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UK Car Insurance Industry Watch, March 2008 |
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This regularly updated section of the HomeApproved web site will cover the latest trends, research, opinion and developments in the UK car insurance sector. Insurers
take Home Office to court Twenty-five motor insurers will launch a joint application for a judicial review if the Home Office presses ahead with its proposals to hike charges, payable by insurers, to as much as £8,400 per time. Cardiff-based law firm Rausa Mumford has been drafted in to advise on the potential action. ABI director of general insurance Nick Starling condemned the proposed charges as excessive in a letter to the Home Office in January. Under the plans, the existing flat-rate charges of £105 per removal, £12 per day for storage, and £50 for disposal would be replaced with 23 fee bands ranging from £150 up to £8,400 – a minimum hike of at least £45 per vehicle, and possibly much more. The charges are paid to vehicle recovery companies who, on police instruction, recover vehicles that are illegally, obstructively, or dangerously parked, abandoned or broken down. The group consists of members from the Insurance Forum, which meets every quarter at Lloyd’s to discuss motor insurance issues. Norwich Union, Highway, Zurich, Chaucer, Brit, Allianz Cornhill and RBSI are all represented, alongside the ABI, Highways Agency and vehicle recovery companies. A spokesman for the forum said 66 motor insurers had asked to join since the Home Office published its proposals. Michael Eagles, joint chairman of the forum, said: "It is still hoped that the Home Office will review its proposals and produce a charging regime that more accurately reflects the marketplace." ENDS Brokers
warned about call scam The caller, who is going by the name of Danny Stocker, has been calling brokers to encourage them to register for the FSA’s general insurance conference in May at Canary Wharf. The actual conference takes place on 8 April at the QEII Conference Centre. The same caller was behind a similar scam where he claimed to represent the Department of Trade and Industry. A spokesman for the FSA confirmed that they have no employee by the name of Danny Stocker and have advised anyone receiving such calls to report the matter. ENDS Teen
Driver Safety Programme launched As part of its Young Driver Coaching Programme, the council is starting by installing GreenRoad Safety Center in 50 cars driven by local teens. These young drivers will get instant feedback via red, amber and green LED's in their car showing how well they are driving. Teens and parents will also be able to log onto a web site to review each journey. Teens that drive well will be rewarded under a "Safe Miles" incentive scheme. "Neuroscience research has revealed that the human brain cannot effectively assess risk and consequences until the age of 25. This makes young drivers an especially high risk on the roads," said Adrian Hide, Road Safety Manager, Staffordshire County Council. "GreenRoad Safety Center is like a virtual driving instructor providing feedback and encouragement after young people have passed their driving test." GreenRoad users have reduced accidents by an average of 54% and lowered accident costs by an average of 65 percent. By empowering drivers to manage their own safety, and understand how to drive more responsibly, GreenRoad can make teens safer behind the wheel. Safe drivers also use less petrol. With GreenRoad Safety Center, fuel consumption is typically reduced by 7 - 10%. "Young drivers are at risk more than ever before. They have increased access to cars – in fact many have their own cars - and the same size engine is higher powered than ever before," said Aidan Rowsome, VP of GreenRoad Technologies EMEA. GreenRoad Safety Center rates driving skills without invading the driver’s privacy or tracking their location. An in-vehicle sensor collects information on over 120 different driving manoeuvres. These are analysed to give the driver feedback about their driving and the areas that need improvement. Safety Center can provide feedback by SMS and on the Web at the end of each journey and will make reports available to teens, their parents and the council. ENDS Private
motor insurance could finally make profit in 2009 Under Datamonitor’s neutral forecast the UK private motor insurance market is expected to make a loss this year but move into a profit of approximately £30m in 2009 as premium income will grow at a faster rate than claims costs. However, Datamonitor’s forecast sees the market move quickly back into a loss in 2010 as competition intensifies. The UK private motor insurance market has been chronically unprofitable for underwriters over the last 14 years. The reasons for this are twofold:
