My Claim Market Update August 2010
Insurance Fraud Bureau secures convictions
Four men have been convicted as a result of Operation Flash, a joint operation between the Insurance Fraud Bureau (IFB) and Lancashire Constabulary. This followed suspicions raised by Fortis Insurance involving a number of claims made on motor, pet and home insurance policies.
Further investigations revealed common elements across some of these claims including identical wording on invoices, common bank accounts, addresses and other details.
Arrests followed these investigations and two of those arrested have subsequently received terms of imprisonment. Fraudulent claims add to the costs of insurance for customers and there is some evidence that the proceeds of fraudulent claims goes to fund other forms of serious crime including gun running and drug trafficking.
Fortis completes acquisition of Kwik Fit Insurance Services
Finally receiving Financial Services Authority approval for its purchase, Fortis believes its recent acquisition of Kwik Fit Insurance Services will add a further 600,000 customers to its existing 7 million customer base in the UK. Kwik Fit Insurance Services is set to become a subsidiary within the Fortis group.
RBSI report operating loss
Royal Bank of Scotland Insurance has reported an operating loss of £203 million for the second quarter of 2010 as compared to a profit of £142 million for the same period last year.
This is apparently as a result of reserves for claims in the motor insurance book and RBSI point to growth in the household and international sectors.
BP hit by claim following use of dispersant
After receiving approval from the US Environmental Protection Agency, BP has used a chemical dispersant called Corexit to disperse the oil, the company has found itself the Defendant in a claim brought by two Gulf residents. They allege that the chemical is far more toxic than crude oil and allege that BP has been negligent in its use of the chemical.
This allegation is based in part on the lack of proper testing carried out on the chemical before its use and indeed the chemical’s manufacturer, Nalco, has released an information sheet stating that while the risk of toxicity is low it has not been tested with regard to its effect on humans.
Over 8 million litres of the chemical have been pumped into the Gulf to disperse the oil and it is feared that it has entered the food chain.
Fall from unguarded scaffold leads to fine
A Staffordshire company has been fined £8,000.00 following a fall of two metres by one of its workers from a scaffold tower. The fall fractured one of his veterbra and crushed another leaving him immobilised for six weeks. An investigation by the Health and Safety Executive lead to the company being prosecuted under the Work at Height Regulations. Lynne Boulton, Health and Safety Inspector, said afterwards that the victim of the accident had done nothing wrong but had been left with life changing injuries.
The prosecution was on the basis that no attempt had been made to install a guard rail or similar device on the platform.
Third Party claims rising
Preliminary results from a study by the Actuarial Profession’s third party motor insurance working party indicate that the costs of motor claims are still rising. Findings suggest that claims are being settled faster but claims generally are increasing in size.
In addition claims management companies are succeeding in prompting potential claimants to make claims where they would otherwise not have considered doing so. The statistics indicate that the amount of personal injury claimants has increased by about 9% each year since 2007. The costs involved are currently increasing by around 30% per year.
Aviva and RSA warn of increases to cover costs
With Aviva imposing double digit percentage rises in motor insurance premiums in the last six months, the head of its UK general insurance David McMillan has warned that these increases will continue. At the same time, the company reported a 21% increase in operating profit.