Myclaim Market Update March 2010
MIB Reduce Contribution from Insurers
For the third time in as many years, the MIB has reduced the contribution expected from motor insurers to the fund of last resort. The contribution expected for 2010 is £397 million.
“Fronting” Motor Insurance policies seen as a problem
Recent research by Swiftcover, Aviva and the Motor Insurer’s Bureau have thrown light on the widespread problem of “fronting” motor insurance policies. This is where, for example, a parent declares themselves as the main driver of their child’s car as a way of lowering the often high premiums for a policy for a new and young driver.
The research indicates that a surprisingly high number of those involved think of “fronting” as a semi-legitimate, or at least harmless, method of lowering the premium for a policy. The difficulty is that if the person driving the car or motor bike then has an accident and this is discovered, the insurance company may decline to pay the claim due to the fraud involved. This could leave the named policy holder, in this example the parent, having to pay not only for the damage to their own vehicle but also the damage to the other. This could be very expensive, possibly many thousands of pounds particularly if a personal injury is involved.
There are lawful ways to reduce premiums in this situation. For example driving a car with a smaller sized engine and making sure an alarm is fitted can help. Also ensuring the vehicle is parked in a garage can lower premiums and finally if the driver goes on an advanced driving course this might also help to reduce the insurance outlay.
Car Scrappage Scheme to Be Scrapped Soon
Motorists must remember that the Car Scrappage scheme, introduced by the government to aid the motor industry during the recession, will finish at the end of March 2010. The scheme, in which the government and the motor industry paired up to assist motorists purchase a new car, has proved to be a success with over 355,000 new cars and vans have been purchased since it began in April 2009. But the money involved of £400 million is now running out and there are no plans to extend the scheme. The most popular make under the scheme is the Hyundai followed by the Ford.
Owners of Toyotas Report Problems
As reported in The Guardian, Moore Blatch Resolve solicitor Ciaran McCabe has been appointed to deal with a case involving a Toyota vehicle, one of many that has become the subject of a recall due to faulty components. This case involved a vehicle becoming uncontrollable and crashing into a wall. The client is currently having rehabilitation.
RSA struggles in “tough” UK market
Figures from insurer RSA show that 2009 net premiums were up 4% but operating profit and both pre and post tax profits were down. Chief Executive Andy Haste said that the UK market remains tough but the downturn due to the recession has been mitigated by focussed targeting on business goals.
Towergate buy John Charcol
Insurance company Towergate recently purchased mortgage broker company John Charcol, beating off a mystery alternative bidder in the process. John Charcol, a company specializing in high net mortgage deals, recently went into administration and as a result it is believed that Towergate were able to purchase the company for much less than the £50 million it was for sale for when originally put on the market in 2008. John Charcol’s business will remain running in the same way at present and no redundancies are planned as a result of the acquisition.
RBS Insurance losses
There was surprise in the recent figures issued by the Royal Bank of Scotland when it was revealed that its insurance division, which includes such household names as Churchill, Direct Line and Green Flag, has lost £170 million in the final three months of last year.
This is partly explained by costs involved in the bad weather during the winter and also higher personal injury claims. It perhaps explains why there have not been quicker moves to sell the insurance division like other non-core assets that the company has to divest itself of to comply with an EU ruling recently.
It is expected that it will be back in profit in 2010 and be ready to sell during 2012.