UK Insurance News

The Government Justice Secretary Kenneth Clarke’s announcement that the current ‘no win, no fee’ rules will be reformed, has been applauded by the Association of British Insurers (ABI), who have been campaigning for a change to the current system for some time.

In his announcement Clarke said that a reform was needed to “put the brake on runaway legal costs and mean a better deal for genuine claimants and insurance customers.”

The ABI have long campaigned that high legal costs in settling personal injury claims is one of the main reasons for the general rise in motor insurance premiums.

Nick Starling of ABI said; “For too long ambulance-chasing lawyers and claims management firms have encouraged many people to believe that there is a compensation culture to exploit. The result has been a slower process for genuine claimants, and out of control legal costs that end up being paid for by all consumers through higher insurance premiums.”

The ABI claims that for every £1 paid out by motor insurers in compensation, another 87 pence is added in legal costs.

We will have to wait for news from the government as to what reforms they will make to the compensation market and whether motor insurance premiums will decrease as a result of any such changes.

One activity that appears to be booming during these hard times is the illegal cultivation of cannabis in farms set up in residential homes, with plant seizures by police rising by 18% in 2009/10.

According to Aviva insurance almost all of the 758,700 plants seized by the police in 2009/10 were being cultivated in residential properties and the insurer is warning landlords to be more vigilant as claims resulting from seizures have shown an increase of 30% in claims made against the insurer for damage caused to the property.

Cannabis farming tenants will often line walls, ceilings and doors with plastic or polythene, and windows will normally have blinds or curtains closed to obscure any activity.

The plants are watered through a watering system and high powered lighting is installed, often resulting in the tenant bypassing the electricity supply or at least tampering with it.

Heat from the lights and moisture from the water can cause condensation to be produced and the pungent smell of the plants can permeate walls.

Aviva said; “Cannabis farming comes with serious risks for landlords; properties can be completely ruined inside to make space for plants, water damage can occur and fire poses a risk due to interference with electrics or strong lighting left on for a long time.”

The company adds that it is working with both clients and brokers to raise awareness regarding tenants using domestic dwellings as cannabis farms, ensuring landlords have the right level of cover in place, rather than standard home insurance.

What exactly is Public Liability Insurance and who needs it?

Public Liability Insurance (PLI) provides cover for any damage caused by the insured to a third party person or property.

Should you run a business, despite your best intentions there are bound to be occasions when accidents happen and should the accident happen as a result of something that your business has done, then the client, contractor or member of the public can claim against your business for compensation.

Your Public Liability Insurance will then cover any claims made against you for damage to property or injury to a third party.

For example if a tradesman working in your home were to knock over an expensive clock or vase, his Public Liability Insurance would cover the cost of the damage or replacement.

This insurance would also provide cover for any injury that a third party receives through the neglect of the tradesman, for example, a roofer dropping a tile from the roof onto the third party below, or even causing damage to the third party by leaving tools lying around the house causing the third party to trip and injure themselves.

Clearly any tradesmen or self employed contractors should have a form of Public Liability Insurance in place, but perversely there is no legal obligation to do so, despite the obvious risk to others and the financial implications to the tradesman.

Many employers such as building sites will not allow anyone to work on site without a valid insurance agreement and home owners should take the same stance and ask to see the certificate of anybody that they employ for jobs such as building work, plumbing, window cleaning – anything in fact!

For anyone starting up their own business particularly when working in other peoples homes and business premises, it is recommended that you take out Public Liability Insurance without any doubt.

It only takes a drink being spilled on a clients computer or a third party tripping over unattended tools causing injury to themselves, to realise your business cannot possibly operate without PLI.

The European Court of Justice has ruled that UK insurance companies and pension providers cannot charge different premiums to men and women because of their gender, saying that it is discriminatory to do so. The ruling will lead to higher insurance premiums for women and lower annuity pay outs for men.

The changes will not come into effect until December 2012 allowing the industries in question time to adjust, but doubtless there will be some increases in both in the interim.

The British Insurance Brokers’ Association (BIBA) said currently the cost of the average car claim by an 18-year old man was £4,400, while that for an 18-year old woman was £2,700.

“The ruling will have a significant effect on the insurance industry which has used the system of risk based pricing to award discounts to lower risk drivers like young females who are statistically safer drivers.

The industry will have to change its model and effectively females will now pay a cross subsidy for males on their insurance premiums,” said a BIBA spokesperson.

Young female drivers are likely to be among the worst hit by the ridiculous ruling and the AA warns that premiums for females under 30 could rise by up to £400 per year.

Maggie Craig, acting director general of the Association of British Insurers (ABI), said: “This gender ban is disappointing news for UK consumers and something the UK insurance industry has fought against for the last decade.

“The judgment ignores the fact that taking a person’s gender into account, where relevant to the risk, enables men and women alike to get a more accurate price for their insurance.”

Pensions

The ruling will have an effect on the cost of pensions when it comes to buying an annuity, as women statistically live longer than men and so receive a smaller annual pension for a longer period from the same size annuity pot.

The first impressions from the pension industry suggest that men will end up getting smaller annuity income than they do now when benefits are bought into line with those of women.

So as far as I can tell, without being discriminatory, we will all end up losers!

The dreadful longevity of the snow and icy weather endured across much of the country at the tail end of last year has proved to be extremely costly for UK insurers with figures released suggesting that claims during the period reached over twice that paid out for the same period in 2009.

Compared to atrocious weather in the same period of 2009, the cold snap in November and December 2010 was not only more severe, but lasted longer and affected more of the country.

Insurance claims against property and vehicles reached a staggering £1.4billion over the most recent winter period compared to the measly £650million paid out for damage caused in 2009.

In fact burst pipes alone accounted for more in pay outs in 2010 than the total claims from the previous winter, with over 100,000 claims totalling £680million.

More than 250,000 vehicles were damaged as a result of the snow and ice on the roads, leading to claims for a further £530million it is claimed.

The Association of British Insurers (ABI) who released the figures, suggest that there is no evidence that premiums had increased as a result of the cold weather, but I am sure that will follow during the course of this year.