Euro On The Point Of Collapse - Victim Of A Trojan Horse?
If the Franco-German alliance fails to bail out the Greek debt then the Euro will most certainly collapse!
Mass Devaluation.
Cheap Holidays in the Sun!
Suddenly Europe will not be worth half as much as it was!
Worse still for the Euro Bankers is the fact that the amount of Greek debt appears unquantifiable due to some smart bookeeping by the previous conservative government who were incumbent for most of the credit crunch and the subsequent recession.
This is not going to impress those financial entrepreneurial illuminati who have their money tied up in the Euro and itchy fingers on the sale button!
Europe is supposed to be growing itself out of recession faster than the UK or USA.
Some say that this is a mirage and was a temporary bounce due to the Eurobankers encouraging consumer spending coupled with the christmas seasonal factor.
The overall trends appear to be down!
If the Euro collapses on the money markets, all participants will pay the price of the Greek tradegy.
I can already hear the British Euroskeptics say 'I Told You So!' as the Irish economy collapses.
So what will it mean for the UK and in particular the UK Insurance Industry?
Well Insurance Blogger thinks it could be a very good thing for the UK financial services industries as a whole.
After all when the Money markets sense a tsunami coming; the smart money always runs to the safest shores!
Of course the right wing euro-sceptics will claim victory in the advent of a Cameron led election victory; but the real praise must go to Gordon Brown and Barack Obama for not following the Euro pump priming recovery route.
UK Insurance Regulation Is Changing The Face Of The Market
In 2005, two years before the credit crunch, the British government imposed far reaching financial and structural controls over the UK Insurance Market by bringing the sale of General Insurance into the controlling hands of the Financial Services Authority, the FSA. Legal regulation and authorisation for the first time of the sale of UK personal lines and commercial risks.
Anyone large or small who wishes to market and sell the majority of insurance products in the UK must be authorised and regulated by this very large Quango.
Prior to this the UK Insurance industry was self regulated through professional bodies. Five years on, what has this meant to the way we buy Insurance as consumers in the UK?
The regulation has certainly had a large impact on the available distribution channels, with a contracting market and barriers to entry.
Although regulation came into force during a period of Insurance broker consolidation and aggregation coupled with skewed figures due to new entrants from the Internet, it appears that our old friend the high street broker is the one to have suffered the most.
The problem with metropolis style regulation is that there is no point having it unless you have enforcement.
The UK Insurance Industry likes to use the nice word compliance as a synonym for the cost.
This has breed a whle new industry in itself, outside of the additional thousands of pen pushing bureaucrats in the FSA.
Compliance, generating a whole new industry and wealth base....the compliance officer or consultant.
The problem is ... it hasn't generated any wealth has it?
Where's the money for all this compliance come from?
Out of the pockets of the Insurance companies involved!
And where do you think that money is going to be retrieved from?
Quite Right! Higher Insurance Premiums for me and You!
So what we initially thought might be a boring insurance story has turned out to be very intriguing.
What's happening in the world of compliance and Insurance Brokers?
we thought we'd catch up...........
Insurance Blogger Kris Oldland Reports...
Regulation and Compliance: FSA Fees a “burden on smaller firms” Says Institute of Insurance Brokers’s Bradshaw
I imagine that there are no small amount of insurance brokers out there at the moment wondering what on earth they have done to upset the financial authorities so much.
First we see her majesties wonderfully efficient revenue and customs chaps getting it completely wrong with Insurance Premium Tax and piling unnecessary and unwarranted taxation on the broking sector. Probably too busy trying to doubling erroneous tax bills to pay to much attention to what the role of the humble broker is.
But like the pantomime baddy that tries to steal every scene in the show in wade the FSA to show these clowns in the HMRC that when it comes to completely missing the point and costing brokers a lot of time, money and emotions – they have the market cornered by proposing a minimum regulatory fee of £1,000.
As they have done so many times before they really seem to have tried so hard to do the right thing but somehow just managed to get it so wrong. The move to review the fees and levies structure is the correct thing to do, but it needs done in a considered and intelligent manner.
When will the FSA understand that sometimes a one size fits all approach to all things financial just doesn’t work. Sometimes that square peg just won’t fit into that round hole – no matter how hard you smash it with that sledge hammer.
Well they’re in trouble now because Barbara Bradshaw, chief exec of the IIB and defender of the humble broker has the FSA in her sights. For the record I think that Barbara is a wonderful and very likeable lady, that said I wouldn’t like to get on the wrong side of her either, she is also a very powerful and determined lady who strikes me as being able to achieve anything she puts her mind to.
