UK Insurance Companies Pay Out Millions In Metal Theft Claims

The demand for raw materials, especially metals for industry in the emerging BRIC economies of Brazil, Russia, India and in particularly China, coupled with a recession in the UK has created a massive nationwide crime wave of metal theft that is costing UK insurance companies millions of pounds per week, according to a press release from the ABI (Association of British Insurers).
All types of metal are being stolen and each theft creates a series of public hazards and property damage.

Popular theft includes the lead from off of church roofs, cast iron drain and manhole covers from the streets, railway track and copper cabling from permanent way and sidings, all types of electrical cabling from business premises or unoccupied buildings. Nowhere is immune to the theft and reports have been made of damage from all corners of the country.

A spokesman for the ABI said that metal theft had doubled in the UK in the past five years with now around 1,000 reported police and insurance claim incidents each week.

The disruption the crime causes is estimated to cost the UK economy about £770m each year. Much of this is paid out in claims for business interruption.

The ABI report said metal theft was an “ever-present threat” and it will meet the UK Government and British Transport Police to debate the issue.

Nick Starling, the ABI’s director of general insurance, said: “Metal thieves are putting lives at risk, causing expensive damage and massive disruption. “This is why we are working with the Government to crack down on metal thefts”.

The ABI states that each week:
1,000 metal thefts occur – double the number of five years ago
300 tonnes of metal was stolen per week, which is the equivalent of 300 cars
The UK economy loses £15m in replacing stolen metal, compensating victims and disruption
Train services are delayed by 117 hours after cable thefts
23 churches are attacked

Example of recent thefts include a range of attacks from the small to the large-scale organised crime gangs.

A £500,000 sculpture was stolen  from a park in London by a few individuals while a large gang stole a train with two trucks of scrap metal, driving it down the line and emptying the metal into lorries at the track-side before making off.

The ABI support legal action which will make it harder to resell stolen metal and much tougher penalties for offenders and are calling for scrap dealers and metal recycling industry, which is  is worth an estimated £5.6bn per annum and employs 8,000 people in the UK, to be registered and cash payments to be banned.

Chris Coates of UK Commercial Ltd insurance brokers warns businesses, especially those at risk to take extra precautions to prevent theft and to minimize any disruption caused which often amounts to the biggest loss.

“All businesses large and small should carry out their own internal risk assessment as to the likelihood of suffering from a metal theft crime.”

“The theft of  a roll of lead cladding from the roof of building housing a computer repair business, could be devastating if it occurred on a wet stormy night. Often extra preventative security measures such as denying access to the roof through for example the application of anti-climb paint, is a simple, effective and cheap method of deterring metal theft.”

Insurance Companies Should Support Barclays Shareholders Bonus Demands

Regular readers of Insurance Blog will know that we are not fans of Banc-assurance, indeed if it was mandatory you’d find us voting for UKIP in next months local elections!

The whole concept of banc-assurance, a European import of the mid Nineteen Nineties, with it’s centralised lifestyle, bank and insurance personal umbrella,  has stunk of plutocracy since the cosy relationships were first formed to maximise profit for the few.

PPI claims and mis-selling are just one example of things that would never have occurred if Banks had not been allowed to sell insurance products. (or should I re-phrase that ‘mis-sell’).

Large un-democratic multi-nationals are not good for competition or the UK Economy and the evidence shows that they are stifling business growth. Critics may argue that the market will decide and shareholders make this process democratic.

Not when over 70% of the shares in the Banks are owned by the large Insurance Companies, including in particular the large life  insurance and pension fund composites of Aviva, Legal & General and RSA, to name just a few!

Don’t just blame the previous Labour Government (FSA) for the mess that was created outside of their control. The fact that as predicted here two years ago, the UK has this week slipped into the dreaded double-dip recession, shows the problem is fundamently structural and lies in the ownership, management and control of the banks and mortgage lenders who control the money supply and are responsible for the current Western recession.

