Archive for April 2009

Does Sickness Insurance cover ‘swine flu’?

A lot of questions are being asked in the insurance world this week regarding the impact of the H1N1 virus to insurance claims.
With the World Health organisation now classifying the virus at five out of six on the scale of pandemia, it only needs one more country to confirm inter human transmission for it to become the first Flu pandemic since 1968.

So what will be the impact on the Insurance World?

Insuranceblogger doesn’t beleive that we are going to see a doomsday viral situation much hyped by films like 28 Days later or Survivors, so the impact on on the life insurance fund will be negligable. In the developed world the largest risk to human life appears to be from the associated pnuemonia, which unless extremely aggressive is unlikely to kill more people than the average seasonal flu.

Like in 1968, the largest impact will be on the loss of business if large sections of the workforce are forced to take a couple of weeks off. It is also possible that businesses will be forced to close by the Government in a bid to stop transmission if there are sporadic outbreaks that can be controlled by quarantine and restrictive movement measures may be imposed by local authorities. If this becomes a fundamental risk, commercial insurance business interruption cover will not be in place.
If this situation occurs some sort of Government led compensation fund will need to be set up for the business interruption excess, or we could see more businesses going to the wall! Just what the doctor ordered in the middle of a recession!

On a personal level the millions of us who have personal sickness insurance in the form of ASU or protection products will be keen to know whether they are covered for the H1N1 virus.
We spoke to Simon Burgess, the managing director of Burgesses Insurance the UK’s leading provider of Sickness and Unemployment Insurance. He assured us that it has been confirmed by all his underwriters that all Burgesses clients are definitely covered in the event of contracting this variant of the flu.

……………. Anyone stil out there? …… hello?

The Hidden Costs of Uninsured Drivers in Your Car Insurance Premiums

Car Insurance – Uninsured Drivers Cost You More Than Money!
By Dave Healey

We are constantly reminded that the cost of our car insurance premiums are inflated because of insurance fraud and exacerbated by the number of uninsured drivers on the roads! It is certainly true that in the United Kingdom all car insurance companies are required by law to pay into the Motor Insurance Fund (MIF).

This pool of money was designed to protect and recompense the innocent British public, from damage or injury caused by an increasingly large number of uninsured drivers. and accidents involving untraceable hit and run drivers.

The Motor Insurance fund was set up over sixty years ago, immediately following WW2 when the licensing laws and car insurance regulations were still being formulated and yet many of our modern laws were yet to be put onto the UK statute books.

The war years had seen the number of cars and vehicles in the UK rise exponentially, particularly towards the end of the war after the USA joined in, and for the first time British women were systematically taught to drive in their thousands, and indeed even the Queen, Princess Elizabeth as she was at the time, mucked in with driving vehicles of all shapes and sizes and women drove the domestic war effort.

At the end of the war Britain’s roads were beginning to become cluttered and returning troops and foreign bases exacerbated the number of unlicensed cars and drivers on UK roads without car insurance to record levels.

As the number of accidents involving uninsured drivers rose steadily, public outcry forced the government to act and in 1946 a Government ‘Quango’ called the Motor Insurers Bureau (MIB) was established to oversee the whole operation of public compensation for damage, where no car insurance covered the costs.

The MID is to this day funded by a proportion of every policy sold, and to date has paid out over £2 billion in total. The MID have calculated that the cost to each of us when we purchase car insurance is an additional £15 to £30 per policy to cover uninsured drivers, which amounts to more than £200 million every year.

Furthermore, recent statistics from the Bureau indicate the problem of driving without car insurance has not declined over the intervening years since its foundation, and show that the UK continues to have a very poor record, with one in every twenty cars on the road being driven without proper car insurance cover.

Breaking down the statistics further, reveals that the amount of damage caused by drivers without car insurance each year far exceeds the amount paid out in claims every year through the risk fund.

It is often difficult to receive full compensation even if you have identified the uninsured driver, who may well have been prosecuted by the police, and you make a claim through the MIB.

A satisfied claim, that is those claims that are paid out, usually only occur when a particular claim has run the full course of the law and a judgement handed down.

In a case of a hit and run driver without car insurance who is unidentified, the MIB does not pay all legal costs, which can quickly run into thousands, but merely makes a contribution with a deduction to cover the balance of legal costs and expenses.

Thus the hidden costs and misery caused by the actions of those who choose to drive without car insurance is far greater than the official statistics of two hundred million pounds every year.

It is with these figures in mind that the MIB became the centralised point of a new database, the Motor Insurance Database, created at the turn of the century. The database is updated daily with details of every person and their car, who buys a car insurance policy. This information is now immediately available to all police forces throughout the Country, who through automatic number plate recognition systems, can instantly send a car registration number to the MID.

This allows the system to immediately indicate to a police office in the field, cars that are being driven and the driver has valid car insurance in force.

Go Compare Elsewhere! Google slaps aggregator

The wires are hot out there this morning and the keyboards buzzing as it appears that Google has slapped, that is, removed from it’s search results all mentions of
The UK insurance comparison website had featured widely across the top of Googles search results for all sorts of insurance related terms, before yesterday!
Word on the street has it that GoCompare was indulging in very dubious link building practices. Ior those of you who aren’t familiar with search engine rankings, the positions that you appear in the results are largely determined by the number of one way links you can build pointing into your website. These links should however, be on theme!
If you carry out a backlink search on Yahoo for you’ll see links from some very strange and dubious blogs, which tends to support this theory.