Referring to the proposed minimum fee as ‘totally disproportionate’ Bradshaw went on to comment that the fees were likely to become a major ‘burden for the smaller firms’
She added “While we welcomed the FSA's commitment to review the fees and levies structure, we're nevertheless concerned that the proposals really do penalise the smaller broker. The FSA's proposed fee structure means many smaller brokers could face up to a 200% increase."
Showing a complete lack of understanding for the complexities of the broking community as well as fundamental disregard for the smaller brokerages the FSA have claimed in their consultation document ‘Regulatory fees and levies: policy proposals for 2010/11’ that "These proposals simplify and significantly increase transparency as it is clear what the minimum fee covers and why”
The document goes on to later state that the new system will “be fairer as the basis for calculating it will be the same for all firms." Again they are so close to getting it right aren’t they? Again the theory behind it sounds like it is ticking all the right boxes but the delivery is just far too heavy handed.
The biggest worry is if we get rid of this incompetent lot, who are on earth are we going to get to replace them? Part of me would say that its better the devil you know. Perhaps if they just started listening to people like Barbara, Eric Galbraith or even god forbid a few insurance brokers, they may actually be able to make the leap from having good ideas to actually doing some good? But can we afford to give them the time to learn from there mistakes when their mistakes are costing us so dearly?
Public Sector Employees Facing Redundancy Should Consider Unemployment Insurance
With the recession officially over and 0.5 percent growth in the last quarter of 2009 you might be fooled in believing that unemployment is a thing of the past.
The grim truth is that every day up and down the country people are still losing their jobs in the thousands.
For the Public sector this must be a worrying time. Whoever gets into power come the elections in May, will make public sector job cuts their first priority in order to reduce the massive National debt accrued by so called quantitiive easing.
Civil Servants need to ACT NOW! if they are to protect themselves from redundancy come the Summer of 2010.
Dennis Haggerty Fellow of the Chartered Insurance Institute (FCII) from lifestyle protection company iprotectinsurance explains.........
Up until now, Public Sector jobs have largely escaped the ravages of the recession. Although for Defence related jobs, budget cuts have already begun to bite. Because of this, many Mortgage Protection and Income Protection Insurance providers are currently turning down applications from people who work in the Defence industry, believing they now represent an exceptional level of risk. What is meant by risk? The Underwriters think in terms of the number of redundancies made by a specific employer proving much higher than average. The same view is taken about people working for several Councils currently implementing staff reductions.
"Therefore, it is probably the last chance for the majority working in the Public Sector to buy this type of insurance, before the deep post election budget cuts begin."
State benefits are pitiful compared to the real cost of living for the average family or young couple living in the UK today. When denied their ability to earn a living wage by accident, sickness or unemployment, everyone needs money to fall back on. The fortunate have savings, however the majority will find themselves in real financial trouble within weeks. Research published in 2008 established that most people of working age have less than 2 months wages saved, with 25% reported to have nothing at all. This applies equally to Public Sector employees. Therefore, having an insurance policy that covers all important bills whilst out of work, makes a great deal of sense. For those that need this insurance, get it now before the Underwriters say 'no thanks' to all Civil Servants, Local Authority and Health Service employees.
For anyone employed full time (at least 16 hours per week) in the Public Sector and where there are not any reports of any impending threats to jobs, it would be prudent to consider getting a quote right now. If a Government Department or Council for example, has made an announcement regarding cut backs, a recruitment freeze or layoffs, it is probably too late to buy this cover. Without any doubt, now is the time to get a low premium deal, rather than wait for this cover to rocket in price, or applications to be simply denied altogether.
Even those who already have this type of insurance, perhaps just covering a mortgage or a single loan, should check if they have sufficient benefits. For working couples, particularly where the main wage earner is employed, say, by a Local Authority, it could be prudent for them to take out additional low cost cover whilst it is still on offer.
Mortgage Payment Protection Insurance (MPPI) is designed to cover monthly mortgage payments and can usually be increased by up to 25% to contribute toward other expenses related to the home.
Income Protection Insurance (often called Lifestyle Protection) is very similar to MPPI, however it is designed to replace the majority of net income if the person insured is unable to work. As it pays out for up to a year it is more accurate to describe this as short term income protection insurance. It is not limited to mortgage repayments. However many providers cap their maximum monthly benefits at £1500, some £2000. It is rarely more because the Underwriters make the assumption this would be enough for most buyers to pay their monthly bills.
Most buyers tend to be only be interested in unemployment cover in the mistaken belief health related benefit is less important for them. However there are relatively few providers of unemployment only cover and frequently their competitors will offer full Accident Sickness and Unemployment cover for less! More importantly with 2.4m people in the UK claiming Disability Benefit (Dept of Work and Pensions 2008) the risk of health related claims is greater than many think.
