Todays official figures show levels of unemployment last enjoyed under Margaret Thatcher’s Tory Government of the Eighties.

Youth unemployment is at its highest level for 19 years.
Womens unemployment is at its highest level for over 23 years.
The public sector is traditionally a large employer of both these groups.
The Governments argument that the private sector creating new jobs will prop up the public sector has proven to be widely inaccurate.
David Miliband pointed out that for every two jobs lost in the public sector only one was being created in the private sector.

The result is that the economy is in a downward spiral and the public sector job cuts are fuelling the maelstrom.
Maybe our public schools are failing as well, because it is obvious that neither David Cameron or the Chancellor bloke, whose name Insurance Blog can’t remember, have even the basic skills in macro economics!

When there was a global depression in the USA in the late 1920′s, FD Rooseveldt’s ‘New Deal’ of public works and public sector employment, brought America out of the downward spiral and introduced infrastructure which gave the post war US a massive competitive advantage.
President Obama has finally realised that cuts don’t work and has announced a massive Federal investment in public works. Alex Salmond, Leader of the Scottish Parliament today said that unemployment was down in Scotland during the last three months due to a large public building program.

David Cameron is carrying on making people and public sector workers unemployed.

If you work in the Public Sector there is still time to get unemployment insurance and income protection however you must hurry.

Income Protection Insurance is available to eveyone in full time employment. As long as you have not been informed by your employer that your job is at risk, you can still take out an income protection policy.

Act quickly and you can protect your mortgage, rent and other regular payments such as council tax, utilities bills, finance agreements and even gym memberships and satellite/cable tv bills. With low monthly payments you have a choice of cover between accident, sickness and unemployment, accident and sickness or unemployment only, with 12 or 18 month benefit options.

Related posts:

1. Public Sector Employees Facing Redundancy Should Consider Unemployment Insurance
2. UK Unemployment hits record heights
3. Unemployment to hit North of UK First warns Specialist Insurer

The UK has just introduced new bribery laws and one area that could fall foul of this,  is that of corporate entertainment.

Well certainly not in Germany, and especially if you work for Munich Re, one of the worlds largest reinsurance companies who threw an orgy in a spa baths complete with prostitutes for all its major clients and top staff, according to a report on Radio 5 of the BBC!

One of Munich Re’s divisions, Ergo, told the BBC that the party had taken place to reward salesmen in 2007.

A spokesman said the people who organised it had since left.

The gathering was held at a thermal baths in the Hungarian capital Budapest as a reward to particularly successful salesmen.

‘Whatever they liked’

There were about 100 guests and 20 prostitutes were hired. There was one prostitute for every five guests.

A German business newspaper said the prostitutes had worn colour-coded arm-bands designating their availability, and the women had their arms stamped after each service rendered.

According to Handelsblatt, quoting an unnamed participant, guests were able to take the women to four-poster beds at the spa “and do whatever they liked”.

“After each such encounter the women were stamped on the lower arm in order to keep track of how often each woman was frequented,” the paper quoted the man as saying.

“The women wore red and yellow wrist bands. One lot were hostesses, the others would fulfil your every wish.

“There were also women with white wrist bands. They were reserved for board members and the very best sales reps.”

A spokesman for Ergo told the BBC that the party had happened, but said it was not the usual way of rewarding their employees.

The company said it had introduced a new code of conduct.

“We’ve taken all the right steps to prevent it happening again,” he said. “It was a mistake but we are very sure that it was a unique event.

“The new people of the sales organisation introduced a very personal commitment that these things should not happen again.”

Insurance Blog does not suggest that you approach your marketing director in the morning………

To hear the full interview visit the BBC.

No related posts.

So what has gone so wrong? Why are we paying more for motor cover?

Well first we were told it was uninsured drivers, two million of them apparently, that were pushing up the costs of car insurance because the Insurance Companies were having to pay more into the collective fund, administered by the Motor Insurance Bureau, to cover the costs of claims against drivers with no cover.

So after much pressure from interested parties, the Continous Insurance Enforcement legislation has been passed but to date we see no evidence of reduced premiums.