Incidently, by restricting credit they are also currently responsible for killing British entreprenuerial spirit and destroying growth potential in SME business.

The poor management speaks for itself in shareholder dividends. Just a penny in the pound for those poor shareholders of Barclays!

Today they are openly up in revolt to demand that the Chief Executive is not worth his $4 million annual bonus. Quite rightly so in our humble opinion. The overpaid who fail should not be rewarded, especially at the expense of those who take the risks.

Barclays chief executive Bob Diamond received a £1.35m salary and a £2.7m bonus for 2011, with an additional £2.25m in long-term incentive payments. Barclays has set aside an extra £300m for settling claims of mis-selling payment protection insurance. A £2.62bn accounting adjustment and the extra Payment Protection Insurance Claims reserve meant the bank reported a statutory pre-tax loss of £475m in the first quarter of this year as opposed to a £1.66bn profit a year ago.

More importantly though, the actions of these minions will fail as the outrageous bonuses are supported by the Insurance companies, who own big blocks of shares and voting rights.

There is your Plutocracy!

Regardless of your political allegiances, before you renew your insurance, if you can afford to that is, think about how these multi-nationals are encouraging the sort of undemocratic behaviour seen today that should not be seen at all, especially in a time when millions of families in the UK, it has also been announced today, between them owe £58 billion in debt mostly composed of interest and bank charges, to these very same ‘institutions’.

 

Was The RMS Titanic Sinking An Insurance Fraud?

In 1998 American Robert Gardiner in his book ‘Titanic: The ship that never sank’, first postulated the theory that on the 14th of April 1912, a hundred years ago today, that RMS Titanic was scuttled for the Insurance money.

More importantly it wasn’t even the Titanic that sank, but her older decaying and seriously damaged sistership, RMS Olympic, in what would become one of the greatest insurance frauds of all time – if proved to be true!

Was the Titanic disaster the greatest Insurance fraud ever?

Mystery, Myth and Money Surround The Whole "Titanic" Sinking Tragedy

Insurance Blogger whilst initially thinking what a load of ……, decided to look deeper into the ‘conspiracy’ and in particular the question of marine insurance for the vessel.

In order for the possibility of an insurance fraud to have taken place answers must be given to the following questions:-

Did the Owners, Company or individuals stand to benefit from the total loss of a ship?

Could the Titanic have been swapped for the Olympic as Gardiner proclaims?

What evidence is there to prove that the ship lying two and a half miles down at the bottom of the Atlantic is indeed the Olympic ?

Incredible as it first seems, the more you look into the assertations, the more feasible the fraud becomes!

And there is some amazing evidence to suggest that persons or persons unknown conspired to defraud the insurers of £1 million of hull cover, unknown P & I liability losses and cost life insurance and personal accident companies nearly £3 million.

Titanic – The Case for Insurance Fraud

Before we discuss the evidence for fraud in the sinking of the Titanic it is important to set the economic scene for 1912.
In particular the fight for the most lucrative transport routes at the time, not dissimilar to the airline struggles of today with the exception that sea travel had a monopoly on trans-atlantic trade, there was no alternative.

The White Star Line was ultimately owned by International Mercantile Marine (IMM) and after years of struggling to win trade, they commisioned the Olympic class liners in 1907 to try to take the luxury end of the market.
For the previous fifteen years the lucrative passenger sea traffic to and from the US from the UK, France and Europe was dominated by the super-fast German mercantile fleets that held the Blue Riband for the fastest crossings.
The SS Kaiser Wilhelm der Grosse and SS Deutschland (1900) owned respectively by the Norddeutscher Lloyd and the Hamburg America Line HAPAG, the two German top shipping companies.

In the UK, Cunard rose to the challenge with the launch of the RMS Mauretania and her ill-fated sister ship, the RMS Lusitania. The ships were very fast and the Mauretania went on to keep the coveted Blue Riband for more than twenty years, from 1907 to 1929.