The best rates are available on line where Income Protection and Lifestyle Protection Insurance can be bought without the expense of telephone sales or high commission to inflate the price. Moneysupermarket are a good source of comparison quotes, however the summary of cover should always be read very carefully to ensure what each provider offers for the price, really is like for like.
A web based comparison service is provided by the FSA. This is entirely independent and not trying to sell anything. Their tables also include quality measures, although as a result they are quite complex and therefore not easy to use. However they represent a good place to research a shortlist of suppliers to compare quality as well as price.
Applying for Income Protection, Mortgage Protection or Payment Protection Insurance on-line is a great way to save money. However the acceptance criteria applied by different underwriters varies. If applying on-line does not work out, it may simply mean the applicant is one of many who need advice regarding what to buy.
There's been a lot of positive talk in the UK housing market over the last few days or so........Onward Christian Soldiers.....
Relaxation of the credit stanglehold?
Total net lending to individuals rose by £0.3 billion in October. The twelve-month growth rate fell to 0.7%, and the three-month annualised growth rate increased 0.3% to 0.5%, according to new figures from the Bank of England.
Money for New Mortgages?
The value of building society mortgage approvals in October was £1,511 million - broadly in line with the £1,565 million of approvals in September according to new figures from the Building Societies Association.
Gross lending also remained steady with £1,666 million being lent in October compared to £1,605 million in September.
Within the total, net lending secured on dwellings increased by £0.9 billion, in line with the September increase and above the previous six-month average of £0.6bn. The twelve-month growth rate was unchanged, at 0.8%. The three-month annualised growth rate increased 0.4 percentage points to 1.0%. Within total secured lending, secured lending by banks (excluding the effects of securitisations) increased by £3.1 billion, slightly below the September increase (£3.3bn) but above the six-month average of £2.6bn.
The number of loan approvals for house purchase (57,345) was above the September figure (56,205) and above the previous six-month average, whereas approvals for remortgaging (24,596) were below both the September figure and the previous six-month average.The number of loans approved for other purposes (29,195) was higher than in September and higher than the previous six-month average.
Credit Cards - Britains 'Secret' loan sharks!
Consumer credit fell by a net £0.6 billion, below the previous six month average of -£0.1bn. Credit card lending increased by £0.1 billion and other loans and advances fell by £0.7 billion. The annual growth rate of consumer credit continued to fall, to -0.1%; the three-month annualised growth rate fell to -2.2%.
Housing Market still in Cheyne-Stokes
House prices grew by 0.2% in November according to the latest national house price survey published by Hometrack, the housing intelligence business - the fourth consecutive increase in prices, bringing the year on year rate of house price growth to -2.9%.
Commenting on this month's survey, Richard Donnell, Director of Research said:
“There are three distinct elements to the latest results from this and other recent surveys. This first is that prices continue to post month on month increases. The second is the extent of prices rises across the country and the number of households who have seen an improvement in market conditions over 2009. The third, and most important element, is the short term outlook for prices.”
“This is the third consecutive month that the survey has posted a 0.2% price rise. Add to this a growth in sales volumes and it is easy to see how agents are beginning to feel more confident about sustainable pricing levels - at least in the short term. But this pick up in market activity and prices is not one that has been felt across the whole country. The stark reality is that there are large swathes of the country where prices have remained unchanged or have seen continued price falls.”
Over the last 6 months London and the South East have consistently seen the largest number of postcodes registering price rises - values are up across 78% of London and over half of the South East. Yet in five regions less than 20% of the market has registered any price rise.
Personally I see nothing in these indicators to warrant any change of course by the Bank of England regarding Interest Rates.
It is quite clear however that the money invested by the British people into the Quantitive Easing 'project' is clearly designed to line the pockets of those within the system where the money will not 'trickle down' into the general money supply.
The credit strangulation of SME's and individuals is as bad as ever!
Government Transport Policy set to increase Car Insurance Rates
The British Government although to be applauded in some social areas, seems to have totally got things wrong with it's policies towards infrastructure, and those policy relationships with transportation, movement of goods and people and subsequent business development and economic growth.
Anybody who has been stuck in a gridlocked traffic jam on the M25 while trying to get to a work meeting...will know exactly what I mean. Yeah and they don't exactly provide roadside toilets (latrines to you guys over there), and what with all the closed circuit TV cameras covering every bush....!
Now I'm not one of those who would like to see less cars on the road, in fact, like J Clarkson I'd like to see more - on a lot more, better built roads and motorways. And I'm certainly not advocating that you vote for Cameron and his policy less party!
The man would have us all on pushbikes!
