The Association of British Insurance companies, the ABI, has issued a statement clarifying the position of Insurance and Claims for Riot Damage.
The ABI warn…..
On current estimates insured losses and damage suffered by individuals and UK businesses are likely to be well over £100 million.
The ABI has reassured customers that they are covered for riot damage under their home and business insurance and claims will be paid by their insurer as quickly as possible. People with insurance should claim directly from their insurer as soon as they can.
Riot Damages Act 1886
When a riot happens a statutory police compensation scheme is activated to provide compensation to organisations and individuals for losses that they could not possibly have predicted. This compensation scheme has existed on the statute books since 1886 with its operation having stood the test of time for the last 125 years.
The scheme means that people who are under insured or do not have insurance have somewhere to go for compensation and redress.
Other organisations, including insurers, can claim under the scheme for money they have paid out to their customers for loss and damage they have suffered as a result of the rioting, although insurers will themselves be liable to pay for business interruption losses, which are not covered by the scheme.
The scheme means that people do not have to pay higher premiums every year to insure their home or business because of a riot which may only happen once every thirty years.
For example, shopkeepers in Tottenham have still been able to get insurance, despite events in 1985, and have not had to pay extra because the police compensation scheme gives individuals and organisations, and their insurers, certainty that costs of the unexpected will be covered.
Contrary to some reports, neither the Home Secretary nor the police need to designate the events as a “riot” in order for the police compensation scheme to be activated. The law sets out a range of criteria for this, for example the number of people causing a disturbance.
Extension of Claims Period
The ABI met with the Home Secretary on Tuesday and have written to ask her to extend the claims period to the police compensation schemes from the usual 14 days to the maximum 42 days to give people the time they need to fully assess the loss and damage they have suffered and properly submit their claim.
Insurers’ priority is to support people affected by the riots in London and other major cities, and people are urged to contact their insurer as quickly as possible to start discussing their claim. Many firms have 24 hour helplines and are on hand with support and advice.
David Cameron has just finished speaking for 165 minutes on the riots in the House of Commons, and has confirmed that the ABI’s request will be met and the period extended to 42 days.
Mr Cameron also stated that the Riot Damages Act provided ‘unlimited’ funds for those affected by riots and both the Treasury and the Home Office would provide the financial support for claims against local police authorities.
The impact of riots on the community can have long-lasting and unforeseen effects.
Riots may not last very long, but the time to put a community back to where it was takes a lot longer.
For a business or property owner the work ahead can be daunting.
The actual damage to each premise needs to be accessed and repaired.
This can take time and may depend on whether adequate insurance was taken out to cover the damage.
If adequate insurance is in place insurance companies need to access the damage.
Putting Things Right
There maybe damage to the property, injury to staff, residents, tenants and owners.
Tenants maybe homeless. New temporary accommodation needs to be found.
Loss Adjusters need to be appointed to look and access the damage and give authority for repair work to commence. Quotations from repairers have to be given and of how long and when work can commence once agreed.
Immediate remedial damage may need to be repaired eg windows boarded up, broken glass cleared, any unstable structures removed .
Removal of goods not stolen need to be placed in a secure area to avoid further loss. Further accommodation and storage space may need to be found.
Vehicles may need to be hired if transport or commercial vehicles have been damaged. This can also delay work be carried out if contractors have damaged vehicles as well.
Evaluating Business Continuity and Business Interruption
Shop keepers and property owners have to decide if they can continue to trade and should ask themselves the following question:
Is the structure safe?
Do they have still have goods to sell?
Is there chance of further rioting?
If thieves have raided the shop will new stock have to be ordered?
How long will the stock take to deliver?
Are supplies of gas, water and electricity working ?
Have staff been injured or mugged?
Can staff get to and from work?
Are staff involved in the riots in any way?
Have they been arrested or injured?
Will they need time out because their homes have been damaged?
Are there any customers or are they too scared to enter the area or have police closed the area?
