Posts Tagged ‘insurance’
Everyone knows the insurance industry is the worst kind of old boys club. Well, perhaps not the worst kind. Still, the fact that financial advisers can be sunning themselves on a cruise paid for on the back of advice given 20 years ago is why the whole financial services regime is currently undergoing a ‘reform’ to make it more transparent for everyone involved, with such ‘trail commission’ payments expected to be banned from 2014.
Now, HMRC have decided to get in on the act, with a new ruling that any such commissions that are thrown back to consumers will, from April onwards, be taxable. Earlier years’ bonuses will not be taxed. The insurance industry are perturbed by this new announcement, but are trying to spread the bad news by insinuating they are merely the first step on an HMRC cashback rampage.
The payments in question are basically repeat commission paid annually on longer term insurance-type investments. If you purchased the product with the help of a financial adviser, you can rest assured that he has been enjoying the benefit of the annual charge-back ever since you took it out. However, if you did not have an adviser, or in certain other circumstances, the investment product provider or broker will get the bung instead. Such firms are under no obligation to show you a penny of this free commission, but some do, notably Hargreaves Lansdowne who repay 16% of any commission received to its investors as a ‘bonus’. It is this cash payment returned to customers, either by way of an account credit or set off against management fees that HMRC have now ruled as chargeable. As far as they are concerned, it is an income generated by your investment, so unless it’s in a tax-free wrapper like a Stocks ISA or a SIPP, it’s fair game.
Hargreaves Lansdown, who is the largest bonus re-bunger, is understandably unimpressed. “It seems the Government is now seeking to tax small savers and investors. This is effectively a second tax on their income,” grumbled chief executive Ian Gorham.
However, he didn’t stop there, complaining to the Telegraph that it wasn’t just sour grapes, he was merely concerned that “the government may have set a precedent in taxing such loyalty schemes and savvy shoppers could well be next with Multi-buys, cashback credit cards and cashback websites all possible targets in the future.”
So should we all be worried about our clubcard balances? Is the taxman going to be making honey out of your Nectar card? Should you start declaring your Quidco and TopCashback earnings on your tax return? Apparently not. HMRC are reported to have dismissed these claims as “complete rubbish”, and the taxing of additional income on an investment product (i.e. designed to make the holder money) does seem to be entirely different from earning 20p from buying a kettle at Argos.
Still, you can never say never with HMRC, and perhaps the good folks at Hargreaves Lansdown have just given them a great idea for next year’s Budget…
Those incredibly exciting people at the Transport Committee are calling for evidence to see how much whiplash is costing us all. It has been reported that whiplash claims are adding around £90 to every motor premium, so what can be done to reduce that?
Basically, they want to find out how many whiplash claims are bogus and which costs are hiked-up as a result. This will invariably mean that claimants will have to undergo an independent medical examination, which is something insurers have been calling out for.
The Association of British Insurers (ABI) wants to see all whiplash claims seen by medical professionals in a bid to stem the flow of claims, after seeing whiplash cases rising by nearly a quarter in the past four years. The UK is already considered to be the ‘whiplash capital of the world’ and the figures that estimate 70% of road accident personal injury claims are for whiplash in the UK is indeed, much higher than Germany’s 47%, Spain’s 32% and France’s frankly pointless 3%.
The Association of Personal Injury Lawyers (APIL) isn’t convinced by all this, and said that this may put off people with genuine claims. “The real issue should be about getting the right level of compensation for genuinely injured people,” said APIL President Karl Tonks.
Louise Ellman, Transport Committee chair, said: “It is vitally important for policymakers to understand the reasons for the very high cost of motor insurance, especially for young drivers, and to take steps to bring that cost down. Whiplash claims undoubtedly play a part in driving up the cost of motor insurance, but access to justice for injured people must be preserved.”
“We want to hear the arguments on these points and will publish a report in the summer about the best way forward on this difficult issue.”
Either way, chances of your premiums going down in price remain at nil.
According to statistics, one in three cars have been damaged by potholes on Britain’s dreadful roads. The cost of fixing that is around the £10bn mark.
A study has deduced that the number of potholes has gone up by nearly a third to more than 2.2 million, or, one in five of all roads. This has resulted in compensation pay-outs reaching an eye-watering £32million.
£113million was spent last year filling in the potholes and this year is worse, thanks to heavy rainfall, floods and cold-snaps. The investigation by Annual Local Authority Road Maintenance (ALARM) concludes that there’s “a crumbling road crisis of increasing concern”, signing off with a delightfully hysterical notion that this is a “ticking time-bomb”.
The report thinks it is time to “stop the rot” and for politicians to start making some money available to sort all this out, moving on from a policy of “patch and mend” in favour of a “planned, preventative maintenance programme.”
The report said: “The cost of filling the estimated 2.2 million potholes across England and Wales came to £113million, while £32million was paid out in compensation claims and the cost of staff time spent on claims amounted to over £13million. Councils have paid out 50 per cent more last year than the previous year in compensation claims from road users for damage or injury due to poor road condition.”
The AA added, in their own report, that they’ve had to double the size of the team who deals with pothole damage and that: “As spring arrives our patrols are reporting potholes appearing faster than daffodils,” and after polling their members, found that a third have rated the overall surface condition of their local roads as ‘poor, very poor or terrible.’