But the latest announcement of UK Government transportation policy in mid week, borders on economic and social lunacy and demonstrates that the mandarins in Whitehall have little understanding of causality and it's consequences, and it logically follows that their plans, if they actually have any, lack any inherent vision.
What am I talking about? Why? the stupid decision to slap a minimum £22 tax on every seat on most domestic flights within the UK! In some places like Cornwall this is in addition to an Airport development tax that all departing passengers must pay. With all the additional charges like parking or taxis the combined effect will obviously be to push traffic back onto the roads, increasing risk and ultimately Your car insurance premiums.
It's not like it's easy to travel domestically anyway, with the ridiculous security checks and the threat of fifth columnists, you can't even get a decent cup of tea or have a smoke in the modern departure lounge that mostly resembles a scene from Phillip K Dick's BladeRunner.
If you restrict the movement of people and goods you are restricting economic growth!
There are some exceptions to the ludicrous tax! if you live in the Outer Hebrides you won't have to pay the tax. This is obviously an area where the Scottish run UK Government wants to see some development!
The Bank of England has just announced that the latest efforts at so called Quantitative Easing involves the injection of another £25 billion of made up money in the circular flow of money system, which means that since the recession Britain has generated £200 billion of made up debt!
So Where's the money gone? And what is Quantitive Easing anyway
It turns out that QE as the press now like to call it, is radically different from the Pump Priming developed by FDR in 1930 to get the States out of the Great Depression!
And this explains why you and me, the small and medium sized enterprise and it's workers are not getting any credit or money!
Truth of the matter is QE is designed to shore up the internal arteries of the international banking system and not leak any money out. To leak money by the creation of credit to the general public and increasing the money supply would introduce both inflationary and currency exchange pressures that would be far from welcome in the current economic climate. So here is how QE works - The UK Government decides to make up some more cash to shore up the banking system. It creates £25 billion pound worth of bonds that it says you and me will repay! It then instructs the Bank of England which sells them to Banks. They make a nice profit by selling them onto - have you guessed it yet?
Yes 95% of the guilts and bonds go to INSURANCE COMPANIES! Very little money is being released to the public system.
It just means that today the Government decided that You, Me and Everybody! - in the UK, now owes another £25 billion of made up money plus the made up Interest, to Aviva et al.
So QE cannot have any beneficial effects to the likes of you and me, Joe Public, except the potential ability to stave off a second wave of recession by keeping the banks ticking over!
Pump Priming conversely is a 'lets spend our way out the crap' solution which would only work in the UK if the money is diverted into the public sector.
Why just the public sector? Because only large national institutions have enough employees to spread the money to all parts of the system before it returns to the investment banks.
Like all system solutions they have to be top down and bottom up!
The recession will not come to an end in this country until we start pumping it into the bottom!
Payment Protection Insurance - Barclays Challenge Government ruling
Barclays scupper plans for PPI reform
Plans to restrict the sale of payment protection insurance (PPI) at the point when loans or mortgage are granted have been set back following a successful appeal by Barclays bank. The Competition Appeal Tribunal has now been forced to instruct the Competition Commission to back down from its plan to ban PPI sales such as mortgage protection insurance, at this point of the transaction. The Commission released a statement commenting that it would study the judgement closely before deciding what course of action it would take next. In a carefully worded statement however it was made clear that it was only this one small part of their strategy, to make choices clearer for consumers, that was being affected.
A spokesman for the commission commented "The appeal was upheld on one ground which relates to our assessment of the remedy prohibiting the sale of PPI at the point of sale of credit,” before adding that it was because The Commission had been asked to “reconsider the loss of convenience for consumers of not being able to buy PPI at the same time as taking out credit."
Intended to allow consumers a cushion for repayment of their credit cards, loans or mortgages should they fall ill or lose their job, PPI has been a bone of contention between insurance companies and banks and finance companies for some considerable time. Early this year the Commission outlined a range of limitations on the sale of PPI with some commentators claiming the lack of competition in the field has led to “persistently high prices”. The Commission had stated that from October 2010, lenders would be unable to initiate a sale of a policy for up to 7 days after granting a loan to combat the “point of sale” advantage that the lenders had gained.
However after challenging the Commission’s plan on four separate grounds – three of which related directly to the point of sale restriction, Barclays have successfully convinced a tribunal that putting this plan into place could put customers who actually wanted to purchase cover at a disadvantage.
Referring to the plans laid out by the commission as a “remedy without consent” the Tribunal concluded that the Commission had failed to take into account the “loss of convenience which would flow from the imposition of the point of sale prohibition”. The Tribunal also added that it was this “constituted failure to take into account a relevant consideration” that meant that the Commission would need to revise its plans once more.