Then we are told that criminal gangs (mostly johnny foreigners if the British press is to be believed) are fraudulently staging car crashes that are adding to claims costs. Given the amount that Insurance Companies have invested in detecting fraud in recent years, Insurance Blog cannot believe that these claims are more than marginal costs.

Next we are told that the actual reason for increasing  car insurance costs is the amount that has to be paid out in claims and held in reserve for personal injury claims due to road traffic accidents.

Could we be somewhere near the truth?  The problem with this is that given the latest figures, in 2009 the number of road accidents involving personal injury was 31% down on the average for 1994-98 primarily due to better car and road safety.

So it’s not the number of claims but the costs of claims. The cost of personal injury claims to Insurance companies has doubled in the last ten years from £7bn to £14bn.

So why are the costs of PI claims rising so fast and leading to expensive car insurance for us all?

Well Mr Jack Straw would have us believe that its all the fault of the Claims Management companies that have sprung up in recent years, the so called ambulance chasers. Claims management companies collect details of claims and typically sell these onto solicitors for a fee ranging from £100 to £1000 per case.

Mr Straw has called these a racket and demands that referral fees should be banned as was proposed by Lord Jackson in the 2009 report on court costs prepared for Mr Straw’s government.

Yes, maybe those who refer the accidents to the claims farmers for a fee such as the insurance companies themselves, hospitals, police and repair garages, should be denied the introducer fee but do you really believe that an extra hundred pounds or so is the reason for £7 billion pounds worth of extra claims expense? Who really is benefiting from these PI cases?

Insurance Blog thinks that this is all smoking mirrors, and that the real reasons for the increasing costs of claims and car insurance are something quite different, even though they are mentioned in the Jackson Report, and they are:

1) The ridiculous fees charged by Solicitors. How can any profession especially one that just creates more work for itself justify charging £150 to £200 per hour? Solicitors costs should be fixed for civil litigation as they are for criminal at around a quarter of what they currently charge. Civil Solicitors are the racket and social pariahs!

2) The question of proportionality. How on earth can the UK courts allow claimants to bring cases that run up solicitors and expert witness costs on both sides that are often 1000% more than the value of the claim. (see the figures in the Jackson Report appendices)

This is morally wrong and makes a joke of British Justice. No costs for both parties combined should ever be allowed to exceed the value of a claim and where an award for damages is less than the amount claimed then costs against the defence should not be awarded.

Mr Straw like when he was Home ‘Class B’ Secretary has failed to grasp the real facts and jumped on the populist bandwagon of lets attack the claims management companies and conditional fee arrangements (CFA).

Access to justice at a fair rate should be written into humans rights law and if you were injured you would be glad of a CFA. Because Solicitors charge exhorbitant rates, a CFA is often the only way to get justice if you’ve been injured by someone else.

As for cheaper car insurance, shop around, compare car insurance quotes and if you don’t want to pay more at renewal ask the Insurance company what its current claims exposure is!

Related posts:

1. Insurance Companies Blame 2009 Losses on Personal Accident & Bodily Injury Claims
2. Car Insurance Fraud puts £60 on every policy premium
3. UK Car Insurance Rates Must Harden As Loss Making Companies Claims Reserves Run Dry!

If you haven’t taken out unemployment insurance yet, there may still be a little time, although given latest figures you will have to move as fast as the postman with the redundancy notices, as UK Unemployment hit record heights.

Here’s the facts of the state of Britains Economy

The employment rate for those aged from 16 to 64 for the three months to November 2010 was 70.4 per cent, down 0.3 on the quarter.

The number of people in employment aged 16 and over fell by 69,000 on the quarter to reach 29.09 million.

The last time there were larger quarterly falls in the employment level and rate was in the three months to August 2009.

The number of people working full-time fell by 37,000 on the quarter to reach 21.16 million and the number of people working part-time fell by 32,000 to reach 7.93 million.

Part Time Working at all time high!

The number of employees and self-employed people who were working part-time because they could not find a full-time job increased by 26,000 on the quarter to reach 1.16 million, the highest figure since comparable records began in 1992.

The unemployment rate for the three months to November 2010 was 7.9 per cent, up 0.2 on the quarter.

The total number of unemployed people increased by 49,000 over the quarter to reach 2.50 million.

