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UK Car Insurance Industry Watch, March 2007 |
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This regularly updated section of the HomeApproved web site will run in parallel with our latest news, information and special offers section. Industry Watch will specifically cover the latest trends, research, opinion and developments in the UK car insurance sector. Stiffer
Penalties for Using a Mobile Phone Whilst Driving The new rules will also hit drivers who use a hands-free mobile kit but fail to have proper control of their vehicle, and driving instructors, who are not allowed to use a mobile phone while giving lessons. Now an endorseable offence, with offence code CU80, motorists found flouting the rules could also see their car insurance premiums rocket. AA car Insurance warned that drivers who end up with points on their licence from using a mobile could end up paying more than four times the fine through higher premiums. "Insurers will take this issue seriously," said AA motor insurance head Janet Pell. "There is an irrefutable link between the use of mobile telephones and claims." It has been illegal to use a hand-held mobile behind the wheel since December 1 2003.Home Office figures show that almost 74,000 fixed penalty notices were issued for illegal use of a mobile phone while driving in 2004. But around half-a-million motorists break this law every day, according to the RAC Foundation. Road Safety Minister Stephen Ladyman hoped the increased penalties would act as a greater deterrent. "Using a mobile phone while driving is dangerous and selfish," he said. "Research proves that drivers talking on a phone have even slower reactions than someone driving under the influence of alcohol." Police forces and road users have also welcomed the move. Source: Reuters, February 27 2007. ENDS New
Car Insurance Group Ratings The changes will see the number of insurance groups increase from 20 to 50, to reflect developments such as the growth in vehicle types and different repair techniques and Materials. Norwich Union (NU) who will implement the changes over the next 18 months, said the move would help insurers to improve their vehicle rating and could improve motor insurers' financial performance. The insurance group rating system takes into account factors such as the cost of spare parts, crash repair times, and security to help insurers set premiums. It was last reviewed in 1992. The new system could impact on premiums, depending on individual vehicle characteristics, although it will not affect average premiums. ENDS
The Fight Against Uninsured Drivers Continues We have already witnessed significant strides made by local authorities, improving compliance and raising awareness of the dangers to all motorists. Greater information sharing between the Motor Insurers' Bureau (MIB) and the police, combined with he increasing use of automatic number plate recognition cameras led to over 50,000 seizures in 2006 by the police. One initiative being heavily considered is to encourage commercial drivers to ensure their fleet mangers or insurers are keeping their records up-to-date. As police activity is increased, drivers who are not on the MID face a much greater chance of being stopped and having their vehicles seized. As the new laws contained within the Road Safety Act come into force, The MIB must continue to promote rigour in the data collection process as well as provide the public with greater access to information. Source: Insurancetimes, March 1 2007. ENDS Car
Insurance: Beat The Price Hike Is your car insured with Norwich Union, the AA, Admiral or Quinn? Then it may be time to ring round when the renewal notice lands on your doormat. Figures obtained by Guardian Money reveal they are pushing premiums up, while the best deals are being found at More Th>n, Zurich, the RAC and Swiftcover. The range of premiums quoted by companies vying for your business has never been wider. Some motorists could easily save £200 or more by shopping around, while others will miss out by simply renewing, say industry experts. Price differentials are widening because three of the largest insurers (between them they dominate 50%-60% of the market) are all trying to up prices. Last September, Norwich Union announced it was looking to hike premiums by an average of 16% - with young motorists looking at possible increases of up to 40%. The RBS group, which includes the Direct Line, Tesco and Churchill brands, followed a few weeks later by saying it was looking to increase rates by 5%-6%. All three said they are raising premiums to cover the increased cost of claims. Specialist brands are thriving, as policies are increasingly being tailored to target segmented areas of the market, such as the elderly or women-only. There is also the emergence of value-add incentives, used as bait to entice customers away from existing, or similarly-priced, insurers, eg £50 cash-back (Post Office), handbag cover (Diamond), free MOT (Kwik-Fit)." Meanwhile, if you can't be bothered to seek out cheaper quotes, Barclays will "beat the cost of your current car insurance quote, and, if not, we'll refund the difference by up to £100 and give you £50 when you switch." The Post Office (see above) has a similar deal. Source: Guardian Unlimited, March 2, 2007 ENDS Contaminated
Fuel Debacle Tesco and Morrisons have asked drivers who suffered problems after buying affected petrol to contact them (see below). Under the Sale of Goods Act 1979 motorists can claim for the petrol, any repairs and "consequential" losses. Tests on samples of unleaded petrol from a storage facility in Essex found it to be contaminated with silicon, which may indicate the presence of silicone - often added to diesel. Thousands of drivers last week reported engine trouble and breakdowns after filling up with unleaded petrol from a number of retailers, including Tesco and Morrisons supermarkets. Further reading can be found on the Consumer Direct website. Relevant contact numbers for the two supermarkets are given below: TESCO:
0800 028 6428 - for customers to obtain further information and advice. ENDS Equity
Signs Affinity Partnership with Nissan Equity will underwrite Nissan's 'Free to Go' product, a seven day motor insurance initiative launched last month (February 2007). cover notes will be emailed directly to dealers, allowing buyers to drive their vehicles away on the day of purchase. ENDS Motor
Insurers' Bureau Simplifies Claims Process Its advantages include: ensuring that compulsory information is submitted; only requesting answers to relevant questions; and enabling multiple claimant details to be entered only once on the same form. Information submitted via the service will be data encrypted to ensure client details are protected. ENDS Kitemark
Scheme Unveiled ENDS Allianz's
Repairer Deal Following discussions with the company's approved network consultative group, repairers will soon be required to have either RMIF QC, or PAS 125, or a manufacturers standard for single marque repairers. ENDS Salesmen
Use Legal Compulsion Ruse to Flog Gap Car Insurance Several buyers have reported the trend. As they sign for their new car, the salesman tells them that recently introduced FSA rules require that they tell them about gap insurance. The FSA has reiterated through the media that no such compulsion exists. Gap insurance is mostly sold to buyers who take out hire-purchase agreements. The fact that cars depreciate rapidly in the first few months can mean the insurance payout on a six-month-old car can be less than the finance still owed - if the car is written off. Gap insurance covers the difference. Several readers have claimed they have been subjected to the "FSA rules require us to tell you about it" spiel. Car dealers who sell insurance came under FSA regulation in 2005. Many protested at the time, but now some are trying to use it as a sales tactic. Source: Guardian Money, March 10, 2007. ENDS Drivers
of Noisy Cars Face on-the-spot Fines Current laws restrict exhaust noise to 74db on all new mass-produced cars. But exhausts deteriorate and become noisier, and some drivers fit sporty exhaust systems, which are louder. Authorities have powers against excessively noisy vehicles, but there is no simple way to measure decibel levels. However, the transport minister, Stephen Ladyman, said in a parliamentary answer that the department was considering a quick roadside exhaust-noise test, and would commission research to develop a suitable device. ENDS UK
Car Insurers not Keen on Over 70's According to the Association of British Insurers (ABI), the average claim for those over the age of 75 is £1,716 - 50 percent higher than the average claim for those aged 60. Many insurers, including Norwich Union and Esure, reject new applications from drivers over 70. The older you get the harder it can be to find cover, with three quarters of insurers refusing to take on those aged 80 or over. For new customers, insurer More Than has an age limit of 79 and Tesco's is 80, though both will continue to cover those who take out a policy before the cut-off point. Churchill has an upper age limit of 90 for new customers and 99 for existing ones. Help the Aged, SAGA, Age Concern and RIAS are the main insurers who cater for the elderly. None of them applies age restrictions on policies. However, the cost of cover can vary sharply, depending on a range of factors including gender, where you live and the insurer you choose. To lower premiums senior drivers can change their motor insurance cover from comprehensive to third party, fire and theft. Those with expensive cars could consider downgrading to a cheaper, older vehicle, which will be less likely to be stolen. Lastly, Increasing the excess on the policy or limiting the mileage could also reduce premiums. Source: Financial Mail, March 11, 2007. ENDS Provident
Sets Date for Motor Book Sale A spokeswoman for the company said "The group is progressing the sale of the motor insurance business. Discussions with potential acquirers are proceeding satisfactorily and the board expects to complete the sale of the business in the second quarter of 2007". It is thought the book has a price tag of £230m. Analysts' valuations range from £150m to £225m. Australian insurer IAG, which recently bought Equity Group, and AXA have been touted as potential bidders. Both companies are keen to expand their motor businesses. ENDS Update
- Car Insurance Scams Gangs are increasingly targeting young mothers driving near schools. The number of staged accidents and subsequent fraudulent claims during the school run hours is greater then at any other time. Between 1999 and 2005 there had been around 22,500 staged accidents Organised car insurance fraud costs the industry £200 million a year and is believed to inflate the cost of premiums by five per cent - adding about £40 to the cost of the average fully comprehensive policy. People who suspect insurance fraud should call the IFB's telephone hotline number 0800 328 2550. ENDS Young
Drivers Face Motor Insurance Woe On average, each day there are 35 road deaths and serious injuries among people aged 15-25. The cost of insuring young drivers has increased by 22% over the past three years, compared with just 2% for all other motorists. Premiums for young drivers could soon become unaffordable, CIS warned. The Association of British Insurers (ABI) recently warned that rising personal injury claims and accidents involving uninsured drivers - many of them young - could lead to premiums increasing. Co-operative Insurance, along with road safety charity Brake, has produced an education pack for schools entitled Too Young To Die. The pack contains safety tips and dramatic first-hand accounts from accident victims (see below):
BrakeCare helpline for road crash victims: 0845 603 8570. Source: BBC News, March 19, 2007. ENDS Frizzell
is No.1 for Claims, Say Drivers "Frizzell customers were very impressed with all aspects of the way their claims were handled", said Ian Hughes, managing director of Consumer Intelligence. Frizzell is a brand of Liverpool Victoria. The claims top ten is as follows:
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