2007 UK car insurance industry watch covers the most important news stories, trends, research, opinion and developments for 2007.
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Ladybird Car Insurance hits the Mainstream
Fresh! Insurance Services, are an industry award winning company who remain innovators and leaders in the modern approach to selling insurance products throughout the United Kingdom.
This month (February 2007) the company’s woman only brand Ladybird car insurance is set to hit the mainstream with a series of advertisements on prime time television. Taking on the likes of the Post Office, the broker plans to raise the profile of it’s women-only private motor brand, with a series of eye-catching ads. Ladybird offers a series of excellent benefits to lady drivers including:
• Maximum Introductory Discount for first time Insurers
• Low Mileage Discount
• Discounts for Pass Plus
• Courtesy Car*
• Monthly Payments
• Legal Cover Available
• Discount on Breakdown Cover
The Ladybird advertisements, which provide a free phone number for interested customers, will use several short and snappy tag lines, including:
• ‘Car insurance for women’
• ‘Who makes the most claims?’
• ‘Ladybirds get the best deals’
• ‘When it comes to car insurance, you can spot a Ladybird anywhere’
The broker said it had made the decision to use television advertising as it had noticed – and was reacting to – a public shift in the media that customers were using to source their insurance products. The Ladybird brand will appear on television for the first time in February (2007) and will be running between 16:00hrs and 19:00hrs, when it is hoped their target audience will be tuned in!
*Terms and Conditions Apply
Web: www.ladybirdinsurance.co.uk; www.freshinsurance.co.uk
Car Insurance Set for Big Increases
Motorists face big cost increases next year (2007) as the UK’s biggest car insurer looks set to push through double-digit percentage rises in premiums.
Royal Bank of Scotland (RBS) Insurance, which owns brands such as Direct Line, Churchill and Privilege, has admitted it is starting to increase premiums, just months after Norwich Union raised rates by up to 40 per cent. The major players hope cheaper competitors will follow suit.
RBS insurance said it’s premiums across all key brands have already increased by 5 per cent since September. If the rises were maintained, that would translate into a 20 per cent increase in 2007. On an average Comprehensive Car Insurance premium of £762, that would mean a £152 increase.
RBS insurance, the second biggest general insurer by market share, said it was compelled to increase its premiums because for the past four years the cost of claims had outstripped revenue from premiums.
A spokesperson for AA insurance, said the increases were good for the industry. ‘The market is going to be even more polarised now, between the most expensive providers and the cheapest’.
Swiftcover acquisition boosts AXA direct
AXA has raised the stakes in its battle to topple rival Norwich Union after acquiring direct writer Swiftcover.com.
Swiftcover.com, the internet-only personal lines specialist, was founded by ex-Churchill director Andrew Blowers three years ago. It has made major inroads in the direct market with its popular chicken advertising campaign, highlighting its no call-centre policy.
Swiftcover.com chief executive Andrew Blowers said: “We have a target this year of £100m GWP and with the policies uptake, per month, as it stands, we should clearly achieve this objective. In fact last month we registered 1,000 policies a day which is equivalent to the levels in my Churchill days”.
Swiftcover controlled around 120,000 policies in 2006, and is growing its policy base by approximately 20,000 policies each month, the company said. Bermuda-based insurer Primary Group, headed by Philip James, was the prime investor in Swiftcover.com
Drivers’ Seat Belt Call
British drivers are calling for increased penalties for failing to wear a seat belt, an Allianz Cornhill survey has revealed. 60% of the 2,000 drivers across the UK surveyed by the insurer, would support a penalty of three licence points and a fine of £50, as opposed to the current fine of £30.
Penalty for Non-Renewal
Drivers failing to renew their car insurance will be slapped with £100 fines even if they do not use their vehicles, under tough new rules proposed by the government. The restrictions will also apply to cars parked on private driveways. Those failing to stump up the insurance will have their cars clamped or seized and must pay a release fee on top of the fine. It is expected the measures will be ready for consultation in April (2007) and come into force early 2008.
Esure Brings Call Centres Back to the UK
Esure is bringing its call centre facilities back to the UK from India. Insurance Tycoon Peter Wood blames poor service and industry suggestions that the trend for outsourcing is doomed.