However the overhaul of how PPI sales are regulated is still continuing at a rapid pace as complaints from consumer organisations and those who believe they have been mis-sold PPI grow exponentially. This year alone we have already seen the FSA tell banks and other financial institutions to compensate those who may have been mis-sold policies, re-open the 185,000 old complaints that have been dismissed, and stop selling the much criticised single premium PPI, whilst companies offering help and advice to claim back fees spent on mis-sold PPI has practically become an industry in itself.
Referred to as a “protection racket” in some corners of the industry due to abnormally high cost policies being sold to people who can’t actually make a valid claim under the terms of their agreements PPI providers added excess profits of £1.4bn to their coffers in the heady days of 2006 when the Competition Commission first began making enquiries into the sector.
As Martin Lewis of financial advice website moneysaingexpert.com succinctly commented “Bank-based PPI is a near con - it's hideously over-expensive, billions of pounds of it have been mis-sold, and the sooner it's cleaned up and cleared out the better.”
At a time when public faith in the entire banking sector is at an all time low how the public will react to this further delay in cleaning up what is a tainted section of both the banking and insurance worlds’ remains to be seen. However, the general consensus amongst financial commentators is again echoed in Mr Lewis’ comments "It's a shame Barclays has succeeded in using its lawyers to delay the implementation of such an important ruling"
Whether they have stemmed the tide for good, or as Mr Lewis suggests have simply delayed the inevitable is uncertain, but for the time being the Bank’s are refusing to let this go without a fight.
Kris Oldland
------------------------------------------------------------------------------ WARNING DO NOT BUY PPI FROM A BANK - EVER!
Insuranceblogger urges consumers to shop around and buy mortgage protection insurance from independent suppliers after they have researched the market. The point of removing PPI sales from mortgage and loan sales was to stop the consumer from being pressurised into buying overpriced products to secure the loan.
Once again a bank, admittedly not one overly involved in the toxic debt fiasco , but one intricately involved in the collapse of the banking system by it's failure to step in and rescue Lehman Bros. (until they had collapsed and they cherry picked the best bits!), is allowed to dictate to Parliament and interfere with the due process of consumer law! Insuranceblogger recommends checking out alternative protection products such as Lifestyle Income Protection Insurance which has wider covers and is not tied to any particular lump sum debt.
Vauxhall Insurance not to become a classic - Thanks to Peter Mandelson
Working in Car insurance it's really quite sad when a famous marque goes to the wall.
It's even sadder when it's a British one!
So it's great news that Vauxhall Motors will not just be appearing on the classic car insurance list in the future!
As a kid I remember my first ride in a vauxhall viva and later buzzing around in my mate's Astra sri and later still in an excellent Vauxhall Cavalier 2.0 company car provided by General Accident. I've never actually owned owned one... hey! but I love Aston Martin's as well....
And it's good news for Bedfordshire too!
The company and it's 5000 workers, whose long term future has been in doubt since General Motors sold off the European Division to Canadian Company Magna earleir this year, appears finally to received the assurances that the German Division Opel Motors received on day one of the deal! The jobs are safe for now!
As late as Monday, the future of the deal was still hanging in the balance as the British and Spanish governments threatened to wreck the sale because it favoured GM Europe's Opel plants and workers in Germany.
The outcome appears to be a triumph for ministers, led by Lord Mandelson, the UK Business Secretary, in the face of what seemed to be a done deal between the government of the German Chancellor Angela Merkel and Vauxhall/Opel's US parent company, which was itself recently restructured. Such an arrangement would have fallen foul of EU competition rules.
Yesterday, the GM chief executive Fritz Henderson said it was "quite possible" that the deal would be signed this week.
Dark Lord Peter Mandelson said: "We now have a much better outcome than we originally had, but we still have some way to go in agreeing the financing of this and that's what talks will be continuing about."
GM will sell a 55 per cent stake in its former European operations to Magna, with €4.5bn in loan guarantee from the German government.
Maybe Peter Mandelson does carry as much clout as Angela Merckel?
Since his early summer Sunday morning trashing of that Andrew Marr bloke, Lord M has gone from strength to strength....
PM would make a great PM.....
And we might actually have somebody English leading England's 2018 Football World Cup Bid!
FSA orders GBP 60 Million Mortgage Protection Insurance Repayments
More than a million UK householders are to get refunds on their recent mortgage protection insurance monthly payments, after the City watchdog, the FSA, forced PPI providers including giant firms such as Aviva and Abbey; to pay back over GBP60 million in increased Mortgage Protection Insurance premiums, which were slapped on already cash strapped mortgage borrowers earlier this year. Over 2.1 million UK consumers have policies to repay mortgages and loans with accident, sickness and unemployment insurance attached.