The White Star Line, who had been losing money for years, struck back with the Olympic class and the upgraded Titanic was supposed to be the largest and fastest of the luxury ocean liners to rival the Maurtania for speed.

Construction of Olympic started in December 1908 and Titanic in March 1909.
The two ships were built side by side at Harland and Wolff’s Belfast Shipyard.
The construction of a third ship the RMS Gigantic began in 1911 after the commissioning of Olympic and Titanic’s launch.
Following the sinking of Titanic, Gigantic was renamed Britannic, and the two remaining vessels underwent many changes in their safety provisions. The Britannic was sunk by a mine in 1916.


What was Covered?

Willis Faber & Co. (today part of the Willis Group) are reported to have brokered the deal for underwriting the hull and cargo insurance for the Titanic. The original boat insurance slip was passed to Lloyds Mercantile Dept for underwriting, but is since reported lost to this day.

There is some dispute about the value of the Willis contract however all newspaper reports of claims paid out and enquiries staged immediately after the sinking report that the Hull was underwritten for loss and liability at Lloyds for $5,000,000.

In 1912 both the USA and the UK were on the Gold standard and the exchange rate was always very close to $4.87 to the £1 or 0.21. This meant that the policy for the hull was insured for around £1,050,000. Perhaps more importantly, the actual cost of building or replacing the vessel was £1,680,000 or $8m, meaning that the hull was significantly under-insured and the owners were bearing a third of the risk as captive. This was an unusually high amount of risk taking. At the time marine insurance would usually only provide for three quarters of the risks, as P & I Clubs (ship owners collective pools) always carried a quarter of the collision liability risk and provided accident cover for the crew, and still do to this day.
It is unknown what if any cover was paid out by White Star to a P & I Club for staff liability. What became evident after the event to many of the 800 plus families of the Crew that perished, who were nearly all from Southampton, was that they received paltry or little compensation for their losses and years of subsequent poverty.

In addition to the hull cover, the marine insurance policy issued by Lloyd’s to the White Star Line for the Titanic included total loss cover for cargo at $600,000 and personal effects at £400,000, which equates to £126,000 marine cargo and £84,000 for personal effects. Both these sums insured proved to be inadequate following the disaster.

What Was Lost?

In an act of incredulous speed all claims by the White Star Line for loss of the Titanic, were paid out within a week of the ship sinking and the Lutine Bell being rung at Lloyd’s on the 15th of April.

The company was reimbursed for the loss in a straightforward process that was completed long before any official enquiries heard evidence as to the cause of the sinking.

Claims for loss of life and personal effects were taking a little longer.
Imagine that today, when you have to wait weeks for compensation for just a minor car insurance claim!

The New York Times of one week after the disaster, reported the speed of the claims payouts and lists all the amounts claimed and the processes involved in the claim.

Titanic claims paid out in super fast time!

Click to read the original NY Times reports that all Titanic claims are paid out within a week!

The list of Claims losses paid out were:

Titanic Hull Insurance – Actual loss $8,000,000 – Paid out $5,000,000

Titanic Cargo Insurance – Actual Loss $420,000 – Paid out $400,000

Titanic Personal Effects – Actual Loss $1,000,000  – Paid out $600,000

Life Assurance Passengers -  Actual Loss >$4,000,00 – Paid out $2,125,000

Over 119 Life insurance companies paid out the largest of which was the Travelers Insurance company of Hartford, Connecticut.

Personal Accident Claims – Actual Loss >$2,000,000 – Paid out $1,564,000

Over 48 personal accident companies were involved in claims payouts.

The Olympic Switch

The case for an insurance fraud begins with the RMS Olympic. If a conspiracy to defraud existed it would have began sometime after September 1911 and before April 1912.

On September 20th 1911 while in the Solent returning to Southampton RMS Olympic was struck and severely damaged by a collision with cruiser HMS Hawke.