Google is quite clear in it’s webmaster guidlines and elsewhere about purchasing or acquiring links through nefarious practices.
The same thing happened to GoCompare last year but because of the number of links from authority sites the penalty only lasted a short while.

Interestingly, as a response appears to have upped it’s spend with Google adwords in a bid to retain traffic and please the gods.

Perhaps Google should do the same thing and SLAP all the other insurance comparison sites that occupy the first page of Google for car insurance and other keyword terms – they are all at it as well, some of them getting links in much worse ways than poor old gocompare. Just go and compare backlinks from the top five results for car insurance – these companies employ huge teams of people whose job it is simply to build links and buy links.

Tenants at risk as Landlords are repossessed

Questions have been asked in the House of Commons regarding tenants who have been paying their rent and fulfilling all their other obligations but who nonetheless find they are at risk of losing their home. What protection do they have?

We sympathise with tenants who find themselves in this position. So, what can lenders with the charge on the property do in cases where the tenant is paying their rent, but the landlord is not using this money to meet their mortgage commitments?

It seems it all depends upon what type of mortgage the landlord has and the protection for tenants falls into two distinct groups, and are affected in quite different ways.

The first are those whose landlord has a buy-to-let mortgage, and these tenants are generally in a much stronger position.

The second group comprises those whose landlord has a residential mortgage. A borrower with this type of loan should seek the permission of the lender before renting out the property. Where the lender agrees, it will be bound by the tenancy agreement. That provides protection for the tenant, should the mortgage lender need to take possession of the property or appoint a receiver because the borrower stops paying the mortgage.

In some cases, however, a borrower with a residential mortgage decides to rent out the property without telling the mortgage lender, in contravention of the mortgage agreement and perhaps even fraudulently. These tenants have been disadvantaged and their tenancies put at risk through no fault of their own.
Likewise the mortgage lender. It is quite likely that neither the lender nor the tenant will even be aware of each other’s interest in the property. Both have been put in a difficult position because of the irresponsible behaviour of the borrower.

But while mortgage lenders may sympathise with tenants in this position, it is important to understand that their legal responsibility – reinforced by regulatory requirements – is to the landlord, and not to the tenant.

The lender has an obligation to minimise arrears and get the best price possible for the property. This is likely to lead the lender to seek possession of the property quickly. In this situation, the tenant has few rights.

So how common is this problem? Recent television coverage of the issue reported it against the backdrop of 75,000 mortgage possessions this year.

The reality is, however, that only a much smaller proportion of total possessions – perhaps 4,000 this year, or around 5% of the total, according to the Department for Communities and Local Government (DCLG) – will involve residential mortgages where the lender discovers the property is occupied by tenants.

Buy-to-let mortgages

If tenants are renting from a borrower with a buy-to-let mortgage, they are in a better position. Here, the tenancy is normally binding on the lender if it needs to take enforcement action against the borrower/landlord. The tenant will have the statutory right to notice under their assured shorthold tenancy.

Instead of seeking possession, the lender may choose to appoint a receiver, who will, as far as the tenant is concerned fulfill the role of the landlord, maintaining the property and collecting the rent.

Under an assured shorthold tenancy, a tenant is entitled to the remainder of their contractual period – which is typically six months but can be longer – as notice and to a minimum of two months at the end of that period. In practice, a lender or receiver will often allow the tenant to remain beyond the notice period until rent arrears are paid off or the tenant chooses to leave.

Sometimes, a property may be sold with a sitting tenant. This is rare, however, because the lender has a responsibility to the borrower to obtain the best price for the property, which usually implies sale with vacant possession.

New Advice agency campaign

A number of organisations, including Crisis, Citizens Advice, Shelter and the Chartered Institute of Housing have launched a campaign to help tenants when the mortgage lender takes enforcement action. The campaign calls for courts to be able to delay possession to allow tenants to find an alternative home.

But if there is a residential mortgage on the property, giving the tenant more time to find a new home could put the lender in conflict with the borrower, particularly if it means mortgage arrears build up and the property is eventually sold for less than would have been the case if it was marketed straight away. If the landlord had had adequate mortgage protection insurance for commercial premises the situation would not have arisen in the first place

The campaign also calls for notices to occupiers to be made more obvious and perhaps to carry a risk warning. Landlords Insurance is available to compare online.

RBS to shed 4,500 jobs over next two years

RBS has begun consulting Unite and other employee representatives about a business plan for its back office operations that will regrettably involve job losses, 4,500 of which being UK based.

The plan could affect up to 9,000 Group Manufacturing roles globally, including 4,500 in the UK, over the next two years.

However, the actual number of jobs lost is expected to be significantly lower than this.

A redeployment programme has already identified 650 new job opportunities in the UK and the impact will also be reduced through natural turnover and less use of agency staff.

RBS will make voluntary redundancy arrangements available which may suit some of the staff affected by this announcement. RBS agrees with Unite that compulsory redundancies should be a last resort.

The business plan, which involves a number of other cost-saving initiatives including moving to a common technology platform, will help RBS achieve its target of reducing annual costs by £2.5bn within the next three years.

It is not yet known what impact will be felt by the Insurance group which is responsible for brands such as Churchill and Green Flag to name but a few.