Claim
If you have been affected by the riots it is imperative that you contact your insurance company immediately to pursue a claim. If you do not have insurance but have been affected and have suffered loss, visit your local police station and report the incident and inform them you wish to make as claim under the Riot Damages Act of 1886.
For more information on the various types of business insurance and commercial property insurance available for riot and civil commotion cover, visit UK Commercial Insurance.
Watching live coverage of the riots as they happened across the UK it was quite clear that the Police were totally unprepared to deal with incidents of this type, and more worryingly their laissez-faire approach has cost this Economy tens of millions of pounds in damage that could have been avoided.
Listening to these patronising Chief Constables talking about how they were going to go after these criminals ‘after the event’ made Insurance blog feel sick.
Countless stories appeared on the TV news of how business people saw the Police stand by and watch doing nothing to prevent their livelyhoods being trashed by mindless kids.
From recent dealings with the Police I am disgsuted that their attitude to everything is that Insurance is there to pick up the bill for their professional negligence.
Well it isn’t!
Insurance Blog urges all UK Insurance companies to refuse to pay for riot damage where the Police stood around idly and watched a bunch of kids run riot.
Under UK Law if the Police are not able to deal with a situation the risk becomes Fundamental and is the responsibility of inept UK coalition Government, and not covered by any insurance policy. The taxpayer will then be footed with the bill for damage that could have been mitigated.
Insurance Blog predicted that the minority conservative Government would cause riots on the streets of Britain and we were right. If the cuts continue there is a lot worse to come!
Don’t rely on the Police saving your home and property and if the trouble gets any worse, they just stand around filming, and I’d read that fineprint of that policy very carefully!
Home Insurance Money Saving Tips
How can you reduce your Home Insurance Costs?
When it comes to home insurance, many people simply accept the first quote that they are given without ever looking for alternatives.
However, there are several things that you can do to help reduce the cost of your building insurance and contents insurance.
Obviously, depending on where you live your home insurance is always going to cost a certain amount, but it is definitely worth taking steps to reduce your costs as much as possible.
Were your calculations accurate?
When you take out insurance, you will generally be asked how much you want to cover your home for.
For example, when you take out building insurance you will have to specify a value in case the worst should happen and your home needs to be rebuilt from scratch.
Many people are unsure about this and, as such, the figure they give is inaccurate; quite a few people could reduce their costs by making this more accurate.
Do you have good security?
Something else that affects the cost of your home insurance is how safe your property is. Simply put, the safer it is, the cheaper your policy will be. Of course, there is very little you can do to reduce the amount of crime in your area, but you can do things to secure your house. For instance, good door locks and bolts can help to improve security, as can burglar alarms, gates and even CCTV.
Did you shop around?
As mentioned above, a lot of people never shop around for their home insurance and simply stick with the same provider. Often, though, it is possible to get cheaper insurance if you shop around, or even by asking your current provider if there are any other deals they could offer you: the worst they could say is no so it’s definitely worth giving it a go.
UK Payment Protection Mis-selling Saga Continues
Payment Protection insurance (PPI) is in the news again with the UK financial complaints service, the Financial Ombudsman Service (FOS) reporting that its first quarter was the busiest ever with over 81,000 complaints – more than double the number received in the same period 2010.
Payment protection insurance, such as mortgage protection insurance, was the main reason for this substantial increase and the FOS have been receiving on average over 900 PPI cases each day.
Banks and others are already reporting record numbers of new complaints and it will be some time before we see the impact of those on our figures. So it’s difficult to tell whether we will be seeing still higher numbers yet – or whether the figures will now start to decline.
Tony Boorman, principal ombudsman at the FOS said, “When we come to publish the results for the next quarter, I expect the position on PPI will have changed again.”
“With complaints-handling rules ‘waivers’ agreed by the Financial Services Authority, the rate of new PPI cases has slowed – for the moment at least. ”
And the efforts by many banks to clear the backlog of cases that has built up should see record volumes of cases closed, and high uphold rates.