The Liner, despite being holed above and below the water-line in two places and damaged for 38 feet, made it the fifteen miles or so back to port under tug.

Eyewitness reports suggest that the route of the Hawke and the Olympic intersecting may not have been an accident at all. Interestingly, the Captain of the ship that day was none other than Edward J Smith, Captain of the ‘”Titanic” some seven months later.  The ship was temporarily patched up and returned to dock in Belfast alongside the nearly complete Titanic.

White Star quickly had the damage assessed by marine engineers, and put in a claim. However beause it was well below a policy excess of $750,000,  the claim was repudiated.  In December White Star brought the claim to court, this time claiming $750,000 for loss and damage to the ship including lost passenger effects, to make up the difference to the excess.

The court ruled that the collision was entirely the fault of the Olympic, the only saving grace being that they would not have to pay damages to the Royal Navy as the Olympic was under compulsory pilotage at the time. A further appeal was rejected in 1913.

Unable to collect money for her repairs, White Star was left with a severely damaged ship, quite possibly a lot more damaged than originally thought, which was losing money by the day, by being unable to collect fares and fulfill bookings.

Titanic and Olympic in Harland & Wolff Belfast

Titanic and Olympic undergoing sea trials in Belfast early 1912. But which one is which?

The basis of the case for conspiracy to defraud starts here.

Gardiner asserts that the damage to the Olympic was tantamount to a write-off. In particular the secondary damage to her starboard engines, drive-shafts and propellers which rendered her incapable of reaching speeds of more than ten knots as she limped back to Belfast for repair.

On closer inspection of the damage at Harland and Wolff it was realised that it would take six months to get her in the least bit seaworthy again. The repairs would have to be paid for by the White Star Line which was already committed to $16 million for the building of the Titanic and the half-built Britannic.

The costs of the repairs would in effect wipe out the White Star operating profit for that year, a third of the income of IMM, and the losses from having no ships at sea for six months would equate to another $500,000 plus.

The decision was taken by senior executives at both White Star Line and Harland and Wolff to swap the ships and bring into service, the very near to completion Titanic, as the Olympic.

If the decision had not been taken jobs would be lost and the shipyard and White Star would be threatened with closure.

Getting the Titanic a certificate of seaworthiness was at least six months away. Olympic already had one!

The Swap

Ship swap is reported to be the most common form of marine insurance fraud practiced in the 19th century although this is as yet unsubstantiated.

It would only take a handful of ready picked dockers and tug operators and a skeleton crew to be involved in any movement and re-berthing of the ships, particularly as they were constantly being put to sea for tests.

Both ships were mysteriously painted in the same black and white livery, the Olympic having previously been painted all white.

After the repairs in Belfast including changes to cabins, without doubt the only outwardly visible reported differences between the two ships appears to be the layout of the 1st class passenger B deck, which was enclosed on the Titanic according to the original plans. Photos of the ‘Titanic‘ leaving Southampton and Queenstown show a different layout!

Fitters, Electricians, carpenters etc in Belfast would not necessarily know which ship they were on a short term contract for, and even if they did, they were kitted out almost identically. Final fittings and named objects could have been loaded on-board in boxes to both ships at anytime. In the closed shop world of the protestant dockyards of Belfast and the fraternal offices above, a conspiracy involving less people than the Great Train Robbery is not so hard to envisage.

None of the crew or staff would have been aware of what ship they were on when they signed on in Southampton.  Just what the nameplate told them.

The “Olympic” put to sea and started earning off the North Atlantic run in early 1912. It was only two hundred miles from the “Titanic”  returning to the UK, when the “Titanic” sank!

There is some excellent photographic evidence which shows the damage repairs to the  Olympic following its collision with HMS Hawke and in later years where there is no sign whatsoever of repairs!

You can read more about the ship swap, see photographic evidence and watch a documentary at TitanicUniverse

You should also have a look at Mark Chirnside’s university dissertation which argues subjectively the case against a fraud.