Male unemployment increased by 43,000 on the quarter to reach 1.48 million and female unemployment increased by 6,000 on the quarter to reach 1.02 million.

Youth Unemployment at record levels!

The unemployment rate for those aged from 16 to 24 increased by 1.0 on the quarter to reach 20.3 per cent, the highest figure since comparable records began in 1992.

The number of unemployed 16 to 24 year olds increased by 32,000 on the quarter to reach 951,000, the highest figure since comparable records began in 1992.

Redundancies on steady increase.
There were 157,000 redundancies in the three months to November 2010, up 14,000 on the quarter.

The number of people claiming Jobseeker’s Allowance (the claimant count) fell by 4,100 between November and December 2010 to reach 1.46 million, although the number of people claiming for up to six months increased by 7,200 to reach 960,300.

The total number of male claimants fell by 6,600 on the month to reach 1.02 million but the number of female claimants increased by 2,500 to reach 439,300.

The inactivity rate for those aged from 16 to 64 for the three months to November 2010 was 23.4 per cent, up 0.2 on the quarter.

The number of economically inactive people aged from 16 to 64 increased by 89,000 over the quarter to reach 9.37 million.

Early Retirement at Record levels !

The number of people who were economically inactive because they had taken retirement before reaching the age of sixty-five increased by 39,000 on the quarter to reach 1.56 million, the highest figure since comparable records began in 1993.

Wages Stay the Same!
The earnings annual growth rate for total pay (including bonuses) was 2.1 per cent for the three months to November 2010, unchanged from the three months to October.

The earnings annual growth rate for regular pay (excluding bonuses) was 2.3 per cent for the three months to November 2010, unchanged from the three months to October.

The Oulook.

Very Bleak!  The current situation is comparable to the early Thatcher years and the axe has yet to fall on 600,000 public sector workers. The knock on effects to the high street of this contraction in money flow will damage small to medium sized businesses as demand inevitably drops. Further unemployment within the already contracted private sector is inevitable as orders dry up and the unemployemt queues will increase.

All sectors of the economy will suffer from this so called ‘double dip recession’ particularly high end products and high street businesses will suffer. Insurance will not have an easy time either! Already we are seeing once profitable sectors like shop insurance virtually disappear as a viable large market as the number of shops rapidly decreases. When was the last time you saw a high street travel agents or hardware store? The pattern is being repeated across all sectors of the UK Commercial Insurance market.

Coupled with this we are under immense inflationary pressures from energy prices and global food markets which inevitable, although foolishly, will lead to the Bank of England be foreced to politically raise Interest rates. After all, there are no more weapons in the economic arsenal.

Darwinian ConDemNation.

The future is blue and orange and civil commotion – If you are not a merchant banker, are you fit enough to survive?

Related posts:

1. New Year Recession Fears
2. Unemployment to hit North of UK First warns Specialist Insurer
3. Bank of England is Steady at the Helm with Sensible Interest Rate

While I was out in Majorca I couldn’t but notice what was going on in Tunisia, a popular haunt of mine since the days of the dictator Habib Bourguiba in the 1970′s!

Looking at all those tourists stranded at Tunis Airport got me thinking - ‘None of them are covered!‘

They probably all have travel insurance but how many can actually claim?

The Foreign and Commonwealth Office (FCO) draws up an extensive list of countries that have seen recent war or riot or civil commotion or is currently at war. Subsequently they advise these areas should not be travelled to.

As this is advised by Government most Travel Insurance policies will not cover you if you visit these countries.

Check that the country you are travelling to does not appear on either list, as they are likely to be excluded from travel insurance policies.

Here is the current Government advice for travelling to Tunisia for example:

Travel Summary

• We advise against all but essential travel to Tunisia.
• If you are in Tunisia, register with our service to tell us when and where you are travelling or where you live so our consular and crisis staff can provide better assistance to you. You can register on the FCO website at: https://www.locate.fco.gov.uk/locateportal/ or by calling: (00 216) 71 108 713. Those in the UK should ring the FCO on 020 7008 1500.

Nearly all Travel Insurance policies exclude war riot, terrorism and civil commotion which is rather worrying given all the media talk of domino effect trouble, and the numbers of people that travel each year to Egypt for example!

