Softening up the poor consumer for increase
Softening up the poor consumer for increase
Re the article on page two (Insurance Times February 22), “Soaring claims need action”.
Royal & Sunalliance says it has experienced a 25% increase in settlement costs over the past two years because of:
(a) the Court of Appeal's review of damages. In fact this has had only a marginal impact as the judgment related to higher value claims only
(b) the additional cost of settling claims with CFA funding.
But only a relatively small handful of
these cases have been settled to date.
In the meantime, the insurers must have saved many tens of millions of pounds in credit hire payments following Dimond v Lovell.
It is reasonable to assume this is the situation given the hand-wringing going on among insurers before the judgment in the House of Lords. Curiously, I have not noticed any reductions in premium to pass this windfall back to the consumer.
The insurance industry is in the initial stages of a campaign to “break-in” the motorists/employers for a large hike in premiums to protect profit margins.
OK, fair enough, at least in some part the reasons stated in the article have or will have a part to play.
However, misrepresenting the present position is not the right way to raise public awareness.
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Tim Gorman
Gorman Hamilton Solicitors
Via email
Change the rulebook
Both the recent letters by Roy Rodger and Louise Scaife (February 15) make some good points. However, it is well to remember why compulsory motor insurance was introduced.
Early motorists did not rush to buy motor cover. The motive for compulsion was to protect the public – not provide a new pool of customers for insurance companies. To remove the state's involvement would bring the return of the original problem.
Some 70 years or so since inception, a sizeable minority is again opting out of buying cover. Some insurers, without doubt, dilute the general premium pool by cherry-picking and thus effectively increase the cost to the rest of us. That would be OK if this class of cover was not compulsory – but it is.
And to take up Louise Scaife's point, as she describes herself as just a young female, if all underwriters only insured over-50s where would she buy cover? Or hasn't she thought of that yet? And, by the way, drivers now live longer and drive longer. Above a certain age they suddenly lose their charm as far as insurers are concerned. What are their chances of affordable premiums in the future?
On a point raised by Roy Rodger – sometimes, with imagination, the rulebook can be thrown away. Motor insurers now provide free insurance across the driving age spectrum on new cars. They do not do this by by rating each case on its merits (according to the rulebook) but by the car manufacturer paying a flat premium for each car sold, irrespective of the normal rating criteria.
If the present system is not working, and it isn't, and insurers are paying for non-payers via the Motor Insurance Bureau (MIB) then some original thinking is needed. That does not preclude fines or confiscations but at least, for a start, insurers could be invited to play their part in carrying their fair share of the less desirable risks, and all that implies, and also giving thought to how the original intentions of compulsory motor insurance can be fulfilled. That does not mean concluding automatically there can be no change in the present arrangements, or that there is no scope for solving the problems of those that don't fit the system.
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Oscar Hasdell
Broker
Shaxton Crescent
Croydon
GISC impressed us
We sent our company's application to join the General Insurance Standard Council (GISC) on January 4. We received a letter from the GISC dated January 9 to confirm our membership and enclosing the certificate. I must therefore commend the GISC on its efficiency, and the speed at which our application was dealt with and approved. As members of the British Insurance Brokers Association, we receive the concession where we do not pay any subscription to GISC until May 1, 2001.
I welcome the Office of Fair Trading's approval of the GISC rulebook. I believe that the way forward for brokers and intermediaries is to proceed with membership of GISC.
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Richard Sheik
Camberford Law
Bromley
Kent
What a cheek
What responsibility exactly to the motorist and the public do insurers have in return for having a captured base of several million car owners handed to them by the government?
Also, as we all know – and as reported in the Money Mail on Sunday February 18 – if a driver incurs a speeding fine or ban, insurers load his premium even if there has been no claim and the insurer has suffered no loss.
By what authority do insurers set themselves up as a second court to “fine” motorists in this way? If a claim has not been made, what business is it of theirs? Do insurers just use the information as an excuse to increase the premiums?
The article also quotes one underwriter as saying: “Any ban and we would think hard about giving up cover.” Hasdell has a point. It is the court's duty to put a driver off the road and not that of an insurer. Even more so if there has not been a claim.
And as for underwriters driving youngsters off the road, as Louise Scaife suggests in your letters page, what a cheek and an abnegation of their responsibility to enable motorists to obtain cover simply to comply with the law. This is the purpose for which they were authorised in the first place.
Maybe, insurers are more a cause of the problem than we thought if rates are to be set to get people off the road, rather than reflect the true cost of insurance.
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Fanella Radford.
Croydon
Surrey
Nought to do with us
We were alarmed to find that Norwich Union (NU) was using our name in its “wraparound” advertisement on the February 15 issue of Insurance Times without our
permission.
We would like to make it clear that we have not been agents for NU for some years now and would not under any circumstances wish to be associated with them.
Also, has anyone noticed the spelling mistake in their new slogan? Shouldn't it read, “Together we're stranger”?
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Warnell Insurance Services
Woodford Green
Essex
Learn from elders
If only some of the leisure time at university was utilised to teach students that a degree doesn't mean they “know it all”.
The business itself is much to blame for the lack of knowledge in insurance offices and even the insurance qualifications a young person may obtain can only really deal with the theory.
In the scramble by the chartered accountants, who now head insurance companies, to ensure that the bottom line in their annual accounts is in the black, they have squandered years of experience and expect a 20-year-old to take over from a 55-year-old or 60-year-old with 30 to 40 years of experience and practical knowledge, overnight.
Brought into the business part way up the ladder, mollycoddled and flooded with incentives, graduates often cause more mayhem in an office than they do good. Some of the best talent the business has ever had did not see the inside of a university.
When three major insurers can offer £350, £700 and £1,250 premiums for exactly the same risk, and a section leader has never heard of Insurance Premium Tax (IPT), the industry is indeed in a sorry state and in need of underwriters to head the business.
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Hubert Green
Chartered insurance practitioners
25 Hall Moss Lane
Bramhall
South Manchester