Having looked at all the evidence Insurance Blog believes that a ship swap did take place, however not for the purposes of committing an insurance fraud but out of business economic necessity.

So how did what had been a business decision to hoodwink the Ministry of Transport turn into an insurance fraud?

Well the matter of an Iceberg for one thing!

Gardiner goes on to explain all sorts of incredulous reasoning about how White Star planned to scuttle the ship and had pre-arranged a collision in mid-Atlantic, however all this was unnecessary if the iceberg was just an accident.

This explains why the ship was under-insured, White Star never had any intention of scuttling the ship. The swap was purely to keep the company in business!

White Star did effectively gain out of the loss of the “Titanic”.  The loss cost them just £680,000.  A lot less than the $8 million required to fund a new vessel, which they did!

As an interesting footnote, Chairman of White Star J Bruce Ismay, the man William Randolph Hearst choose to bully and pillory as a coward, went on to hold prominent Director positions on the boards of the Liverpool and London Insurance Company, Globe Insurance Company, Royal Insurance Company and the Thames and Mersey Marine Insurance Company.

Mis Sold PPI? Claims Could Reach Titanic Proportions

PPI Claims To Date Are Only The Tip Of The Iceberg

Despite the banks and others who missold payment protection insurance (PPI) being forced to pay out over £2 billion to date, it appears from the latest reports and estimates that this could be just the tip of the iceberg as the misselling scandal escalates, with an expected final payout of over £9 billion in compensation. Billions are still waiting to be claimed.

Mis-sold PPI? Claim now before its too late

Last year alone over 200,000 complaints were made to the Financial Ombudsman about individual policies, despite instructions from the FSA for all those involved to deal fairly with their customers.

Both these figures indicate that although most of the major financial institutions and banks that missold PPI are taking some steps to compensate those that they missold the products to, many people are either not being notified that they are due for compensation, or it appears that an even greater amount may not be aware that they even had PPI and that they have been paying for it in charges since they first took out the debt.

It also appears from the number of continual complaints to the Financial Ombudsman that the compensation offered by those guilty financial institutions has been in many cases derisory or insufficient.

This has been particularly the case where individuals have sought to deal with the PPI claims themselves, rather than seek the help of those professional claims teams and lawyers who have years of experience in maximising claims settlements through negotiation and the courts.

The FSA is concerned by the titanic scale of the misselling and has extended the period for which claims can be dealt with in order for the firms and the courts to deal with the high demand.

PPI was missold throughout the last decade by nearly all the major institutions including all the high street banks and most of the mortgage, loan and credit card companies. It was often sold on the back of credit agreements, where it was neither explained properly to the client or the client do not want or need it.

Many people who were aware they had purchased PPI, bought the cover because they feared their credit application would be refused if they did not agree.

In the most extreme of cases it was often sold to people who could never claim, such as those with existing medical conditions, pregnancy or the self-employed.

If you think you may have been missold PPI, Insurance Blog urges you to check the wordings of all your credit agreements and to act quickly to contact a PPI claims specialist to assist you in your fight for compensation.

The iceberg of claims may be melting slightly, however there are rules of limitation under UK law and the right to be compensated for being missold PPI may not be around for too much longer.

Marine Insurance Explained

Marine insurance is the oldest form of commercial insurance, indeed insurance under contract, and it is little wonder that it holds great fear with students studying for their ACII, due to the complete range of risks that it covers from physical property to transportation liability and the specialist marine cargo goods in transit covers.

Despite the unusual and monopolistic ways in which marine insurance is still delivered to the global market, the actual risks themselves are very well defined and easy to understand, mostly due to time honoured knowledge and the Marine Insurance Act of 1906 which set the standard for all modern underwriting.

Marine Insurance in London

London remains to this day the global capital for placing Marine Insurance risks

Insurance Blog asked Insurance Blogger to get down to the jetty and investigate the market for marine insurance…

 

Marine Insurance

Hulls, Liability and Marine  Cargo Insurance
Marine insurance was the very first type of insurance contract and has a fascinating and complex history dating back to the earliest coffee shops in London in the Seventeenth century.