Bad Banks
Unsurprisingly, the bulk of complaints have concerned PPI after the banks lost an appeal on a ruling to pay back the policies in the High Court earlier this year. The period also saw both the High Court decision on the PPI judicial review and the decision by the British Bankers’ Association not to appeal that decision.
Figures from some of the banks this week have revealed that the PPI saga is having an adverse effect on their balance sheets.
Barclays said that its profits had fallen by 33% compared to the first six months of last year, with a £1 billion provision for PPI claims largely to blame.
Results from HSBC also showed the bank has put almost £270 million to one side to deal with customers’ claims.
Lloyds Banking Group has also previously revealed that it has put £3.2 billion aside to pay possible claims. PPI was sold by banks on unsecured credit products such as loans, credit cards and some mortgage products.
Santander is the latest bank, and the last of the big banks to cave in and to set aside money to pay the compensation bill. Santander owns Abbey Alliance and Leicester and Bradford and Binlgley has set aside £543 million for PPI claims.
In April, the banking industry lost its High Court challenge to new rules on the sale of PPI.
Among other things, the rules require sellers of PPI polices to review all their past sales to see if their customers have a claim for mis-selling, whether or not they have actually complained.
While the legal case was going on the banks put on hold tens of thousands of fresh PPI complaints that came in.
Santander was second, behind Barclays, in the list of most complained-about financial institutions during the second half of 2010.
A Brief History of Insurance:
Part seven: A small coffee shop called Lloyd’s
Welcome back to this series which aims to briefly plot the key times and places in the historical journey of insurance, from the earliest Chinese civilisations some seven thousand years ago right through to the modern day. As we discovered in the last article in this series, the seventeenth century was of major importance to the development of insurance.
The tragedy of the Great Fire of London saw the first insurance company The Fire Office appear and soon after a number of competing fire insurers had arrived including Sun Fire Office, which we now know today as RSA – one of the largest insurers in the word.
We also discovered that the era was one of great advancement in the field of mathematics, which led to the emergence of first true development of actuarial systems and relatively sophisticated risk management models.
Of course no history of insurance would be complete without reference to Lloyd’s of London and it was during this same period of innovation within insurance, that Mr. Edward Lloyd opened his first coffee shop in Tower Street, London.
It needs to be mentioned that the coffee shop of the seventeenth century was a far more important venue within a society than your local Starbucks or Costa Coffee is today. In fact at this time the coffee shop was a relatively new phenomenon in Europe.
Whilst they has been in existence in the Muslim world for much longer, they had only recently appeared within the West.
Originally thought to have been introduced to Europe via the Kingdom of Hungary, the first documented coffee house to open in Europe was in Venice in 1645.
The first English coffee house, The Grande Café, opened in 1650.
Less than a century later there were 551 coffee houses in London alone.
A fundamental reason for the success and popularity of these coffee shops was that they were great social levellers. They welcomed men from all levels of society and as a result they became synonymous with equality, republicanism and the ideals of a free market.
As such it was almost inevitable that the coffee houses of the late seventeenth century were to become vital hubs in which to discuss politics, the current affairs of the day and of course business.
It was 1688 when Edward Lloyd first opened his own coffee house in Tower Street, London.
Capitalising on the current growth in popularity for coffee houses across the city, Lloyd was able to carve a strong niche in the city by providing regular and reliable news from the shipping industry.
Soon Lloyd’s of London had a vibrant and faithful community of sailors, merchants and ship owners visiting the coffee house on a daily basis.
It was not long before Lloyd’s of London had become synonymous with the shipping industry and establishing itself as the key meeting place to discuss business in the shipping world.
In the next article within this series we shall look at how boat insurance and the shipping industry became intrinsically linked and how Lloyd’s of London developed from a humble coffee shop to one of the major organisations in modern insurance.
We’ve predicting it here at Insurance Blog for quite some time and now its official..
Insurance Fraud is on the rise again!
A symptom of every recession, the difference this time is that detection rates of Insurance Fraud are also on the increase, but that doesn’t seem to be bothering those intent on criminal deceit, according to the latest figures released today by the ABI (Association of British Insurers).