The major UK money lenders have had over 10 years of collecting premiums on inflated house prices, with very few claims. But with claims now rising due to the recession, they've been recently hiking up the rates on many of these policies to maintain their profit levels.
The Financial Services Authority (FSA) and Mortgage Payment Protection Insurance (MPPI) firms have agreed an industry-wide package of measures for consumers, including refunds of around £60 million.
The industry has acted in response to FSA concerns over recent increases in premiums and reductions in what customers are covered for under their policy. The FSA’s concerns centred on the terms permitting these changes, and how clearly they were disclosed. The FSA expects its concerns to be addressed by the agreement reached. Following discussions initiated by the FSA with relevant trade bodies and some firms, the industry has responded positively by agreeing to:
• proactively refund increases in premiums, and reverse any reductions in cover, for customers who have experienced these changes to their policy in 2009; • offer to reinstate policies where a customer had cancelled it within two months of an increase in premium or reduction in cover made during 2009; • freeze premiums and cover for existing customers for at least the remainder of this year • amend Mortgage Protection Insurance contracts to ensure that all customers are made aware of the circumstances in which firms have the right to vary premiums and cover.
New contracts will mean customers get a fairer deal with two months' notice of any changes to enable people to compare mortgage protection insurance products and switch mortgage protection if necessary.
Jon Pain, managing director of supervision at the FSA, said:
"The FSA welcomes this positive move by Mortgage Protection Insurance firms to reverse recent changes in premiums or cover which will put affected customers back in the position they were in before the policy was changed. It will also give all MPPI customers clarity about when and why firms will be able to vary these in future. "This clarity will provide the basis for MPPI to remain a valuable option for many mortgage customers who wish to take out protection, alongside the mortgage commitment they are taking on." The affected companies will contact customers if their policy is affected, and will make all refunds by the end of June 2010.
The Consumer Panel has also welcomed the announcement today of FSA action and an industry-wide refund on Mortgage Protection Insurance. Adam Phillips, Chairman of the Financial Services Consumer Panel, said: “This is exactly what a financial regulator should be here for and we applaud the FSA’s action. It cannot be right that firms change the terms and conditions of an insurance policy just as times get hard and when people are more likely to try to claim on it. We note that this agreement is to freeze premiums and cover for existing customers until at least January 2010. We will be watching to see how the FSA ensures Mortgage Protection customers continue to get a fair deal beyond this date. Significant changes to cover go against the whole principle of why people pay for insurance and undermine consumers’ trust in the industry.”
Unemployment Insurance has hit the headlines recently, mostly due to a rise in demand due to the recession, but also due to misselling of payment protection accident, sickess and unemployment insurance and the subsequent flood of claims.
As a concept the first type of Unemployment Insurance available in the UK was created by the Liberal Goverment of Lloyd George with the passing of the National Insurance Act in 1911. The bill was introduced mainly to protect the two point five million workers in manual trades who along with their employers were required to pay into a central fund to cover the claims. The payments were calculated on a sliding scale up to a maximum of seven shillings a week. The cover period for which claims could be drawn was limited to one fifth of the period of contributions. In other words you had to be in work and paying contributions or premiums for five years before you would be covered for unemployment that lasted a year. The unemployed who did not qualify for cover or who had not been in work long enough had recourse to the Poor Law authorities which inevitably at this time still meant the workhouse for many unfortunates.
High premiums and poor cover, not a very good effort for the first Government led insurance scheme, but it did offer some protection to those in work, and coupled with the social change of the Edwardian period led to a new sense of Government social responsibility and a working class mentality that became the foundations of the Labour Party and eventually led to other social provisions such as the NHS.
This National Unemployment Insurance scheme proved to be inadequate to provide for the large numbers of unemployed and returning demobilised military, that followed the end of the First World War in 1918.
A temporary scheme of unemployment relief was designed to combat the suffering, which was known as the 'Out of Work Donation'. This enabled a much larger payment of 29 shillings a week for men and 24 shillings for women to be made to claimants, with additional allowances for dependents, to most adults who registered as unemployed. This was available for a strictly limited period, but the Government was forced to grant extensions as more and more servicemen were demobilised. In 1920 the Unemployment Insurance Act was passed amid an mini economic recovery. The Act extended the provision of the 1911 Act to most workers earning less than £250 per year. The period in which money could be claimed was shortened to one sixth of the period of payment contributions and for the first time a maximum cover period, during which benefits would be paid was set to 15 weeks.
