• FSCS report shows 96% of new claims relate to PPI • Number of non-PPI claims halves
The number of general insurance intermediation claims not related to payment protection insurance (PPI) fell by half last year, according to figures from the Financial Services Compensation Scheme (FSCS).
The scheme’s annual report and accounts says its general insurance intermediation compensation pot received 2,513 new claims in 2009/10. All but 102 of these relate to allegations of PPI mis-selling. The figure for non-PPI related GI intermediation claims in 2008/09 is 205. Non-PPI claims include issues relating to employers’ liability and public liability insurance.
By contrast, the number of PPI-related intermediation claims over the same 12 months rose almost fourfold from 635 to 2,411. Of the new PPI claims, 908 relate to a single firm, Picture Financial Services.
The FSCS annual report also shows that the average compensation paid for PPI claims is £8,540, compared to £1,152 for non-PPI claims. In addition, PPI claims are much more likely to result in a payout than non-PPI complaints.
The report says that the “steep increase” in overall claims to the FSCS, which covers the whole of the financial services sector, is largely due to PPI. The scheme paid out a total of £204m to more than 21,000 compensation claimants last year. The FSCS expects the number of PPI claims to grow in 2010/11.
The figures explain the 48-fold increase in the levy being demanded by the FSCS from firms in the general insurance intermediation SBO2 sub-class over the last two years.
They will add weight to Insurance Times’s Fair Fees campaign to reform the way the FSCS is structured, so that professional GI brokers are ringfenced in their own category.
Biba head of compliance and training Steve White said the figures confirmed that professional GI brokers were a low risk, but they had been classed in the same compensation pot as those who had been allowed by the FSA to sell much riskier products. “The problem is not with the professionals, it is with the amateurs – we need to find a way of separating the professionals from the amateurs.”
Lloyds Banking Group announced last week that it was the first high street bank to stop selling PPI on all its loans, credit cards and mortgages. Instead it will simply hand out with such products a British Bankers Association leaflet about PPI, which is supposed to help people pay their loan or credit card bills if they fall ill or lose their jobs.