Always check the policy wording clearly of any travel insurance policy before you buy it and remember that if a travel insurance policy is cheap you may have problems when you try to claim.

If you do find yourself stranded in a war zone try to contact the British Embassy initially and at the same time your travel agents or tour operator who will help in these sort of non covered events and situations.

Related posts:

1. Health Insurance and Care Abroad – Get Travel Medical Insurance!
2. Dangerous sports travel insurance
3. Cheap Classic Car Insurance Cover

“Check your policy wording and put your spacesuit on!”

Insurance Business have finally moved into the 21st Century with some truly space age of aquarius exposures to risk to deal with over the next year, according to a new report from Lloyds of London.

These new age risks include Space weather, cyber risk and critical infrastructure attacks that are predicted to cause big problems for consumers, businesses and their insurance companies in 2011.

The Lloyd’s 360 Risk Insight report states that ‘The phenomenon of space weather is one of the most difficult to quantify and yet potentially serious sources of loss and disruption for business.’

“Space weather and its impact on Earth: Implications for business”, says that businesses should be looking at ways to assess and mitigate space weather risks this year because the 11-year solar cycle is expected to peak in 2012/13.”

Turbulent space weather created by solar phenomena such as coronal mass ejections, solar flares, solar wind, solar radiation and magnetic storms could have wide ranging impacts around the globe in climatic responses, many scientists believe.

These phenomena are also predicted to affect aircraft communications, air traffic control and navigational systems which could malfunction or might stop working, satellite and GPS systems could also malfunction, and surprisingly. power grids could collapse.

Scientists know a lot about the possible causes and effects of solar weather from previous cycles. Established infrastructure that we take for granted, such as rail networks, telephone systems, pipelines and electric power grids have all been seriously disrupted by space weather in the past.

But the economic fall-out that could result from the increasingly active solar season is far less certain. That’s because our dependency on wi-fi and internet technology is so much greater than before.

“There is growing concern that the coming solar maximum will expose problems in the many wireless systems that have grown in popularity during the quiet solar conditions that have prevailed over recent years,” the Lloyd’s report warns.

Insurance Blog should have a lot to write about then over the coming year if these concerns are realised.

And then it’s 2012!

Don’t worry about the risks to the Olympic games! The Mayan Calendar stops here……….

And the earth is positioned in alignment with the centre of of the Universe!

Related posts:

1. Apocalypse Now for Natural Disaster Insurance Claims
2. Commercial Insurance Risks Explained
3. Lloyd’s Slips have come a long way to the current Electronic trading

If all the Economic pundits are to be believed, you would think that the economy was rosy! No chance of a the dreaded double dip recession now ……..

Hmm, what about the 600,000 job losses in the public sector that still have to be made this spring and will have to be paid for out of a shrinking GDP, rising wage demands from the private sector, fuels costs going through the roof and VAT at it’s highest ever 20%!

However you look at the current situation the immediate future does not look too bright!

Amongst all the coalition division and noise about quangos, cuts, student fees, interest rates and inflation, the UK Government has this week raised Insurance premium tax to 6%. With the cost of Insurance already at record highs as companies try to build up lost claims reserves, maybe they thought we’d not notice more indirect taxation!

The future doesn’t look too orange for Corporal Clegg and his Liberal lackies either who are currently enjoying their lowest popularity level for 30 years.

Meanwhile David Cameron is making noises about the housing sector while failing to enforce the necessary lending from the banks that would inject some momentum into a recovery, he has spoken out about plans to clamp down even further on mortgages in the name of responsible lending.

Tory Housing minister Grant Shapps has said that under the new  FSA’s Mortgage Market Review (MMR) proposals, he himself would have failed to get a mortgage.

Now Cameron has said that lenders have already gone too far in preventing ‘good risk’ buyers from getting mortgages.

The Prime Minister warned that the housing market was ‘stuck’ and would not improve until banks and building societies got back to ‘respectable’ lending.  Cameron said the reaction to the crash had now gone too far.

He said: “The pendulum has now swung too far the other way. If you are a single person, you are earning a decent salary, you go to the bank or building society, you are actually quite a good risk, they won’t give you 80% of the value, they won’t give you four times your salary.