Esure is backed by HBoS which also owns the Sheila’s Wheels lady driver brand. The group had previously opened call centres in India two years ago. At the time Wood claimed the move was not driven by a desire to cut costs, but because the company could not recruit enough staff in the Manchester region. Many customers however have expressed dissatisfaction with the centres in India, prompting Wood to close them and bring them back to the UK.
Biba to Launch Rival Pay-As-You-Drive Plan
BIBA is gearing up to go head to head with direct insurers on pay-as-you-drive motor cover. The trade association is looking at setting up a scheme to allow brokers to offer black box technology to customers. This could be used as a key selling point for brokers, under growing pressure from direct insurers in the motor market.
The black box system, or telematics (see below), is designed to enable underwriters to price risk according to motorists’ driving habits. Norwich Union and More Th>n launched pay-as-you-drive schemes in 2006, aimed at younger drivers.
This would mean creating a universal system in conjunction with several insurers who would agree to support the initiative without significant charge. Biba is set to meet the ABI to discuss the proposals in the coming weeks.
Telematics, or ‘pay-as-you-drive’ (PAYD), technology records the time, distance and location of a vehicles journey. Norwich Union began a pilot scheme for PAYD technology in 2004, amassing over 42 million miles of data.
Community Speed Watch
Speed Watch is a partnership between Cambridgeshire County Council, Cambridgeshire Police and participating Parish and Town Councils, which aims to help residents reduce speeding in their local area by providing support and advice.
The project relies on the involvement and enthusiasm of local people wanting to improve the quality of life and road safety in their community. Specifically the objectives of the program include:
• Help local people address speeding problems in their area.
• Increase public awareness of the dangers of speeding.
• Provide help and advice to local communities to enable them to make their roads safer.
• Promote the Kill Your Speed – Make The Commitment campaign.
• Involve all sections of the community, including the Parish or Town Council, local residents, businesses, and the Police.
Car Companies Investing in Collision Avoidance Technology
A planned “active safety” system in US cars promises to cut congestion and the number of accidents, but drivers may be reluctant to take it up.
Your car will be wired to avoid colliding with other cars or swerving off the road, sometimes by steering, decelerating or braking automatically. Motorways will bristle with wireless equipment that can beam your messages, charge tolls without stopping, or pre-empt traffic lights for emergency vehicles. Your car will also send information on traffic or weather conditions to central agencies in an effort to prevent delays and dangerous pile-ups.
Road crashes in the US alone kill about 42,000 people a year and cost the economy $230bn (£118bn), according to recent research. Accident rates have dropped recently with improvements in standard safety equipment, but the trend line is flattening due to the constant factor of human error. With “passive safety” devices such as airbags and seatbelts now widely used, safety experts say “active safety” is the new frontier. The technology could also cut fuel consumption and CO2 emissions by reducing traffic congestion.
Source: Financial Times
MIB to Fight Compensation Ruling in Uninsured Driver Case
The Motor Insurers Bureau (MIB) is petitioning the government to tighten up guidelines on who is eligible to obtain compensation in an accident involving an uninsured driver.
It wants dependants of a passenger killed while travelling with a driver they knew to be uninsured barred from making a claim from the MIB. This follows a ruling by the Court of Appeal this week which said a dependant was eligible to claim.
The MIB had appealed a High Court decision ordering it to pay compensation to Louise Phillips, whose husband Neville died after his friend fell asleep at the wheel of a car on the M25. The driver was uninsured.
Louise Phillips’ lawyers argued that the Uninsured Drivers Agreement (1999) did not prevent her claiming compensation. The lawyers, Field Fisher Waterhouse, said that the exclusion for claimants who knew they were being driven by an uninsured driver was limited to the passenger not dependants.
Field Fisher Waterhouse said the decision could cost the MIB millions of pounds. But the MIB downplayed the significance of the ruling saying it would have a “relatively small impact” because it was limited to a specific scenario.
An MIB spokesperson said there were “no more than a dozen” similar cases each year. Trevor Harrison, technical manger at the MIB, said: “The MIB, in conjunction with the Department of Transport, will seek to have the wording amended at the earliest available opportunity.”