They Never Learn!
You could not make it up but some false claimants did.
Insurers are detecting more fraudulent claims than ever: over 2,500 worth £18 million every week
A gymnast with back trouble, a flying toilet roll holder, an invented wedding engagement, a fake photograph and an invisible wall were among the record number of fraudulent insurance claims detected by insurers in 2010, state the ABI.
The figures highlight that in 2010:
• Insurers uncovered 133,000 fraudulent insurance claims – 2,500 every week – up 9% on 2009. The value of these claims was £919 million, also up 9% on the previous year. Over the last five years both the number and overall value of insurance frauds detected have risen by over 100%.
• The most common frauds involved home insurance with 66,000 bogus or exaggerated claims detected, followed by dishonest motor insurance frauds with 40,000 frauds uncovered.
Car Insurance frauds were the most costly, costing the industry £466 million.
• The value of savings from detected frauds represented 5% of all claims, compared to 4% on 2009
Cheats uncovered by insurers include:
• A claim for back injuries apparently sustained from a fall while working in a nightclub was rejected when Facebook images showed the claimant performing gymnastics, and training for a charity run.
• A woman’s claim for facial injuries she said resulted from a falling toilet roll holder in a fast food outlet was rejected when it was shown that the holder would have had to have fallen upwards to cause the injury claimed.
• A man claimed for a ‘lost’ engagement ring. His ex partner said that she was never given a ring as they had never been engaged. On the same day the man said he had suddenly found the ring.
• A claim by a woman for the loss of a £2,000 watch after a night out was rejected when the photograph she provided of her allegedly wearing the watch turned out to be that of a friend.
• A claim for injury said to be caused by falling over a wall was rejected when it was proved that there was no wall at the scene of the alleged incident.
It is estimated that insurance fraud costs £2billion a year, adding, on average, an extra £44 a year to the insurance bill for every UK policyholder.
New National Insurance Fraud Register
Nick Starling, the ABI’s Director of General Insurance and Health, said:
“Insurers are working harder than ever to protect honest customers against fraud. The savings made by weeding out fraudulent claims would otherwise end up being paid for by honest policyholders through higher premiums.
“Fraudsters continually look for new ways to con insurers, so we are upping our game. Early next year we will be setting up a national Insurance Fraud Register, which will contain details of all known insurance cheats. And at the same time the first ever national police insurance fraud investigation unit will begin its operations, making it harder than ever to commit insurance fraud.”
Glen Marr, Director, Insurance Fraud Bureau comments:
“Fraudsters will increasingly find the insurance industry a hostile environment. The IFB is committed to supporting insurer efforts to systematically root out and tackle fraudsters. At the IFB we have access to a significant volume of industry data, use sophisticated and powerful analytical software, work in partnership with insurers, law enforcement and regulators, and have no shortage of reports being received from consumers of their knowledge or suspicions of those concerned with defrauding the industry, through our Cheatline facility.
“We would urge anyone with information on any type of insurance fraud to support industry efforts to root out the fraudsters, by calling the IFB free and confidential Cheatline on 0800 3282550 or by using our online reporting facility at www.insurancefraudbureau.org/report.
Reports to Cheatline can be completely anonymous if necessary. It’s important to underline that some of those concerned with insurance fraud, are also involved in criminal activities where there is harm to local communities”.
Insurance Blog is pleased that when these criminal gangs are caught, their assets will be seized as part of the new Proceeds of Crime Act. Fraud is not a victimless crime and we all pay higher premiums because of it!
Insurance Employees Favourite TV Shows
It was very hot at the office of Insurance Blog today and not the best of working conditions.
However a bit of light relief went around the office with the results of the Insurance company department favourite gameshows of all time poll.
Here are the results in no particular order…….