“So we are working with them to try and say, of course we don’t want to see the unsustainable boom of the past, but we’ve got to get proper lending, respectable lending, going again.”

Cameron made it clear that he did not want to see a return to 120% mortgages and loans based on seven or eight times earnings.

He said: “We don’t want another housing boom where prices rise out of people’s reach, but the housing market is a key part of the economy. You need a housing market where people are able to sell and people are able to buy.”

Yeah and one where banks lend money! It wasn’t irresponsible lending to UK homeowners that caused the current recession, if this was the case then repossessions would not be at the levels they are! Moreover bad banking and buying toxic debt from the USA were the root cause. With the same people in control, these banks must be forced to lend to both homeowners and businesses alike if we are to see any real recovery in the housing and employment markets in the UK in 2011.

Related posts:

1. The effect of the Budget upon the UK Insurance market
2. Insurance Companies must be held to account for the Recession
3. UK Government CON DEM The FSA Insurance Regulator

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!

When they finally got found out, thanks to the lobbying of Insurance Brokers, The FSA fined them all a pittance!

Now there’s a shortfall in the amount of cash needed to foot the bill, and guess who’s got to pay?

You got it – the very same Insurance Brokers who pointed out the misdeeds of the UK Banks and PPI  in the first place.

How mad is that!

So what do the FSA do and what does the Insurance Broker get for his fees?

Well from our experience absolutely nothing, until today that is, when a letter came in the post advising us to ‘cold shoulder’ this investment company we’ve never heard of on penalty of being struck off the register……

Meanwhile the UK Government owned Lloyds TSB Group owners of Halifax and Bank of Scotland have announced today that they finally will not be pressurising their customers into buying their PPI products!

Insurance Blog is of the opinion that the sooner the FSA is removed and replaced by another bunch of bureaucratic pen pushers the better and worse for us all………..

This time please keep the Bankers out of Insurance!

Related posts:

1. Small Insurance Brokers at Risk as Banks fail
2. FSA orders GBP 60 Million Mortgage Protection Insurance Repayments
3. What a bunch of Bankers! UK Banks challenge PPI ruling

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.

This will mean that all the additional costs of running the business such as bought in services like marketing and IT support, are likely to be passed onto the consumer in higher premiums.

Another major problem and potentially the biggest ticking timebomb for the UK Insurance market, will be the inevitable lack of demand for financial services products , as unemployment rises and demand falls, with cuts to public sector jobs and welfare across the board. This will naturally lead to further rationalisation of the market with the expected loss of up to 60,000 financial services jobs…. in addition to the thousands destined to go from the FSA!

Insurance Blog is of the opinion that  if the ill thought out measures announced in the recent UK budget and due to be delivered this Winter, don’t lead us into a double dip recession… then nothing will!

Related posts:

1. UK Government CON DEM The FSA Insurance Regulator
2. UK Housing Market Home Insurance Mini Boom
3. Insurance Companies must be held to account for the Recession

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.

“We will create a new prudential regulator, which will operate as a subsidiary of the Bank of England. It will carry out the prudential regulation of financial firms, including banks, investment banks, building societies and insurance companies.”

The news will probably be met with cries of  “hurrah” from Insurance Brokers up and down the Country, who have for five years been complaining about the unfair business practices demanded by the bureaucrats and exorbitant costs of Fees.

Without doubt, The UK Insurance market has shrunk since the FSA came to power due partly to to restrictions and barriers to entry to the market, imposed by the FSA.

What prudential authority is created to replace it remains to be seen. ……

It’s all a little deja vu and while we resent paying our FSA fees as much as the next person involved in UK Insurance, one cannot but think, haven’t we been here before? and before…….

Related posts:

1. New look Insurance blog for a New Look Parliament
2. UK Insurance Regulation Is Changing The Face Of The Market
3. Insurance Companies buy more UK Government Debt

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.

This level of profit is ultimately determined by the Base Interest Rate set by the Government above which the Insurance Companies can not only sell you products with hiked up rates such as mortgages and pensions, but much more importantly make the bulk of their profits from reinvesting your money in very large chunks, for guaranteed long term profits.
For example ,the current Government borrowing deficit of 165 billion pounds sterling has mostly been underwritten by Global Insurance Companies buying up the bonds.