ABI Examines Road Toll Collector Role
The ABI is examining whether insurers could become the government’s road toll collectors under the pay-as-you drive scheme.
The controversial plans to introduce a national road pricing system will force motorists to pay to use the roads and could have a major impact on the insurance market. An ABI sub committee has been established to investigate how the insurance industry could fit into the governments road pricing plans.
The ABI is considering whether the motor insurance industry’s telematics technology could be used to collect road tolls. An ABI spokesperson said: “We are looking at what mechanisms will be in place, and whether the industry will be forced to look at becoming tax collectors. How will insurers react to becoming tax collectors?”
Dave Swann, head of motor development at Fortis, said the committee was assessing the merits and downfalls of road pricing. “We are asking where do we want to go with this? We are keen to use the technology but actually running the system? It is unlikely,” he said.
This week it emerged that the government would seek volunteers to pilot a road pricing system. It comes as public momentum against he scheme picked up speed, with more than 1.5 million people signing a petition against it.
Road use in the UK is on the verge of hitting an all time high, with the Department for Transport admitting that road traffic has risen another five billion vehicle kilometres, a 12% rise since 1997. It is estimated that by 2025 congestion would cost the industry £22bn in lost time annually.
Uninsured Driver Deaths Mount Up
Uninsured drivers killed more than 180 people last year and seriously injured 360, a study has found. The figures, compiled by the Motor Insurers’ Bureau, underline the danger posed by Britain’s growing number of drivers who fail to register their car. The bureau, which handles claims by drivers hit by uninsured vehicles, said that drivers without insurance were responsible for 36,000 crashes and 27,000 injuries last year (2006).
In 12,00 of the crashes drivers fled the scene knowing that it would be almost impossible to trace them from the number plates because it was not registered in their name. In some London boroughs more than a fifth of crashes are hit-and-runs.
The numbers of Metropolitan traffic police has fallen to their lowest ever proportion of the manpower of the Metropolitan Police. The Mayor of London’s road safety ambassador Jenny Jones commented “The long-term cuts in the number of traffic police in London has allowed a culture to develop of drivers thinking they are beyond the law.”
Hit-and-run crashes have also risen sharply in other parts of the country. In the West Midlands, they have almost doubled since 1997, up from 1,063 to 1,793 in 2004. In Manchester over the same period they have risen from 1,267 to 1,531.
A Department of Transport (DfT) spokesperson said “(The) DfT is clamping down like never before on criminals who don’t tax, register or insure their vehicles correctly. New technology allows the police and DVLA clamping teams to assess if a car is registered and insured within seconds of it coming into sight.
Clamping blitzes have seen over 67,000 illegal cars immobilised since last May and the use of bailiffs has allowed the DVLA to recover 80 percent of outstanding tax payments. New online and telephone services make it easier for people to tax or register their cars.”
Source: The Times
Misleading Car Insurance Advertising
The pressure on leading car insurance companies to stand out in a very crowded market place is enormous. As consumers we are bombarded with communications by insurers in print, television, online and by telephone. Some of these advertisements overstep the mark with promises of discounts and savings on motor and general insurance products.
The Financial Services Authority (FSA) has warned the insurance industry to stop using adverts that include extravagant claims of possible savings, or face regulatory action. The warning from the financial watchdog follows a review of press advertisements from 57 firms selling motor and other types of insurance.
The FSA found that 57% of motor insurance advertisements with savings claims were either unclear or misleading. The FSA said too many adverts give the impression that most consumers are eligible for such savings when in fact only a few are.
A Direct or at the FSA commented ” Mostly people rely on insurance to protect them and advertising is a major influence on what they choose to buy. So it must be clear, fair and not misleading, leaving people with a balanced view of what on offer. This work demonstrates that firms in the car insurance market must ensure that the claims the make don’t mislead.
The FSA has contacted managers of firms where they were concerned to improve the quality of advertising. It will repeat its review in three months (April 2007) and decide whether further action is required.
A spokesperson for the consumer group Which? passed comment on the actions of the FSA by saying “The Advertising Standards Authority, which looks after non-financial promotions, publishes complaints on its web site. It doesn’t just ell firms behind closed doors that they have three month to improve”.
Source: Guardian Unlimited.