapidly – nay, exponentially – advancing technology, most of it computer-based, and largely internet-driven or through what we can sum up as “connectedness”. By connecting everybody to everything, so many “solutions” to problems – both real and imagined – can be reached, and in time periods of decreasing magnitude. And here you thought Bitcoin was the initiator of blockchain protocol. Ha! It existed before, you just didn’t have a name for it. Double Ha!
So, what does disruption and connectedness have to do with insurance premiums? Supervision, that’s what. Big Brother-style oversight, to be precise, without the creepy voyeurism. Listen carefully:
Shawn Corey Carter, shaggy-haired African-American poet, businessman and chanteur once said: “Men lie. Women lie. Numbers don’t.” He may have been on to something. It is ridiculous to flat out ask your clients if they have had accidents before, they’ll simply reply: “Me? Crash a car? Hahahahaha” before telling you to be serious and ask less grating questions, knowing full well they’ve wrecked close to Sh20 million worth of motor vehicles in the past five years alone. So men lie and women lie, let’s deal with the numbers.
Allow me to introduce something called “Autocorrect”. The disruption aspect of it is this: it will most likely change the way insurance matters are handled henceforth, mostly based on merit. It is something not entirely new because it has been brought up a few times before by random folks, it’s just that nobody thought to execute it, until now. Heritage Insurance Company Limited is the entity that decided to bite the bullet and take the plunge, and Autocorrect is their brainchild.
The technological connectedness part of it is they will install a ship-to-shore telemetry device in your car to gauge this merit by which your premiums will be calculated. You read that right: they are going to monitor how you drive. This little piece of technology is what will give insurance companies the numbers with which to counter the lies that men and women tell. Tune in same time next week for a full breakdown of what I'm talking about. Trust me, you want to see this...
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