Myclaim Market Update August 2009
MIB target fraud
In combating fraud, the Motor Insurers’ Bureau is using a new software tool called Sira to collate information about the parties involved. This looks at data across a broad range of sectors including banking and insurance to see if this registers any indicators of possible fraudulent activity.
HSBC fined for Data Protection breaches
The Financial Services Authority has fined three companies within the HSBC group for inadequately controlling the storage or flow of confidential data relating to customers. This included sending unencrypted data of customer’s details through the post or using couriers and basic problems such as leaving details in unlocked filing cabinets. HSBC cooperated with the FSA fully throughout the investigation and as a result were able to have the fines imposed discounted.
No profitability in 2009 for motor insurers
A report for the motor insurance trade by Defaqto suggests that rough trading conditions during 2009 will mean no profitability for motor insurers. Across the board, premiums increased on average by 8.7% during 2008 whereas to bring the market up to profitability an increase of 20% is required. Instead it is possible motor insurers will write policies geared at increasing market share instead of profit.
US recovers whilst UK economy continues to shrink
Recent figures for Standard & Poor’s 500 Index of US companies show the index recovering after the previous dramatic losses experienced in late 2008 and early 2009, particularly after the Lehman collapse. The recovery has continued since a twelve year low was reached on 9th March as investors pour cash into stock expecting the biggest rally since the Great Depression of the 1930s.
By contrast the UK economy shrank 0.8% over the April to June 2009 quarter. Although this is much less than 2.4% decrease seen in the first quarter of 2009 it still was larger than the 0.3% decrease analysts had forecast.
Serious Fraud in UK at new highest level
Figures from KPMG suggest that serious fraud in the UK has reached new levels with 163 cases of fraud involving amounts of over £100,000 during the first six months of 2009. This included a number of basically pyramid selling schemes, one of which involved the former cricketer Darren Gough. Whilst many of the schemes target the wealthy, others are more universal and include buy to let schemes where the properties purchased turn out to be derelict and abandoned.
Other frauds include a social worker who invented a completely fictitious children’s home called Cherrywood and then funnelled all the payments needed for it and its “staff” into her bank account. This eventually netted her £600,000 of public funds over a five year period.
UK’s only Muslim insurer considers expansion
Salaam Halal, the UK’s only stand alone Islamic insurer, is set to expand from home and motor insurance, or takaful as it is called. Their plans are to provide insurance to companies run by Muslim businesses. Takaful uses a different business model than standard insurance and does not invest in businesses profiting from alcohol or gambling.
Drivers unaware of rights over repair of vehicle
A recent survey by Vauxhall has indicated that many drivers of vehicles damaged in collisions are surprisingly unaware that they can have their vehicle repaired where they wish when pursuing a claim through their insurance company. They do not, as they are sometimes told, have to always use the garage recommended by their insurance company.
Technology used to monitor vehicle speed
Increasing use is being made of new technology in monitoring the speed of vehicles on our roads. In car monitors along with new sensor fixed to lamp posts can be used to assess average speeds and traffic densities. Another system, being researched by the University of California, uses GPS-enabled mobile phones to determine the location of vehicles. This data can be used to review traffic flows and accident hot spots. In car monitors might be used in the future by drivers to demonstrate how safe they are – a track record of no collisions could be used to authenticate a new claims discount for example.
Insurance in 2020
A new report by Andrew Moss, chief executive of Aviva, looks ahead to 2020 and what the insurance industry might be like then. It is a little known fact that the UK is the second largest centre for insurance in the world, with 1,100 companies employing over 300,000 people. It is therefore an unsung success story of the British economy and a major contributor to taxes. In the future the insurance industry could contribute to such things as the reform of the national health, the provision of the state pension and unemployment pay. It may also play a role in reducing the public’s dependence on the state.