2009 UK car insurance industry watch covers the most important news stories, trends, research, opinion and developments for 2009.
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Car Is ‘Home Away From Home’ for One in Ten Drivers
According to a new survey from Admiral Insurance, one in ten people in the UK spend more time in their car than at home. The study, which surveyed 3000 motorists, exposed significant regional differences, with one in five people in London spending more time in their car than in their houses, and only one in 25 drivers in Wales doing so.
In addition, 62 per cent of respondents claimed that they preferred to drive alone than with passengers, indicating that many British drivers look upon the time they spend in their car as one of solitude.
Scots are most likely to want to drive without passengers, with 67 per cent saying they preferred to do so. On the other hand, only 48 per cent of drivers in Northern Ireland would choose driving alone over having other people in the car.
The figures prove that cars are among Brits’ most treasured possessions, underlining the need for a comprehensive car insurance policy in order to protect this investment. Sue Longthorn, managing director at Admiral Insurance, commented: “Drivers could be finding themselves spending so much time in the car because they have a long commute, or thanks to congestion on the UK’s busy roads.”
“However, in a world where social networking and being constantly available are so valued, it might be that motorists are also seeking some solace in their cars.” What’s more, the Admiral Car Insurance survey also found that men are three times more likely to want to spend time alone in their car than women.
Ms Longthorn added: “Perhaps men are taking some time out on the road to relax and get away from pressures at home. However, overall it’s a sad reflection that people are spending so much time away from their friends and family, whether by choice or not.”
Fifth of young motorists have no car insurance
An estimated 250,000 people aged between 17 and 20 continue to drive despite not having any car insurance cover in place, according to the Motor Insurers’ Bureau (MIB).
The group, which pays compensation to people involved in accidents with uninsured drivers, said people in this age group were four times more likely to be involved in claims, highlighting the significant proportion of young people without insurance cover who were causing accidents. It said part of the problem was that one in 10 young drivers claimed not to be aware that having motor insurance was a legal requirement.
But the biggest issue is thought to be the high cost of young driver car insurance, which puts off many people from taking it out. Accidents involving all uninsured drivers cost motorists with cover around £500 million a year, adding around £30 to every car insurance policy taken out. Uninsured drivers are five times more likely to be involved in a collision, fail to comply with other road traffic requirements or be involved in criminal activity than other motorists.
The MIB said uninsured and hit-and-run drivers injure three people every hour and kill three people every week. The UK has one of the highest proportions of uninsured drivers in Europe, with around 5 per cent of motorists not having cover, compared with just 0.1 per cent in Sweden and 0.2 per cent in Germany. But the police are being more successful at tackling the problem, with around 230,000 people convicted for driving without insurance each year.
Ashton West, chief executive of the MIB, said: ”Young people make up a significant number of uninsured drivers and with one in five newly qualified drivers having an accident in the first year of driving, they need to make choices based on the consequences of driving without insurance and not just on price alone.
”While we recognise the financial pressures for drivers taking to the roads for the first time, it is also a criminal offence to drive without proper insurance cover.” People who are caught driving without insurance could have their vehicle seized, be fined and receive a minimum of six penalty points on their licence. The highest concentrations of uninsured drivers are thought to be in the West Midlands, West Yorkshire, Greater Manchester, London Metropolitan and Merseyside.
Nick Starling, director of general insurance and health at the Association of British Insurers, said: “Uninsured drivers are a menace on our roads. “Not only are they putting lives at risk, but they push up the cost of insurance for law-abiding motorists. The recession is no excuse for breaking the law. “Young drivers in particular can take steps to manage their insurance costs and stay legal by, for example, taking Pass Plus lessons and driving a lower risk car.”
Utmost Good Faith
Utmost Good Faith means that each party to a proposed insurance contract is legally obliged to reveal to the other all information and materials facts, which would influence the other’s decision to enter into the contract, whether such information is requested or not.
Industry research suggests that approximately 10% of individuals applying for car insurance lie by giving false information or by omission, not telling the whole truth. If you are one of that 10% beware because insurers are getting far better at spotting the signs where motorists are not telling a true story when they apply, and even better at investigating these cases and cancelling cover where necessary.
Every contract of insurance is a legal document and is subject to the principle of utmost good faith which obliges the individual to disclose ANY detail which may be of importance to the insurer WHETHER IT IS REQUESTED OR NOT. Surprised? Many people whose claims are denied or whose cover is cancelled are! You have tell the whole truth or that contract of car insurance can claimed to be invalid and summarily cancelled.
