Trevor Harrison makes a very good case for the removal of article 75 (Letters, 14 September). If only it were that simple.
On the basis of what Trevor says, it would be a simple swings and roundabouts exercise with each insurer's article 75 spend being transferred to their part of the MIB levy.
Unfortunately, this is not the case. By their very nature, most article 75 situations occur either due to the character of the individual insurer's book of business or due to the insurer's modus operandi both in terms of business acquisition and claims handling.
Also, in a number of these claims, the insurers may have spent some considerable time dealing with the claim and in some cases may have even made a payment before the "problem" is discovered.
In relatively simple terms, a "good" company will lose its relatively small article 75 outlay and this will be replaced by an inflated MIB levy which includes former article 75 claims from the "less good" companies.
A more logical approach would have been for these insurers to be looking to extend article 75 and to use their own claims teams, leaving MIB to handle the truly 'uninsured' situations. If an insurer invests time and money training a claims team, why should it then abdicate a tranche of claims to someone else over which it has very little control?
In return for giving away these claims, it receives a bigger MIB levy inflated by its competitors' former article 75 claims and the increased costs incurred by MIB in handling these claims. I'm not sure this seems a good deal.
I do appreciate that the fate of article 75 will be decided by the market, but the market is not the level playing field many think it is. Insurers who pride themselves on their level of expertise and customer care should be wary of any reduction in article 75's parameters.
Roy Rodger
Insurance Training & Consultancy
