Insurance Brokers Pay for UK Banks PPI Claims

It’s that time of year again when UK Insurance Brokers and Intermediaries are asked to pay their annual membership fees for the soon to be defunct, Financial Services Authority (The FSA).
Reading through the Insurance news this week you will find multiple stories from Brokers moaning about the ‘ridiculously’ high fees they are being asked for in order to trade. In some cases the fees have risen three fold on last years costs and many small operators are threatened with going out of business. In some cases the fees represent 20% of their income.
The reason, the FSA’s Financial Services Compensation Scheme to which all members have to contribute.
In the last couple of years the FSCS has paid out over a billion pounds in damages for claims to individuals who were mis-sold payment protection insurances (PPI), such as mortgage protection or loan protection primarily by – The Banks.
Yes those good old bastions of the British financial system, the Banks and not forgetting the Building Societies who were equally as guilty, had been systematically robbing their customers for years, who took out PPI on the back of their mortgages, loans and credit cards .
On average these institutions were charging in excess of five times the premium for the same cover that could be had from an independent supplier or Insurance Broker offering mortgage protection.
They got away with it for years because you and me the UK public were initially only too keen to sign their agreements to secure the loan!

UK Public Demand Cheaper Young Drivers Car Insurance

Insurance blogger was searching the blogosphere when he came across this interesting story about the incredible number of uninsured drivers there are on the UK highways and byways, that quite frankly make you paranoid every time you get behind the wheel of your car:

300,000 Young Drivers without Insurance on UK roads

by Performance Car Insurance on July 22nd, 2010

According to the Motor Insurers’ Bureau in a report released today, there has been a twenty percent drop in the number of people driving without car insurance in the UK.
However, there are still a third of a million uninsured drivers on the roads in the UK without adequate car insurance cover.
And it’s young drivers who are the biggest culprits when it comes to breaking the law and putting other road users at risk of loss.
The Motor Insurers’ Bureau (MIB) reports:
Young drivers are the least likely to be insured with new figures suggesting the problem is worse in Britain than any country in Western Europe.

The effect of the Budget upon the UK Insurance market

The hatchet man Chancellor George Osborne has spoken and the little red box opened to reveal one of the most stinging budgets in recent memory, already named the austerity budget, with huge public sector job losses, spending cuts and tax rises for all!
On the face of it Insurance escapes fairly lightly with Insurance Premium Tax (IPT) raised for the first time in over ten years to 6% from 5%.
 IPT is chargeable  on every insurance policy sold within the UK,  although Insurance is currently VAT exempt.
This rise will harden the market with slightly raised premiums,  however it is suggested by many in the City that the percentage increase will mostly go un-noticed by the majority of the insurance buying public.  A spokesperson for specialist car insurance company Car Insurance TV said that ‘this increase in IPT will add just a few pounds to the cost of an average car insurance policy, however levels of competition will often see this absorbed by the Insurance Companies trying to win your business’.
A major impact upon the supply of Insurance and adding further inflationary pressures, will be the raise in the basic level of VAT from 17.5% to 20%.
 The rise in VAT will add additional costs to the supply of insurance. Most distributors of Insurance such as Insurance Brokers are UK VAT exempt and therefore unlike VAT registered businesses, cannot claim back their VAT expenditure against their VAT income.