Concealment is the intentional failure to reveal a material fact, which would influence a prudent underwriter in deciding whether to accept or reject a risk and what rate to charge and what conditions to impose.
Misrepresentation is the giving of false or misleading information on the material fact.
Concealment and/or misrepresentation gives the aggrieved party the right to avoid the motor insurance contract.
BeatThatQuote Insurance goes Green
BeatThatQuote has announced that eco-friendly insurance intermediary the Green Insurance Company has joined its panel bringing the total number of contracted motor insurers up to 62.
Russell Bellamy, head of insurance sales at BeatThatQuote said: “Last year, we extended our insurance cover to include motorbike and commercial vehicle cover, and we saw our numbers grow significantly.
“We now have approximately 2 million unique visitors per month visiting the site and even with the current economic slowdown we have seen the number of insurance policies sold through the site double since the beginning of 2008.
“We believe that consumers want to be able to make more ethically aware choices about who they buy from which is why the Green Insurance Company will bring a welcome new dimension to our panel. They offer low emission discounts if you drive a greener car and/or do low mileage, and donate 5% of profits to charity, as well as offering an online discount of up to 26%.”
Car Insurance Fraud
Fraudulent and dishonest car insurance claims are a major problem for the insurance industry and fraud is alleged in a number of the cases we see. These can be difficult to assess.
To establish that fraud has taken place, some concrete evidence of lies, inconsistent statements or acts of deception must be present. The essential components of fraud are intent to deceive and desire to induce the firm to pay more than it otherwise would.
Motor Insurance fraud does not usually involve injuring people, however, a disturbing new type of car insurance fraud entitled “Crash for Cash” has emerged in recent years effectively putting motorists lives at risk and causing serious injury.
Crash for Cash
Quite simply, a fraudster will target a busy road junction by driving extremely erratically and, for example, they may perform emergency stops which are completely unnecessary, causing unsuspecting motorists to crash into them. Subsequent car insurance claims citing fictitious personal injuries are then made to the victim’s insurers.
Criminal gangs across the UK are deliberately staging accidents to make false insurance claims. More than 22,000 staged, false accidents happen every year, £200m worth of insurance payout’s.
To maximize their payout, fraudsters will go as far as exaggerating damage to the vehicle, inventing injuries, passengers or even the entire accident. The scam works on the premise that insurance companies almost always pay out for rear-end accidents with very few questions. Meanwhile the driver who’s also being scammed ends up paying too in their premium.
The Insurance Fraud Bureau is now fighting back. They offer advice on how to deal with the scam and they have a new database picking out people making multiple claims. Recently a gang of thirteen men were convicted for a total of 10 years – one of the first cases of its kind in the UK.
According to the Insurance Fraud Bureau (IFB) who are leading the fight against this phenomenon, the top 20 hotspots in the UK where this type of fraud occurs most often are as follows:
Bradford, Blackburn, Oldham, Liverpool, Huddersfield, Birmingham, Bolton, Halifax, Uxbridge, Luton, Ilford and Barking, Slough, London East, Harrow, Manchester, Walsall, London North, Leeds, Enfield and London North-West.
Attitude issues with young male drivers
Industry research over the past number of years has always indicated that the problem with the amount of night-time accidents experienced by young drivers (males) in Britain is mainly down to their attitude.
Although only 25% of travelling made by car drivers between 5.00 pm and 8.00 am, this time accounted for 40% of the serious and fatal injuries to drivers. It is possible that the amount of road injuries and fatalities in built-up districts may be attributed of the young to the attraction to clubs and pubs in town locations with the accompanying early evening arrival and early morning departure times. Reports to aid the development of young driver night time driving have included the following recommendations:
• Increased driver education and training undertaken before being allowed to drive alone.
• Increased night driving risk awareness programmes with preferable involvement of car insurance companies, motoring organizations together with local and central government.
• Restricting the number of passengers that could be carried by young drivers in view of the high association between accidents and the number of passengers.
One of the major incentives and benefits associated with Pass Plus is the opportunity to make savings on your next policy. Excellent discounts for young drivers who have successfully completed the PassPlus course area available from many leading insurers.
Pass Plus can be taken up to a year after you have passed your practical driving test. There is no further test to take – when your instructor is satisfied with your performance you receive a certificate from the DSA.
In an attempt to try and reduce the number of young driver accidents and deaths RoSPA has previously offered drivers the chance to improve their driving skills and safety with a the RoSPA evaluation course. The course targets people aged between 17 and 24-years-old.