Insurers, especially since 2001, have priced their policies more with an eye towards maintaining or gaining market share and less with regard to their increasing claims bill. The result has been a market that has lost millions of pounds each year for insurers as their costs have outstripped revenue, even when premium rates have increased. Consumers’ number one criteria when choosing a motor insurance policy remained price in 2007. In fact, consumers of all ages and incomes cited price as the top reason for purchasing their motor insurance policy. This trait is particularly pronounced among consumers purchasing online - the fastest growing segment of the market. Consumers that purchased their policy online were the most price sensitive, with 85% basing their choice on price. Consequently, raising premium rates is difficult for insurers concerned about market share, though it may be necessary to reduce their underwriting losses. ENDS Three
charged in 'cash for crash' investigation IFB Investigators worked closely with Keighley Police over the last ten months to investigate alleged false motor accident claims involving hundreds of thousands of pounds, known as Operation Pelican. During the inquiry 22 people have been arrested. A 37 year old male from the Keighley area has been charged with conspiracy to defraud insurance companies, conspiracy to pervert the course of justice and the intimidation of witnesses. A 36 year old female from the Keighley area has been charged with conspiracy to defraud insurance companies, while a 57 year old self-employed vehicle examiner has been charged with conspiracy to pervert the course of justice and conspiracy to defraud insurance companies. All three individuals will appear at Bingley Magistrates Court on March 13th. A further 16 people have received police cautions for minor fraud offences and three individuals have been eliminated from inquiries. John Beadle, chairman of the IFB added: "The insurance industry is no longer an easy touch for these organised fraudsters. We will continue to work closely with West Yorkshire Police and are delighted with the results achieved to date via this ongoing inquiry." "We know these criminal gangs affect honest motorists in a number of different ways and are ruthless. Through our partnership approach with the Police we will continue to find, expose and pursue those criminals involved in organised insurance fraud." ENDS New
aggregator site enters congested market The site claims to offer the most comprehensive search of any comparison service by comparing price, what the customer wants and what the provider offers:
Lloyds TSB optimistically predicted that the size of the aggregator market would double over the next three years despite recent warnings from Henry Engelhardt, group chief executive of Admiral, Confused.com’s parent company, that conditions would get tougher as the market became increasingly congested. Steve Grainger, head of insurance.co.uk, said: "For too long now, consumers have had to make do with comparison sites that offer only some of the information they need to make the right choices. Although there’s no shortage of online services that claim to compare insurance policies, you’d be hard pressed to find one that can truly demonstrate it is built on a solid understanding of what consumers want." ENDS Tradex
Buys Cab Specialist Tradex chief executive Stephen Endean said: "We are delighted to welcome the experience and dedication of the Westminster team on board. Together, we will now control in excess of £100M in commercial motor, motor trade and motor liability business." ENDS LV=
wins Defaqto five star awards for car insurance product The awards have been developed by Defaqto’s in-house experts and insurance products have to meet set criteria to achieve a five star rating. Defaqto scores products based on a wide number of benefits, however to achieve a five star rating the policy has to include certain benefits. For car insurance, policies specifically need to include eight key benefits, such as cover for theft of keys and personal belongings cover, a repairs guarantee and the ability to protect a no claims discount. John O’Roarke, Managing Director of LV= General Insurance, said: "LV=’s aim is to provide great quality cover at a very competitive price on its insurance products. As a mutual, we go the extra mile for our customers and the fact that our car insurance products now come with a Defaqto five star rating means customers can be confident the product they are buying offers a high standard of cover." Mike Powell, general insurance consultant at Defaqto, said: "Defaqto’s star ratings are based purely on cover and benefit features provided within an insurance policy, and when the consumer sees the Defaqto five star rating logo, they can be sure that the product offers a wide range of cover and benefits compared with most policies." ENDS |
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