August 2007
Direct Line set to shake up small business insurance
Insurer Direct Line plans to shake up small
business insurance in the same way it revolutionised personal cover
in the eighties.
A multi-million pound marketing campaign will be launched in September (2007) to target small businesses. The move will be another body blow for UK brokers. Customers will be offered lower premiums for carrying out business online or cover over the phone. Direct Line will initially target premiums of £1,000 a year or less.
The initial policies will be on simple cover such as property and employers insurance and public liability. However, the group hopes to take on larger, more complex corporate risk. A source said: "This is the new big thing for Direct Line. The marketing campaign will be worth tens of millions of pounds".
At present, the only commercial insurance that Direct Line provides is for white vans. Pricing and underwriting models for the new operation will be provided by NIG, the commercial arm of RBS insurance.
ENDS Is your pet too fat to insure?
One pet in three is now obese, which could leave owners facing expensive
bills as pet insurance
often does not cover overweight animals. Figures from Sainsbury’s Bank
show 34 per cent of the UK's cat and dog population is now obese - meaning
some 2.72 million dogs and 2.87 million cats are affected.
"Many pet owners may like to treat their animals with food and snacks intended for human consumption, but they must be aware of the detrimental effect this can have on their pet's health," said Claire Moyles, Sainsbury's pet insurance manager.
"Treats such as chocolate can not only lead to obesity but when ingested in large amounts can even have serious effects on an animal's pancreas and heart."
And there is a triple blow for owners of chubby puppies and fat cats - not only do they pay more for food for their four-legged friends, their pets are also more likely to need to visit the vet, and in many cases their condition means that owners cannot take out pet insurance to cover this cost.
"Overfed, obese animals often suffer from diabetes, osteoarthritis and other conditions that require a long-term course of veterinary treatment and their life expectancy can also be reduced dramatically," Ms Moyles said.
"Owners concerned about their pets' weight should consider feeding their animals from the growing range of nutritionally balanced, low-calorie, organic or additive and preservative free pet foods." The Pet Food Manufacturers Association offers the following signs to whether your animal is overweight:
- Thin – ribs easily felt, backbones and hip bones visible.
- Underweight – ribs easily felt, waist very obvious.
- Ideal – ribs can just be felt, no excess fat covering, tummy tucked up when viewed from side, waist narrows after ribs.
- Overweight - ribs can be felt but with a bit of excess fat, waist can be seen but not easily, tummy tucked up, but just.
- Obese - ribs not easily felt, waist almost invisible, tummy may be sagging.
Parking in the garage 'could save on car insurance'
Cleaning up the garage in order to keep the car there may be one
way to save on motor insurance,
it has been claimed. According to the British Insurance Brokers' Association,
theft and vandalism are less likely to occur - and compromise a policy
- if a vehicle is kept locked up.
It added that those living in London with an expensive car could end up paying more for car insurance if their vehicle is not parked off-road. But technical services manager Graeme Trudgill commented that insurers do not always see eye-to-eye on this.
"Every insurer does have a different view on to what extent they should discount their premiums. But, of course, the theft and vandalism factor is so much less if it is kept in a garage," he said. Home Office figures show that despite a 51 per cent drop in vehicle crime since 1997, 1.7 million vehicle-related thefts were recorded in 2005 to 2006.
ENDS Hiscox buys stake in professional indemnity broker
Hiscox has announced the purchase of 49% of UK professional indemnity
broker and underwriting agency, Allison and Partners Insurance Services.
The deal includes an option to buy the remaining 51% in the future.
Commenting on the purchase Steve Langan, managing director Hiscox UK, said: "Allison & Partners is a good fit for Hiscox, we are market leaders in the provision of office based liability insurance and like us, they are passionate about customer service. We are looking forward to growing with them."
Jim Allison, founder of Allison & Partners, said: "This is a very exciting time for us, we have been working with Hiscox for years and we appreciate their understanding of our clients’ businesses. This deal represents a new phase in our business and we are proud to be associated with Hiscox." Allison & Partners was privately owned.
ENDS Motor premiums set to rise by 10%
Motor insurance premiums in the UK are set to rise by around 10%
in the coming year, according to analysis by EMB, Europe’s largest firm
of non-life actuaries. Despite the widespread public feeling that premiums
are already too high, researchers found that motor insurers are not
charging sustainable premium rates, particularly for private motor.
The conclusion is based on EMB’s annual review of the returns that all insurers in the UK make to the Financial Services Authority. Their findings show that the £10bn market was able to achieve a modest profit during 2006 only by releasing more than £800m in reserves from previous years. Even with these releases, they relied on investments to make good the shortfall between premiums and the amount they spent on claims and expenses.
For every £100 of premium motor insurers received they paid out £83 in claims and £28 in expenses, giving a total cost of £111. As there is a time difference between receipt of premiums and payment of claims, insurers generated investment income to offset costs equivalent to £5. This meant the average true cost to the motor insurer was £106 per £100 of premium charged in 2006. (Equivalent figure for 2005 was £104, £100 in 2004.)
"Our analysis shows that insurers have been able to subsidise motor premiums because of reserve releases due to better than expected levels of personal injury claims in the past few years, but this won’t go on forever. If they hadn’t had these reserves to release, the results would have been totally unacceptable," said senior consultant Paul Moorshead.
EMB believe, furthermore, that the summer flooding is bound to have a knock-on effect on the motor insurance market. "Since the last major UK catastrophe [the 1990 storms] property had been a highly profitable line of business for personal lines insurers. There’s clear evidence that they’ve been using some of these profits to cross-subsidise their motor book. That will stop in light of the heavy claims they’re getting from the floods," said Moorshead.
"It’s still a very competitive market out there, but the upward pressures on pricing are just too strong. Even with the premium increases that we’re predicting, many motor insurers will end the year with significant underwriting losses."
ENDSOne in five' teens drink-drives
One in five teenagers has driven while under the influence of alcohol
while one in 14 has driven after taking drugs, a survey suggests. And
nearly a third of the 3,118 17 to 18-year-olds asked had been in a car
when the driver was drunk or on drugs.
Charity Brake, which carried out the research with Co-operative Insurance (CIS), said ministers needed to act. It says the results add weight to calls for licence's to be passed in stages and a zero alcohol limit for new drivers.
The road safety charity has urged young drivers to "never drink or take drugs and drive". It also wants to see lower drink drive limit for all drivers, from the current 80mg per 100ml of blood to 50mg per 100ml of blood - in line with EU recommendations - or even to 20mg per 100ml of blood, with a zero alcohol limit for novice drivers.
Jools Townsend, head of education at Brake, said: "Every day young drivers kill and seriously injure themselves and others through a deadly combination of inexperience and taking risks like drink and drug driving." She added: "Decisive government action to tackle young driver crashes is long overdue. "We are demanding that the government moves forward with an overhaul of driver training and testing, and introduces graduated driver licensing, which has been highly effective in cutting casualties in other countries.
"We also need compulsory road safety education in schools and much greater investment in traffic policing, to show that driving that threatens lives will not be tolerated." David Neave, CIS director of general insurance, said too many young drivers were "risking their lives and the lives of others" by driving under the influence of drink or drugs.
Last month the Commons transport committee recommended raising the minimum driving age from 17 to 18 to stop young people "killing themselves and others". The MP's also wanted learner drivers to spread lessons over a year before taking their test and a complete alcohol ban for new drivers. Novice drivers should be banned from carrying passengers aged between 10 and 20 late at night, their report added.
Government figures show that on average more than three people aged 17 or 18 are killed or badly injured in car crashes every day.
ENDS