The UK Economy changed radically for the worse early in 1921 and by the middle of the year unemployment exacerbated by the coal strike, was close to 20 per cent. Under these conditions, the contributory system and the one in six rule were untenable given the threat of political instability and civil unrest among the unemployed.
The Unemployment Insurance Act of March 1921 relaxed the 'one in six' rule by providing for the payment of 'uncovenanted' benefit without previous contributions. The intention was that benefits would be paid for a maximum of 32 weeks. The 1921 Act also introduced for the first time what were effectively 'policy conditions' a 'seeking work' test for those claiming benefit. Claimants had attend a labour exchange and show that they were genuinely seeking work and were obliged to accept any work paying a 'fair' wage - whatever that means!.
In February 1922 further conditions were introduced by way of a means test, aimed at restricting benefit payments. Some groups, such as single adults living with relatives, could be excluded unless it would cause serious hardship.
So what has gone wrong with the system of Nationalised Unemployment Insurance?
Jump forward sixty years to 1979 when Margaret Thatcher duped the nation into electing her with her infamous Labour isn't working campaign...
...only to return Britain to the largest number of Unemployed since the 1920's.
Under the Conservative Government of the 1980's the number of claimants for unemployment insurance far outweighed the resources being paid into the risk pool. Civil unrest spread to every corner of the country in 1981 as the great unemployed sought vengeance on the Tory elite. Unemployment Insurance now had to cover many millions who had never contributed to the system, not just those who had worked all their lives and paid their premiums. Fortunately for Mrs Thatcher she was able to pay for her mismanagement by squandering the proceeds of North Sea oil and keeping most of the nation at subsistence level.
So little had changed in sixty years. Out of this mess in the late 1980's was born a new private market for mortgage protection insurance for unemployment, aimed at the new home owing working classes and middle classes; and initiated by the banks and building societies, primarily to ensure that their mortgages got paid should the home owner lose their job. Most of these policies were flawed in their design and have been subject to recent criticism leading to the mis-selling findings by the Competition Commission and large fines by the FSA.
To counter this the insurance industry came up with an income protection policy designed to protect the insured against unemployment for a fixed period and a fixed amount commensurate with the level of premium. National Unemployment Insurance still exists in the form of job seekers allowance or income support whatever they wish to call it, today pays out very little, is still means tested although everyone has to still pay 'national insurance' contributions and has an excess period of 13 weeks before you can claim.
One thing that hasn't changed in nearly 100 years is that, if you are unfortunate enough to become unemployed - you can't rely on the Government to cover you! In the current recession it is wise to protect yourself against unemployment with income protection or lifestyle insurance. Very reasonably rated polices are available from independent suppliers such as Personal Accident.
Health Insurance and Care Abroad - Get Travel Medical Insurance!
Reading a blog post today from my Health Insurance Blog Blogger friend, got me thinking... "You don't know how lucky you are" My parents used to say to me about going to places on exotic holidays... Their parents would have likely said the same thing to them about the National Health Service - as kids they would have remembered their parents having to pay for the doctor on an ad hoc basis!
You never miss it until it's gone, or more importantly you don't notice it until you have to pay for it, and in the case of medical and health insurance at this holiday time of the year, it's yet another necessary cost of holidaying abroad.
Watching the news and the debate going on in the States about the health care reforms proposed by the President, that are being made out by the Media to be dividing the Nation....you can't help but laugh when you read that the right wingers are using the NHS system as an example of everything that could go wrong with a nationalised healthcare insurance scheme. I can't wait to see Barack Obama's camp stand up and defend the NHS as the example of a health care system that all countries should be following!
Barack Obama is the Good Samaritan for US Health Care
Most of us are used to some type of health insurance in the the UK despite the existence of the ubiquitous free for all NHS.
In fact most UK citizens have purchased private medical insurance at some time or another!
Yep! surprising isn't it! But because we all travel we are probably as well versed in the vagaries of the medical insurance section of our travel insurance policies as we are with our compulsory car insurance!
Since the 1970's Brits have regularly bought medical insurance for their two week jaunt to the Costa del Sol and very many have had to claim and seen the workings of a foreign privatised health care system in action.
It is only then that we see the true worth of our NHS, when we have to participate in the bureaucracy of a claim when sick. We also get to see the standards of foreign care at the coal face! Still, the good news about those sorts of health insurance covers found on a travel policy is that they will always repatriate you to good old Blighty and the awaitng NHS.
Most Brits like to visit our cousins in the United States. This is when we come face to face with the fact that health care is not homogenous, especially when it comes to availablilty and more importantly - price! Those travel insurance insurance policies suddenly treble in premium and all those exclusions to cover such as pre-existing medical conditions suddenly become real concerns....the same sort of concerns that face the average American daily!