Marine insurance is designed to cover watercraft of all shapes and sizes, from the smallest dinghy to the largest passenger liner, however the term as opposed to boat insurance, usually refers to the coverage for larger ocean-going vessels and ships.

The cover has no geographical limits and therefore can insure any vessel under any flag in any part of the world.

The marine market covers a wide variety of risk types including tugs, ferries, liners, cruise ships, dredgers, oil rigs, oil tankers, cargo vessels, drilling platforms, heavy lifting vessels, barges, fishing fleets, motor cruisers, salvage vessels and yachts to name just a few.

Marine insurance has three distinctive risk groups, cover for which can be bought separately or together if necessary and is available for small boats through to ocean-going vessels:

a) Hull and superstructure cover

b) Liability insurance

c) Marine cargo insurance

Hull and Vessel Property Cover

The hull and superstructure cover covers the physical vessel itself against a list of maritime perils and is subject to what is called the ‘Institute time clause’.

At the turn of the twentieth century the Institute of London Underwriters, a collective of Marine Insurance companies and the Lloyds market, agreed and introduced standardised time-tested insurance clauses, and these have been used globally for marine insurance ever since.

The clause is written in plain English and is attached to a policy that contains no information on the conditions of cover itself. It sets out details of the specific marine risk to be covered and the underwriters agreed proportion of that risk. The time clause usually applies to a twelve month period but can be bought for a single voyage.

The cover always extends to both physical damage to the vessel and collision liability.

The insured ship or boat is covered for loss or damage for a list of maritime perils called ‘perils at sea’, fire, explosion, violent theft, piracy, jettison, earthquake, tsunami and volcanic eruption.

Material damage to the ship is also covered for landing and docking equipment, aircraft, accidents in loading and unloading cargo, latent defects and negligence of the officers and crew.

Liability At Sea

However most policies to this day for larger vessels, only cover three-quarters of the risk for collision liability and damage to other vessels. The other quarter is often provided by specialist P & I clubs.

In 1885 marine insurers found themselves unable to cover some of the emerging liabilities of shipowners. Protection and Indemnity associations, known as P & I clubs which had been formed earlier to break the monopoly of the marine insurance market, started to take on these ‘excess of loss’ risks.

The scope of the P & I cover is wide, but in addition to the cover for collision liability provides protection for loss of life and personal injury claims, amongst other crew related benefits.

The associations do not charge a premium as such, but the shipowners pay an annual membership fee into a common pool.

Other marine liability insurance cover that is available are charterer’s liability cover, ship repairer’s liability cover and mortgagee’s liability cover. Liability insurance is often placed in the open market.

Marine Cargo Insurance

The third major marine risk is that of cargo insurance.

Like hull cover the polices are governed by Marine Institute and Trade Association clauses, the main ones which are known as the ‘A,B and C clauses’.

The ‘A’ clause is an ‘all risks’ policy in as much as it covers all damage and loss to the cargo at any stage in its journey.. The other clauses cover named perils only, but can often offer much wider cover for specific risks such as piracy at the Horn of Africa.

Cargo is transported either ‘Free on Board’, which means that the seller is responsible for insuring the cargo until it is safely landed on the ship, or Costs, Insurance and Freight (CIF), which puts the onus of responsibility for covering the safe passage of the cargo on the buyer.

Many people are interested in the safe passage of marine cargo and the level of insurance, which today also includes aircraft transportation.

Those interested include the manufacturer or seller of the goods being shipped, shipping agents, freight forwarders, hauliers, shipping companies, intermediary consignees, selling agents and customs officers at both ports of entry and departure.

Boat Insurance is a London based marine insurance brokerage and underwriter at Lloyds, which can provide all classes of marine insurance.

Originally published online for Insurance Blog by Insurance Blogger