Incredibly the money was borrowed, to bail out many of the private corporations who created the recession but who are now profiting from the debt.

Even more incredibly the Insurance Companies are crying ‘Please don’t tie us in with the banks – We’re not the baddies’!

Well I’ve got news for you Insurance companies!
Thanks to the policies followed by all those chairmen of the Insurance Companies throughout the 1990′s of agglomeration, Cartels, price fixing and that word that they now pretend never existed ‘Banc-Assurance‘ …

You are the bad boys- You and the Banks are the same thing!

And where are all those Chairman of the Bank Assurers who created and introduced risk into the Economy now?
Yes, all sitting pretty in the House of Lord’s, unelected and having further say ion the Country’s future. Outrageous!

Back to the point, Insurance Companies must now adjust to the new economics.
In the past they have had the arrogance to talk about fixed seven year cycles between hard markets where they can increase the rates to high profit levels and soft markets where wider levels of competition keep the prices down. At the end of the day the volume of business is exactly the same and the levels of claims homogeneous, so why the fluctuations?

Purely for profit!

Now though these very same companies are stuck between a rock and a hard market as they no longer have either the control over the flow of money or thanks to Global business and The Internet, the number of entrants able to enter the market,

In the past when Insurance Companies were making losses or wanted to make super-profit, the Insurance market would Cartel like, hike it’s prices across the board. A so called hard market. They are no longer in a position to do this!
Furthermore the profits they make from their investment vehicles are down due the Interest rates sensibly being held low by the Bank of England.
It won’t be long before the Insurance Company shareholders start screaming when they don’t get the dividends they expect or deserve! The Insurance Companies are already moaning about how incredibly unfair the Base Rate is to their investment vehicles!

Remember these are the same people – The Banks – who would like to charge you 15% on your mortgage debt and make super profits – if they thought they could get away with it. They’re already charging you more than that on your Credit Cards!

The Car Insurance Market is traditionally the first to harden it’s rates, with you and me the motorist suffering, but with increased number of distribution channels and the ability to shop around, it would be a foolish insurer who hardened his rates and expected to keep his book of business in the current economy.

You can expect similar resistance to unfair and unwarranted commercial insurance premium hikes, especially when the business had carried out good risk management and claims loss prevention.
Why should they pay more?
Because they are in a poorly managed risk pool?
Shop around Shop owners!

If the collective Insurance industry try to impose a hard market on the public during a recession they will create untold social problems as individuals and businesses under insure and health and safety practices go out the window.

Insurance Companies have to develop a real sense of social responsibility not just some hyped up marketing blurb about planting tress or paying to brand yourselves with Athletics and Football!

Insurance Companies have got to learn to be symbiotic and not Parasites on the State and it’s People! Restricting their profits would be a good place to start!

Related posts:

1. Insurance Companies buy more UK Government Debt
2. UK Car Insurance Rates Must Harden As Loss Making Companies Claims Reserves Run Dry!
3. Insurance Companies Blame 2009 Losses on Personal Accident & Bodily Injury Claims

There has been a mixed bag of results in the insurance world this week as a variety of insurance companies have announced how they have fared across the last year.
One of the biggest impacts on the industry was the phenomenal upsurge in the rising cost of bodily injury claims – partly as a result of the recession and partly due to the increase in claims farmers.

Kris Oldland gives Insurance Blog a roundup of the 2009 UK Insurance results so far……….

The insurance arm of part nationalised bank Royal Bank Scotland was heavily hit with profits collapsing by 90% with £448m reserves being set aside for bodily injury (BI) claims.
The group which includes Direct Line, Churchill, Privilege and NIG – posted a drop in net income from £584m in 2008 to £54m last year. Chief executive Paul Geddes claimed that considering their size and risk exposure, 2009 was always likely to be a tough year saying that being “twice as big as anybody else, when the market sneezes we catch a cold.”

Of course many of the major operators within the personal lines market were hit particularly badly by the rising cost in BI claims although RSA managed to reduce the damage to just £30m by taking early action to counter the rising costs.
UK Chief Exec Adrian Brown admitted that “The hit to our result is fairly small compared with some of the other numbers being thrown around.”
He added “When it comes to bodily injury costs, you have to be massively up to date on claims; they are one of the things you have to watch like hell when you are cutting expenses and headcount.”