Even with Insurance - you don't wan't to get ill in America. You especially don't want to get ill for a chronic amount of time - all health insurasnce policies have strict limits of liability! What if the money runs out?
In the Land of the Free there is no human safety net! (if you can't pay)
Charles Darwin would have loved it!
Remember the parable of the Good Samaritan?
From the right wing noises of middle american rabble rousing grannies shouting on about abortions and illegal immigrants that we see every night on CBS and ABC news ..... I don't think so! Try Luke!
Well you all go to church on Sunday dressed up in you finery, or is that just Hollywood agitprop to satisfy the lunatics of the Bible belt?
So step forward Barack Obama, determined to bring some social justice to the cities and peoples of America. The Good Samaritan who refused to walk on by on the issue of Health Care.
From the looks on the faces of those church going grannies and their militia sons who are dressed up for Afghanistan, and their kids dressed up like neo cons from The Matrix.....I just hope you're wearing extra strong Kevlar Barack, because in some parts of your divided nation that's the only healthcare you will need!
Recession still to bottom out as UK Insurance Industry Suffers
The pundits in the housing markets often seem to be singing from a different songsheet when it comes to what's really happening in the UK economy. One minute we hear that repossessions have dropped in comparison to the first quarter of 2009, and that house prices are rising, but this is surely industry sales talk. Fact of the matter is house prices haven't reached anything like the levels needed to stimulate a National recovery and movement in the market. Mortgages are very difficult to come by and often require up to a thirty percent deposit. Those lucky ones on tracker mortgages are praying every month that the Bank of England doesn't put up interest rates, otherwise many of them would bejoining the ranks of the reposessed! Credit in general is non-existant, particularly in the Car Finance sector, and the credit card companies with their extortionate rates are only interested in recuoperating lending and tightening the national screw further!
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!
Health and Wealth! Isn't that what eveyone drinks to? A look at UK Health Insurance and National Wealth.
Britain was still reeling from World War Two when the National Health Service was launched in 1948, sweeping in an era of social change and expectation. Gone were the days of ‘bring out your dead’ if you couldn’t afford to pay. Despite many changes over the sixty one years and its recent flirtations with Private Health Insurance companies, the so called postcode lottery system and other structural difficulties, the NHS has remained true to the ethos of access for all. No system is perfect and spatial differences in levels of access and quality of care still need to be radically addressed.
In the UK when the National Health Service was finally implemented in 1948 as part of Labour Prime Minister Clement Attlee's 'cradle to the grave' welfare state. A nationwide system of free healthcare was finally launched by Aneurin Bevan the then Minister of Health, which promised us access to health care cover and treatment for all. The cradle to the grave speech mentality had set the standards for social healthcare and access to treatment for all. To date, despite its recent structural changes, and despite the healthy criticism and debate that the subject of the NHS always brings, if you look at the system in performance and social cohesion you have to say that it appears to work much better as a form of national health insurance than do comparative systems in so called developed countries. This development in healthcare is always a subject of great debate in the lead up to a General Election, and no doubt will take greater stage in the months to come
Everyone working in the UK has to pay National Insurance contributions as part of their income in order for the system to work, and facilitating everyone in the UK with medical cover. However National Insurance contributions are not a good solution for a number of reasons. They increase the costs of labour. By definition this makes them inflationary. The costs of production are passed onto the populace en masse The contributions are by no means equitable Many sections of the population are able to virtually opt out of the contribution system The NHS is heavily subsided by the tax contributions of the healthy and wealthy forty percent plus payers.
Whether the United States Government is able to take what could be seen as a major left shift to achieve better social cohesion and consequently improved GDP, remains to be seen. Are the workers prepared to subsidize the shirkers and the misfortunate? There needs to exist a situation both economically, socially and mentality, of desperation and hope that existed in the UK in 1945, in order to see a fiscal response to the current situation, biting the healthcare bullet that the USA is so afraid to bite. Providing the ultimate National Safety Net!
The States is in the difficult situation of how to deal with chronic sickness, the recession, the role of PMI as an underwriter of GDP and the political influence and lobbying power of the large Health Insurance companies. Rather you than me Barrack!
Gordon Brown should note that Private Health Insurance became one of the first things people were encouraged to buy when her who’s name shall not be spoken came to power in 1979.
Payment Protection is the solution to National Debt management
InsuranceBlogger was calling for an overhaul of the way the Government manages unemployment back in November last year. The recent global economic events have seen record levels of unemployment in the UK. Now one of the UK's leading experts on the cost of Unemployment and lobbyist for the prevention of the mis-selling of Payment Protection Insurancehas stepped in with some interesting comments....
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!
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