UK Car Insurance Industry Watch, February 2008

This regularly updated section of the HomeApproved web site will cover the latest trends, research, opinion and developments in the UK car insurance sector.

Motorists Warned over Inclement Weather
A sudden cold snap can still take drivers by surprise. Severe winter weather can deliver slippy roads and a little known crime known as "frosting", whereby opportunistic thieves steal cars left unattended while a driver warms up their engine.

An astonishing 66,000 unsuspecting motorists fall victim to frosting every year, says Joanne Mallon, car insurance manager at Sainsbury's bank. "When it's freezing outside it can be tempting to leave the engine running to speed up the defrosting process while you nip back inside to get ready. But this can have terrible consequences if your car gets stolen."

You'll also get an icy reception from your insurance company if it does. It will argue that you've failed in your "duty of care" to your vehicle and will reject your claim, leaving you completely out of pocket!

However, don't stint on deicing your windows before setting off, says Adrian Webb, communications manager at insurer Esure. "If you merely clear a small hole to peer through the windscreen you are more likely to have an accident, and cause serious injury or even kill somebody," he warns.

Again, your insurer is likely to reject any claim for damage to your car because you have failed in your duty to drive with all-round visibility - although it will still pay a third-party claim to, for example, an injured pedestrian.

Damage on the move
If you skid on slippy roads and have an accident your insurer will pay out under the accidental damage clause on your policy. It should also pay out if your car is damaged by a passing gritter, but this may put a dent in your no-claims discount, as insurers cannot recover the costs from the gritting company.

Breakdown Cover
Breakdown assistance is vital at this time of year, and your policy should give you the same level of cover whatever the weather. "Breakdown services such as the AA, RAC and Green Flag offer full cover regardless of the conditions, unless they are prevented by circumstances beyond their control, such as severe weather."

Keep your car in tip-top condition during the winter months. Make sure it has been properly serviced, monitor your oil, water and brake fluid levels, and check the antifreeze and water in the radiator is at the optimum 50/50 mix.

If it is snowing or raining heavily you should always use your headlights, and check they are clean before setting off, rather than caked with ice and slush. You should also examine front and rear wiper blades for wear or splitting. Use major routes where possible, as these are more likely to have been salted or gritted.

Source: Guardian, February 1 2008

ENDS

EMB launches personal lines pricing software
Latest software enables insurers to model a higher range of variables. EMB, the non-life actuarial and business consultancy, has launched the latest releases of software products within its personal lines pricing suite. The software allows actuaries to develop profitable pricing strategies for non-life risks such as individual motor policies, small commercial vehicles and more.

The performance of both applications (Classifier and Rate Assessor with Optimiser) has been increased to handle more variables at a higher degree of granularity providing optimal detailed pricing information in seconds.

Andy Lingard, head of software at EMB, said: "The upgraded versions dramatically increase the scale of pricing scenarios that can be modelled as well as providing the ability to run an infinite number of scenarios to offer the ultimate price for a piece of business."

Karl Murphy, partner at EMB, said: "With the latest version of Classifier, an insurance company is able to gain detailed geographic categorisation and assessment of exposure even where they have no claims history - a notoriously difficult challenge in the past."

"The EMB software makes this simple by combining internal and external data. This means that insurers can now confidently write profitable business in new areas. In today’s competitive market this sort of detailed analysis is critical. A competitive price must be backed-up by a realistic assessment of the risk."

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RSA acquires Fyfe Group
Royal & SunAlliance (RSA) has acquired the Fyfe Group for an undisclosed amount. Fyfe Group is a retail and wholesale intermediary specialising in motor trade products for small businesses, through the following brands:

• Road Runner Motor Trade – Road Risks and/or Liability cover for full-time or part-time motor traders. Wide choice of affordable cover. Range of payment options.
• Motor Trade Solutions - similar products sold to other brokers and their customers.
• Monthly Motor Trade – monthly road risks cover sold direct exclusively via the net.
• Temporary Limited - Short Term Insurance for Cars and Vans - Cover for 1-14 days.

Following the acquisition, RSA will underwrite 100% of Fyfe's book of business. This deal complements RSA's drive towards niche sector expertise within the Broker trading units and will broaden its offering to the Motor Trade market.

ENDS

New IIB chief executive appointed
The board of the Institute of Insurance Brokers has announced the appointment of Barbara Bradshaw as its new chief executive following the sudden death of Andrew Paddick.

Announcing the appointment, Graham Gomm, chairman, said: "The board was determined that we should continue to provide the very highest level of service to, and on behalf of, our members."

Commenting on her appointment, Ms Bradshaw said: "Nobody could fill Mr Paddick’s shoes; nor would they want to. He has left the legacy of a strong Institute with a first class team that can continue to represent the interests of its members, as well as to provide them with technical and regulatory support."

"Our first priority is to ensure that the voice of small and medium sized insurance brokers is not lost and that our views continue to be heard."

Ms Bradshaw added: "Mr Paddick was rightly proud of the many achievements of the Institute since it was founded more than 20 years ago, based on the strength of its board of directors. He was keen to surround himself with successful entrepreneurs and enjoyed working closely with insurance brokers, who he found to be an excellent sounding board for new ideas."

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Expensive Car Seizures Rise - Police seize more uninsured cars
A growing number of top-of-the range cars are being seized because owners could not afford to insure them or chose not to, according to a leading broker.

The AA said the number of uninsured vehicles seized by the police had almost doubled in a year, from 78,000 in 2006 to 150,000 last year. Forty per cent of the cars seized have not been reclaimed. Some of the 45,000 unclaimed vehicles were crushed and others sold at auction.

The AA also said that claims for accidents with uninsured drivers were down from 36,340 in 2006 to 34,239 in 2007. AA president Edmund King said: "The more widespread use of automatic number plate recognition cameras means that the net is closing in on uninsured motorists."

"Some motorists feel that driving a top-of-the-range car means they are less likely to be stopped. This may have been true a few years ago, but the camera does not discriminate. However, some villains are trying to stay one step ahead of the chase by using foreign number plates to try to avoid detection. We need to increase the checks on foreign registered vehicles."

"Plates from a left-hand drive eastern European country on a right-hand drive car are often a sign (of an uninsured vehicle)."

ENDS

Competence of young drivers called into question
Crashes and insurance claims among young drivers are a bigger risk than ever for companies, according to Norwich Union (NU).

The warning follows the results of research conducted by the insurer that showed crash rates among young drivers were worsening and that claims by drivers under the age of 23 had increased by more than 300% in the last five years. It was also revealed that claims among drivers over 23 fell by 10% during the same time period.

NU’s motor risk manager, Bill Pownall, said: "We know from experience that young drivers pose a higher risk of being involved in a crash. Our research of 1,250 young drivers shows that post driving test, over half (55%) of young drivers said they felt comfortable soon after they passed and 17% felt nervous and anxious about driving on their own following the test."

"In the beginning, level of comfort amongst young drivers is high, but the reality is they are still inexperienced drivers. Businesses should therefore consider the risks that young drivers pose on a firm’s duty of care, especially with the introduction of the Corporate Manslaughter and Corporate Homicide Act in April."

"Although some firms have a minimum age requirement of 25 when driving on company business, others can be as low as 21."

"Businesses should therefore consider introducing the minimum driving age of 25 should the driver fail to demonstrate an appropriate level of competence when driving or failing to drive safely following a thorough risk assessment."

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