Insurance All Time Favourite Game Shows
Underwriters – Jeopardy
Loss Adjusters – The Price is Right
Actuaries – 15 to One
Marketing Department – Catchphrase
Claims – Total Wipeout
Accounts – Double Your Money
New Business – Blind Date
Personnel – Britains Got Talent
Senior Management – Big Brother
Claims Fraud – Give Us a Clue
IT Dept – Eggheads
Call Centre – 100 to 1
Products Department – Take it or Leave it
Risk Assessors – The Weakest Link
Account Executives – In it to Win it
Well its nearly silly season…
If your Insurance company department has a favourite gameshow or even maybe a favourite song, write and let us know at the email address at the bottom of the page……
Insurance Can be Sexy!
Insurance can be sexy! Well in Germany anyway!
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.
The World’s First Insurance company -The Fire Office and a man called Halley
In the last article in this series we had arrived at the seventeenth century after a whistle-stop tour of the continuous evolution of insurance across the last 7,000 years or so!
We had just discovered that what is generally regarded as the worlds first ever Insurance company – The Fire Office, was created from the ashes of the Great Fire of London and it is with the Fire Office that we shall continue our journey through the history of insurance….
‘The Fire Office’ was opened by Nicholas Barbon not long after the Great Fire had ravaged some 13,000 homes across the English capital. Barbon himself is acknowledged as being one of the first proponents of the free market and a leading economist and financial speculator of the time – he also had a ruthless eye for a business opportunity.
Predictably as the Fire Office flourished so other companies soon mirrored his business model and a precedent had now been created for insurance to evolve once more. Providing insurance was no longer limited to wealthy private individuals, but instead a developing industry, with dedicated companies establishing specialist commercial insurance and personal insurance products.
This period thus introduced a legacy of professionals who would ultimately establish an insurance industry which would impact upon the lives of almost everyone within the modern world. It is interesting to note that one of The Fire Office’s earliest major competitors was the Sun Fire Office, who, after numerous mergers and acquisitions across the centuries we now know as RSA – one of the worlds largest insurers.
Whilst these early insurance companies actually resembled something more akin to a private fire service (there was no state fire service until 1865), they were soon to develop into far more sophisticated organisations and a large part of this development was made possible by the scientific and more specifically mathematic progress of the time.
As the great fire had swept through London, so through Europe spread an appetite for understanding and a series of extraordinary advances in mathematics established themselves and flourished across Germany, France and England. With them the ability, need and desire to asses and place a valuation on personal risk through more refined, scientific systems also appeared. Economic concepts such as compound interest were re evaluated and revitalised for this modern era where innovative fledgling financial products were rapidly appearing. At the same time more complicated concepts such as probability theory emerged allowing for more sophisticated methods of evaluating risk to appear.
It was through the application of these newly developing mathematic disciplines that London draper John Graunt was able to establish predictable patterns of longevity and death within a defined group of people, regardless of any uncertainty about the future longevity and death of any one individual.
The work that Graunt completed was to become the foundations of an actuarial life table, which is absolutely fundamental to establishing costs for premiums in modern insurance.
However, it was a certain Edmond Halley (yes the same chap that discovered Halley’s comet) who further expanded upon Graunt’s work some thirty years later. Halley was able to demonstrate how to create an insurance scheme to provide life insurance for a group of people, and then calculate with a far greater degree of accuracy than had ever previously been possible, exactly how much each person in the group should contribute to a common fund assumed to earn a fixed rate of interest. Indeed Halley went on to create a life table to calculate the premium a person of any given age should pay when purchase a life-annuity.
With a business model beginning to establish itself through the development of the Fire Insurers and a new attitude towards assessing risk and applying premiums accordingly being shaped for the first time by complex mathematical theory, insurance was primed to flourish and it soon did.
It was at this point, as the end of the seventeenth century approached, that we see one of the insurance world’s most famous names appear for the first time. In 1688, in Tower Street, London Edward Lloyd opened a coffee shop.
In the next insurance history article in this series Insurance Blog will reveal how from these relatively humble beginnings his venture went on to become Lloyd’s of London, one of the most powerful organisations in insurance today.
