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.

UK Government CON DEM The FSA Insurance Regulator

The Coalition UK Government led by the right wing Conservative party, have fired their first major shot in the destruction of the Bureaucratic State with the announcement last night of the abolition of The Financial Services Authority, The FSA, which governs the regulated activities of all sectors of the UK Insurance Market.
In a speech to those lovable Bankers and Merchants (Merchant Bankers having a Ruby to you and me Cockneys!) at the annual Lord Mayor of London’s dinner at the Mansion House last night,  Champagne swaffing hatchet man George Osborne announced that the FSA will cease to exist in it’s current form by 2012.
Osborne said,
“What we are proposing is a new system of regulation that learns the lessons of the greatest banking crisis in our lifetime. I can confirm that the Government will abolish the tripartite regime, and the Financial Services Authority will cease to exist in its current form.

The Cost of Insuring The FIFA World Cup

Every four years Insurance Companies underwrite all the risks associated with holding and attending the World’s largest sporting event – The FIFA World Cup Finals.
Insurance Blog reports on the risks and covers available and the large premiums paid to ensure that this years Tournament currently going on in South Africa, went without a hitch…

The prior concerns and fears that had been raised over the insurance cover for the 2010 World Cup failed to materialise as the tournament passed off without a major incident or claim.
FIFA had been forced to build a R6.3 billion contingency fund (around a billion US dollars) to cater for the possible collapse of the 2010 event -  a lot of money when you consider that the winners Spain only receive £40 million pounds ($60 million) in prize money.  FIFA have taken out cover  for any kind of interruption, delay or abandonment of the World Cup and the consequent loss of revenues.
Individual players and their respective Football Association’s had to make their own arrangements for sports disability and sports accident  insurance , with the number of top players appearing at the tournament making it the most injury exposed in the history of the sport.

Insurance Marketing Old School

Insurance Blog was gazing through some very old travel guides when we noticed that Insurance Marketing has come a long way since the start of Insurance….
This old advertisement for The London Assurance Company from the turn of 19th century suggests that insurance was something that you didn’t talk about in public – like money!

‘Very good people to deal with”  What’s all that about then?
Good at what? Deal with What?
“Good Day Mister. I’m from London Assurance. We’ll deal with it for you! (Cockney Accent required)
An interesting thing about the advert is the Firemark in the centre depicting the coat of arms of the Corporation of the City of London, The George Cross.

Aon in the Red! AIG loses the Shirt off it’s back

The prawn sandwiches were out in force yesterday at Old Trafford as the new sponsors of Manchester United Football Club,  Aon the giant American Insurance Broker, took over the lucrative deal from disgraced and broke AIG the not so giant American Insurance Company.

AIG had to pull out their 14 million a year deal which ran until the end of May this year, after the company was bailed out by the US Treasury to keep it alive.
It’s been a bad week for AIG who failed to complete the sale of their Asian division AIA to the man from the Pru, as the Treasury ‘overvalued’ the operation at 24.5 billion.

UK Housing Market Home Insurance Mini Boom

Wthether it’s a sign of Spring or the green shoots of recovery, recent activity in the UK housing market has seen an appropriate response from the major UK home insurance companies, with a multi million pound spend on prime time TV advertising.
The home insurance market had gone quiet in recent months but recent positive indicators in the housing market have led to this bombardment on every TV and commercial Radio station. Home Insurance is definitely the flavour of the month with the market under capacity due to many people cutting levels of cover or dropping covers completely because of the recession.
So what’s been happening in the UK housing market recently to have caused this big budget spend?
Well in April house prices had risen by 8.5 % since January which is a startling recovery in itself, and the figures for the number of valuations carried out in May confirm the trend with Valuation activity in May up by over a quarter compared to May 2009, according to the latest research by Connells Estates Survey team.
This confirms that both the supply side of housing and the demand side from potential buyers appear on the face of it bouyant. It remains to be seen if the Bank Assurers are prepared to underwite this economic activity with the supply of mortgages necessary to complete all these potential deals.

Insurance Companies must be held to account for the Recession

Who really calls the shots – The Government or Big Business when it comes to setting the direction and flow of the future economy?
You don’t need to look much further than the Insurance Industry to see that new forces are in play in a new world economy, driven perhaps by Government steering rather than a cyclical wave of uncertainty created by the money markets who are ultimately the owners, underwriters and profiteers of the multi national corporations.
The Insurance Industry which is at the top of the triangle of the money market distribution, is renowned for it’s slow reaction to change.
You’ve only got to ask a dynamic young business analyst or insurance product underwriter how difficult it is to implement solutions that would ultimately bring an Insurance Company competitive advantage……
Insurance Companies are naturally cautious and are able to absorb external change over time through their ability to control the provision of products and the levels of competition within the market.
They do this by controlling the rates at which they sell their products to the retail market through various differing distribution channels.
The rates that Insurance Companies set for Insurance are typically determined by the levels of profit that the investment side of the company is making.