Another company that felt the impact of rising personal injury claims was the specialist car insurance company Equity Red Star who had a strong full-year profit of A$113m eroded away by bodily injury claims. Insurance Australia group (IAG) who own the company put a statement to market that read “A lower margin of 6.6% reflected reserve strengthening for prior-year bodily injury claims and weaker investment returns, both of which have been felt across the UK industry.”

Meanwhile Allianz have grown their operating profit in the last year by 5% climbing to £203m in the last year while the combined ration improved from 95.2% to 92.9% despite the obviously tough trading conditions.
A large part of the success has been down to Allianz’s hard line stance on driving rate rises of 24%. Chief executive Andrew Torrance predicted more of the same in 2010 commenting that “It remains a priority for in 2010 to increase premium rates to a level that provides an adequate return on the cost of capital.”

Other insurers posting impressive results for 2009 were Amlin and Hiscox who both had strong years due in large to the reasonably benign hurricane season.

Amlin were able to post combined operating ratio improvement from 76% to 72% although their results were padded out slightly by £174.1m in reserve releases whilst Hiscox insurer tripled profits before tax from £105.2m to £320.6m, in what chairman Robert Hiscox described as a “vintage” year.

Another Lloyd’s insurer to triple profits in 2009 thanks to the kind hand dealt by mother nature last year was Brit who increased profits to £171m although an uplift in investment returns of £137.4m last year from £7.4m in 2008 certainly would of helped also.

……..So it looks like a lot of people will be seeking big bonuses?

Related posts:

1. Personal Accident viral marketing video
2. UK Car Insurance Rates Must Harden As Loss Making Companies Claims Reserves Run Dry!
3. 12800 UK homes repossesed in the first quarter of 2009

Here is an Advert from this weeks insurance news

Now that is Cheap!

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2. Recession Latest – House Prices Rise?
3. Insurance Companies buy more UK Government Debt

Unemployment is rising and you only have to drive a short distance to see hundreds of towns that relied upon local industries that have gone to the wall, with the ranks of unemployed growing on a daily basis!

We as a Nation are in the proverbial big time, the good news is so is everybody else!

Insurance in the UK is suffering big time in many ways too. Households are cutting back on items seen as luxuries and Insurance is often perceived this way. In particular home insurance and personal finance insurances such as income protection have seen their markets decimated.
As no mortgages are being given away and the recent furore over miselling, mortgage protection insurance has virtually disappeared as a product to be replaced by a more encompassing lifestyle protection insurance policy.

Car insurance is in trouble too, despite the fact that it is compulsory. Many underwriters have been asking for rate rises for nearly two years but the prices have been artificially kept down by the levels of competition brought in by the Internet insurance comparison sites or aggregators as they are known. Many major players have made substantial losses in the Motor market over the last few years and many have had to cut deeply into their reserves. This cannot go on ad infinitum, and prices must harden. This will inevitably lead to many suppliers leaving the market.
As for the car scrappage scheme – did that generate demand? Yeah for a couple of thousand Hyundais built in India and imported into the UK – Sheer and utter madness!

Commercial Insurance is the one area which has obviously taken a massive reduction in premium volumes as businesses go to the wall and very few new startups enter the market.

One thing we can be sure of it’s going to be a long cold winter, a change of UK Government won’t make the slightest bit of difference and by the noises coming out on ABC and CBS News recently is going to kick of Stateside long before it does here!

Related posts:

1. A Quarter of Home Insurance Policies Cancelled As Recession Grips
2. Unemployent to drag UK further into Recession
3. Nationwide gives false hope to housing market prices

PPI Should Have Been Included in Government’s Debt Management White Paper Says Burgess

Last week’s Government announcement that consumers are to get their own ‘champion’ in the form of a consumer advocate and benefit from a raft of measures to help them better manage their debts is to be applauded says Payment Protection Insurance lobbyist Sara-Ann Burgess from specialist firm Burgesses, but time will tell whether the theory works well in practice.