Traffic accidents remain the largest single cause of death and injury to young adults, and with one in five young drivers crashing within a year of passing their learner test, RoSPA developed the assessment for younger road users.
Insurance 2.0 on Motor Insurance Websites
Basic HTML used to be enough to impress customers. But these days, with aggressive price wars and the growing popularity of comparison sites, successful car insurers know they need to offer much more in order to attract new customers and retain existing ones. So, how do website’s from the leading motor insurers stack up?
One way to find out is to consider Global Reviews’ quarterly motor reports for the three months to the end of November 2008. The company, which provides independent analysis and recommendations for websites across more than 40 industries, specialises in insurance sites.
For the reports, Global Reviews asked more than 1,000 insurance customers what they wanted from a car insurance website. A team of analysts then looked at leading websites worldwide – both insurance and non-insurance related – to create benchmarks of best practice. The leading insurance providers were then assessed and graded against 550 criteria, and received a mark each time they met a benchmark. For example, an insurer that scored 450 out of 550 would have received a grade of 81%.
The five main criteria included quote and application, sales support, customer support, overall website utility and content. Global Reviews analysed its own insurance customers and also any five competitors that its clients wanted to have analysed. Below we explore the findings of the quarterly reports and outline what insurers can do to improve their websites.
Car Insurance Benchmarks
Sheilas’ Wheels led the way with 51%, while Tesco (44%), Admiral (43%) and Budget (41%) posted the lowest scores. The average was 47%. Generally, the companies at the top of the benchmark scored highly across all categories. But areas where companies scored particularly well or badly can be pinpointed.
In the quote and apply section More Th>n received the highest score of 57%, followed by Admiral and eSure at 54%. Providers were assessed on categories such as the information available about the policies, quote content and payment options.
Sheilas’ Wheels was top in sales support with a score of 52%, just ahead of More Th>n with 51%. Sales support includes availability of online help, error handling and the ability to save applications.
Swiftcover (61%), Direct Line (58%) and Churchill (52%) were the top three in customer support. This looks at how a website answers customer queries through tools such as frequently asked questions (FAQ’s), or how well it connects customers with an adviser through services like web chat. Norwich Union stood apart in overall website utility with 75%. It was found to have a high-quality homepage and easy site navigation.
For content, the Automobile Association (AA) had the highest score of 55%, closely followed by Swiftcover and Churchill with 54%. This includes claims information, tips and advice, and supporting motoring content. The Churchill website was relaunched in October 2008.
Content and customer support are the two areas where websites vary the most. They are also the easiest to improve because there are no web development issues. Meanwhile, sales support and quote and apply are considered the most important categories. But they tend to be the hardest to improve because the quote process is tied to the back-end quote engine.
Enterprise Rent-a-Car launch new direct hire service
Enterprise Rent-A-Car has launched a new not-at-fault direct hire model for insurers. The company said that the model would provide insured drivers involved in not-at-fault accidents with a way to access their rights to mobility and access to justice, while ensuring this is delivered in a simple, fair, cost efficient and transparent way to the insurance companies.
Enterprise’s new model will deliver a comprehensive claims package to take care of an insured driver from the First Notification of Loss (FNOL) through to getting them back on the road in their repaired vehicle.
Through an outsourced arrangement Innovation Group is supplying the infrastructure for dealing with the initial notification and identifying liability. Enterprise selected Innovation Group due to their reputation for repair timescale management and FNOL expertise. InterResolve will take ownership of all legitimate injury aspects of a claim, with Enterprise supplying suitable replacement vehicles for the duration of the repairs.
Over the past six months, Enterprise has been working closely with partners, insurers and other stakeholders, to devise a replacement claims service that is not only fair for customers, but cost efficient for the insurers.
This is in direct response to the growing consumer and insurance issues around some current replacement vehicle and claims practices. Recently claims costs have been spiraling partly as a result of elongated repair times and high rental costs charged by some intervening third parties.
Following a period of consultation with insurers, Enterprise said it was confident that its new direct hire model would not only improve customer service and loyalty through the provision of fair treatment, but would also manage down claims costs – marking the next major step in streamlining the claims process.
With these measures in place, Enterprise said it would help create a more cohesive, partnership approach between insurance companies, their insured drivers, repairers and vehicle replacement providers to the benefit of all parties.
