Letters

Is the compensation recovery extension a stealth tax?

The thrust of the Health and Social Care Act [2003] is to extend the recovery of NHS treatment charges from road accidents (RTAs) to include employers' liability (EL), public liability, clinical negligence and other liabilities, where a successful compensation payment is paid as a result of a personal injury claim. It is due to come into force on
1 April 2005.

Like the RTA equivalent, the total NHS recovery is capped at £34,800. However, unlike RTAs, contributory negligence is taken into account.

NHS costs are already budgeted for within our tax and NI structures, and the government is keen to use financial leverage to reduce workplace accidents (proposing a doubling of HSE field inspectors etc). So I presumed this Act would have been a cash-neutral mechanism to further encourage businesses to have less accidents - this would be achieved by reducing NHS costs.

Or the Act would maintain the status quo from an accident and NHS cost point of view, but make an additional charge against culpable businesses, so increasing NHS revenue.

Either way, 'success' of the Act would mean a gain for the NHS, the former clearly being the most socially acceptable.
So, if there is a gain for the NHS if the Act is successful, and as NHS costs are already budgeted for within our tax and NI structures, where will that extra money go? Where will the addition insurance premium tax (IPT) go resulting from the inevitable increased EL premiums for businesses?

To maintain the balance of the NHS books, and to avoid the suggestion of this being a stealth tax, what about a general reduction in NI contributions paid by businesses, the balance being made up by reduced accident costs or the Compensation Recovery Unit 'taxing' the culpable, and a lowering of IPT, which must already be way above the Chancellor's wildest dreams? Or is it actually another stealth-tax?

Colin Lees and other brokers

Lymm Insurance Brokers

PI for 'one-man bands'

Can I respond to Heather Parkinson's letter (12 August, Insurance Times) re independent claims specialists?

I have no problem with Heather, as she is a qualified accountant and adjuster and extremely good at her job. On that basis she is more than able to assist the policyholder following a disaster.

My main issue is that there are many 'one-man bands' with either no or some qualifications. The issue of professional indemnity cover falls into that same problem area - whether or not the fsa requirements go far enough is a separate issue.

But should a professional be covered for the minimum set down by the fsa or cover the exposure that he might have in the event of advice or claim work going wrong?

The instructing broker must consider this issue specifically because, quite simply, if something goes wrong after his recommendation to his clients, the legal ramification may well end at the broker's doorstep.

This is a complex issue that needs more airing.

Nicholas Balcombe

Chief executive

Balcombe Group

Boscastle PR image

I was appalled to hear on the BBC news that "later we will be going to Boscastle to see if insurers are going to pay up".

The interview was with a claims manager (called a loss assessor). The interviewer said something along the lines of "the perception of insurers is that they make it very hard".

How did we get this reputation? A disaster like Boscastle gives us the opportunity to show that claims can be paid quickly and generously and that we can give appropriate advice to the uninsured and the under-insured.

As an industry we just do not have the PR capability to sell ourselves. Will we hear about all the good aspects of claims settlement here? I'm not holding my breath.

Mike Cullen

Moffatt Saunders

British Gas

The headline regarding British Gas (BG) and its proposed venture into the insurance market (12 August, Insurance Times) prompts the perennial question - will insurers ever learn?

The article reports that BG has around 650,000 business customers, the vast majority of them presumably already satisfied with their relationships with insurance brokers/intermediaries.

With the possible exception of Royal Bank of Scotland, which may create a new insurer to handle this venture (surely not using NIG, the broker-only insurer), do insurers think these customers are a new uninsured customer base to tap into?

These businesses are already insured, no doubt via the same insurers looking to support this BG initiative. Aren't all chief executives stating that there is "no soft market" and "rates must remain firm".

Yet here they are considering a venture to undercut themselves, no doubt using the excuse of a cheaper distribution channel.

Come on, let's try to maintain the idea of profitable underwriting and not revert back to market share.

Dave Mackie

E T Knagg & Co Ltd

Cost of 0870 service

I refer to the letter (12 August, Insurance Times) re voicemail answer systems.

I am amazed that so very few people have picked up on the fact that callers are being ripped off by some insurance companies who use the 0870 system.

They are usually the ones that keep you waiting the longest. One reason insurers use this system is that 0870 number operators pay the company using it a percentage of the call costs. This income contributes to insurers' profits, but not their customers' satisfaction.

There is a popular misconception that 0870 numbers are charged at local call rates.

Not so. They are national call rate numbers and never cheap.

Perhaps you ought to publish a list of those companies who utilise user-friendly freefone numbers such as 0800 and 0500, and a 'greylist' of those that use 0870.

Steve Putman

AF Insurance Brokers Harrow Claims

Keys-in-car exclusion

I read your article (19 August, Insurance Times) with interest, only having just finished reading the latest Ombudsman digest.

It is now some years since the initial 'keys-in-the-car' cases, and I think, in the intervening period, most insurers have introduced specific exclusions, admittedly, some better worded than others.

We have also seen some very tragic incidents involving fatalities where keys have been left in the ignition and thieves have taken advantage of this mistake by the driver.

It is about time the Financial Ombudsman Service reviewed its approach on this issue.

Most private car policies carry a 'keys' exclusion and, to this extent, it is the rule rather than the exception.

Why put the onus on insurers to state the obvious? In my view, there is no longer any need to draw this exclusion to the customer's attention.

There is no valid mechanical or driving reason for a driver to leave keys in the ignition, and insurers should not be made to pay out on these claims.

By upholding these type of claims, the ombudsman is sending out an entirely wrong message to the public

Roy Rodger

Technical & training consultant

Motor Investigation Agency

Short measure

In response to Marcus Booth's comments (12 August, Insurance Times), I would be more worried that he spotted the short measure, but failed to notice that one glass was over-sized, and the other half-supped.

Stick to asking for a top-up, Marcus, then you get more than a pint for your money.

Simon Saunders

Commercial department

THB Clowes