Braintree, Essex (PRWEB) July 6, 2009 — Last week’s Government announcement that consumers are to get their own ‘champion’ in the form of a consumer advocate and benefit from a raft of measures to help them better manage their debts is to be applauded says Payment Protection Insurance lobbyist Sara-Ann Burgess from specialist firm Burgesses (http://www.burgesses.com), but time will tell whether the theory works well in practice.

In its White Paper ‘A better deal for consumers – delivering real help now and change for the future’ – the Government is proposing to appoint an advocate who will raise awareness of national issues and represent groups of consumers in court to help them seek compensation and refunds.

It’s banning credit card cheques – blank cheques that are sent to card holders who are encouraged to use them as an alternative spending tool. These involve handling fees and contrary to credit cards, there are no interest free periods and no protection if something goes wrong.

Other debt-management measures include; preventing card providers increasing limits without their customers’ consent, launching a new online credit card comparison tool, courtesy of the Financial Services Authority, assessing whether monthly card minimum repayments are too low (and so allow debts and accrued interest costs to spiral) and reviewing high cost credit providers (50% + APR) who offer credit over the doorstep or via payday loans.

There are also plans to assist people who are at risk from rogue traders – they will be supported by a team formed to tackle internet-based scams and a review of protection for consumers who pay for goods but are not delivered due to the company going into liquidation.

“All of these recommendations sound great,” says Sara-Ann, “but unless the advocate has real power, he or she will not deter credit card providers from encouraging customers to plunge deeper into debt and it will probably take years to implement as there will be a consultation period.”

The Government predicts its advocate will be in post early next year, but concedes the appointee will have no legal power as consultation and a new law would be needed to allow this to happen.

Sara-Ann comments: “I’m interested to see how fast the Government will tackle rogue trader issues as it’s done little to address widespread mis-selling in the PPI sector for years. As a result of its sluggish response, consumers have sunk further into debt via prolific sales of single premium PPI, where the cost of the premium is included in the final loan amount and interest added onto both, complaints to the Financial Ombudsman Service have escalated, group actions are now being undertaken and providers have a free rein to increase their prices and restrict their cover.

“I wonder how long the White Paper review period will last for? The PPI sector has been under scrutiny for around four years now and the deadline for the Competition Commission’s remedial measures isn’t until April and October next year – some five years after the Citizens Advice Bureau first identified that features of the PPI market were seriously harming the interests of consumers.”

She continues: “Given the continued failings that have been allowed to occur within the PPI sector, I’m sceptical about how effective these measures and the role of the advocate will be. I hope I’m proved wrong and sweeping changes are made to stop consumers being encouraged to spend beyond their means, but I would equally like to see greater PPI mis-selling clampdowns and more advice on how to shop around for cover.”

Sara-Ann believes PPI is an effective debt prevention tool as it will repay monthly credit card bills for up to a year in the event the holder loses an income due to accident, sickness or unemployment and would have liked to see reference made to this product in the White Paper.

She concludes: “It only takes a couple of months of missed credit card payments to build up debts which is why this cover is so useful. Credit card providers should be pressurised into offering this cover free of charge to their customers or allow them to purchase at reduced rates.

“It’s a shame the Government didn’t consider Payment Protection Insurance in its measures to tackle indebtedness – instead it’s left to online independent providers such as Burgesses and British Insurance () to ensure quality cover is affordable and accessible to all. Premiums are calculated per £100 of monthly benefit and firms such as these two charge £1.90 per £100 for accident and sickness cover, £3.40 per £100 for unemployment and £3.90 per £100 for all three – well below other providers’ premiums.”

Anyone looking for Credit Card Payment Protection should opt for a policy that pays off all or part of the credit card debt, dependant on the amount of benefit purchased. Older-style policies tend to only pay a proportion of the total credit card bill, usually the outstanding minimum payment. “

……..and while we are on the subject of Credit Cards. Lord Mandelson – please bring the extortionate rates charged by the UK banks into line with the other forms of credit in the UK. The credit card debt is stopping the so called green shoots of recovery!

Related posts:

1. Understanding UK Payment Protection Insurance
2. Mis-Sold Payment Protection Insurance? Claim It Back Now!
3. Payment Protection Insurance Claims and Premiums Rocket