Mike Nigro, managing director of Enterprise Rent-A-Car, UK and Ireland commented: “The launch of the Enterprise direct hire model is the result of many months of planning. We have consulted all the key players in the various industries involved with claims management and resolution. It directly addresses much of the criticism and controversy currently surrounding the provision of replacement vehicles and we believe it will be to the benefit of all involved.
“The provision of replacement vehicles is an area of insurance that has come under a lot of criticism in recent months – with the Enterprise direct hire model, we believe we are providing a new blueprint for how the process should work; a blueprint that is simpler, more efficient and more transparent for insurers and that provides fair treatment to customers
“Working with outsourced partners such as The Innovation Group and InterResolve, also provides with the expertise to deliver this service seamlessly, whilst providing the scalability required for a model of this nature.”
Age law ‘will drive up car insurance costs’
Insuring your car and holiday is likely to be more expensive under Government plans to bar age discrimination, the industry warned yesterday.
Millions of motorists face hefty car insurance price rises and the cost of travel cover could double if firms are no longer able to take customers’ ages into account when assessing risk, insurers claim. All other forms of insurance will also be hit by the ‘unintended consequences’ of the Government’s legislation, the Association of British Insurers said.
But while the ABI said it would be unfair on other consumers if its members were not allowed to take age into account when setting premiums, campaign groups for the elderly insist it is wrong to discriminate on age.
Statistically, the riskiest drivers are senior drivers, particularly those over 85 and younger drivers in the 17 to 21 bracket. But the effect of a proposed Equality Bill banning age discrimination in the provision of goods and services would be to force drivers considered a low risk to subsidise those considered a high risk, the ABI said.
The industry fears that further legislation might also affect its ability to charge older – and riskier – customers more. That would lead to firms passing on the higher costs associated with insuring older people to all customers.
The ABI said the average cost of a claim by a 60 to 64-year-old driver is £1,170, while the average claim by someone aged over 80 is £1,716 – almost 50 per cent more. It added that the average travel insurance claim for someone over 65 was nearly three and a half times higher than for those under 50.
It said that a law that restricts the use of age would mean insurers not being able to take account of the differences in risk among older customers without adopting a more expensive and intrusive approach, such as individual medical assessments.
The ABI also claims such legislation could reduce competition, particularly as niche firms, such as those offering travel insurance-to backpackers, would no longer be able to operate.
The issue has echoes of an earlier insurance discrimination row when Whitehall looked at the premiums charged to male and female drivers. In that instance, insurers successfully argued there were fundamental risk differences in the accidents suffered by men and women.
Men typically have fewer accidents, but those they do have tend to be more costly. Women, by contrast, have more accidents, though these tend to be lower speed shunts. Firms such as Sheila’s Wheels used the difference to offer lower premiums to women.
The ABI’s Malcolm Tarling said: “The age discrimination legislation may be well-meaning, but it creates unintended consequences. At the end of the day, what we are assessing is risk. “And in this respect age is a factor. We won the argument over the relative risk between men and women drivers. We hope ministers will listen to reason over age.”
Nick Starling, an ABI director, said: “Insurers only use age where it is relevant, and restricting their ability to do so would rebound on all customers, through higher premiums.” But Paul Cann, of Help the Aged, said the ABI was missing the point, as the legislation did not propose removing age as a measure of risk entirely, but only where it was used as a blanket exclusion.
He added: “Age alone should not be the basis for an insurance premium or quote. Insurers are entitled to make commercial decisions, but these should be based on evidence of risk and not the date on a birth certificate.” Gordon Lishman, of Age Concern, said: “The insurance industry is riddled with age related practices causing significant harm to older people.
“Many insurers apply upper age limits for motor and travel insurance, leading to older people being cut out of insurance cover. These obstacles mean some older people give up travelling to visit family and friends.”
Swinton to create 250 new roles by end of 2009
Insurance giant Swinton is set to create more than 250 new jobs in its Norwich-based call centre by the end of 2009.
The company will bring in hundreds of new staff ranging form outbound sales advisors to team managers, bringing the number of employees in the Norwich office to around 400.
Commenting on the recruitment drive, Swinton’s director of call centres Kelly Ogley, said: “Swinton has been experiencing tremendous growth over the past few years and this current recruitment drive is testament to the company’s success.
“With many organisation’s suffering through the economic downturn, including some in the insurance sector, Swinton is still continuing to go from strength to strength.”
She added: “The Norwich call centre is a great place to work, with lots of staff incentives and team competitions as well as offering great opportunities for career development.”
News of the new positions comes after Norwich Union announced that it would be cutting 1110 jobs as part of a shake-up at Norwich Union Life.