What do you reckon?
Aviva have published a report which, unsurprisingly, has a pop at those who like to make a claim or two. They reckon that personal claims arising from ‘compensation culture’ are adding £118 to every motor insurance premium.
So, all those people who made claims made for whiplash, have made premiums rise rapidly. Not the insurance companies themselves you understand, as they wouldn’t do such a thing, especially when they’re looking at figures that obviously include genuine claims.
Apparently, there’s also been a surge in fraudulent activity, which means that people are staging car-crashes and passengers involved in these collisions are making false claims, which is remarkable. The dedication for getting a quick-buck is almost impressive.
Aviva’s report – ‘Road to Reform: Reducing Motor Premiums by Reforming the Claims Process’ – will be launched before March and hopes to improve the PI claims system.
Dominic Clayden, claims director at Aviva said: “Our primary concerns are that injured parties receive care and compensation as quickly as possible and that all motorists benefit from a reduction in excessive costs that have built up from claims over the last few years.”
Uh oh – the Go Compare man is STILL alive, in spite of recently being shot to bits by a rocket-wielding Sue Barker. But he’s still a target for angry minor celebrities – this time it’s mediocre ‘soccer’ coach Stuart Pearce who is out to get the singing hate-figure.
If the idea of this campaign is for us all to feel sorry for him, then it isn’t working. In fact, it’s only making us hate Go Compare more. We just spent the afternoon on the phone to the insurer’s main competitors, taking out expensive cover on cars, home and fancy items, none of which actually exist, all in an attempt to drive Go Compare out of business. Try it – you’ll feel better!
Car insurance is, for the most part, dreadfully unfair. And so, Aviva are trying to give a little fairness by offering a trial with a service that tracks your driving via your smartphone. They reckon it’ll adjust your premiums.
Aviva has previous with this sort of thing, trialling black box telematics technology, but this new phone app is a lot less hassle and does the same job.
So, if you fancy letting a bit of technology monitor your driving in the name of (hopefully) cheaper insurance, policy holders can download the Aviva RateMyDrive app which will track your first 200 miles, collecting data on your acceleration, braking and cornering.
Then, you’ll get a score and that will determine your insurance premium.
Aviva have tested it on their own staff, but now they need 5,000 drivers to volunteer to help. “We need a wide range of motorists to test the proposition and help us develop the final product and customer experience before we bring it fully to market,” said Steve Treloar, Aviva’s retail director. ”We believe that by using smartphone technology in this innovative way, Aviva will be able to tailor premiums further to individual drivers – basically the premium will be for you, not people like you.”
Things are looking pretty bleak at Aviva after they reported a loss after tax of more than £680m in the first half of the year. The insurer has not been doing well for a while, accidentally firing over a thousand members of staff, handing out unbelievably awful quotes and indulging in a publicity stunt that woefully backfired.
But losing £680m in six months is something else.
Aviva are looking at a radical shake-up as it tries to get its house in order, planning to sell or close more than a quarter of its businesses in a bid to save £400m. The insurer has appointed investment banks to help them get through this like Daniel Bedingfield.
It appears that they’ll be getting rid of their US division (AmerUs) which was bought for £1.8bn in 2006 and they’ve written down £876m of goodwill with Pat Regan, Aviva’s finance chief, saying: “It’s a test of recoverability of goodwill. It’s no more than that.”
Not in preparation of trying to flog the business to someone else then?
This £681m loss is particularly spectacular if you look at the fact that, earlier in the year, Aviva made a profit of £465m. If you’re an Aviva customer, it might be time to start shopping around elsewhere.
OK. So times are tough. A double dip recession is apparently a bad thing and not something tasty with a lolly and two different types of sherbert. Good job we all have our morals and are fine upstanding members of society eh? We’ll pull through this- as millionaire David Cameron said, we’re in this together.
Or not. New research from Moneysupermarket.com, reveals that we are, in fact, becoming a nation of fraudsters, with 11% of respondents, an equivalent of 4.3 million people nationally, saying they would make a false home insurance claim. What’s worse is that over a third of those, a whole 4% of respondents say they would do so regardless of the economic climate, and the equivalent of almost 780,000 people admitted they had already done made a fraudulent claim. Tut tut.
Nice people, your neighbours. Particularly if you live in the North- people in the North East (15% and North West (14%) are most likely to make a false claim, compared with only 8% of those living in the South East. Insert obligatory scathing remark about how well-off everyone is in the South East.
In addition, men are more likely to make a fraudulent claim (14%), six percentage points higher than females. Those under the age of 35 are more likely to act dishonestly, with 21% making, or likely to make, a false claim compared to just 10% of over 45′s.
Of course, the standard excuse is that insurance companies have so much money anyway, putting a little bit back into the pocket of a poor, struggling (or greedy) householder isn’t going to make much of a dent in mega profits. This is possibly true. However, insurance companies are quite partial to their lovely big profits, and will try and preserve these at all costs. This means that the people who lose out aren’t the shareholders (who would, most likely, be institutional investors like your pension fund anyway) but are the poor old householders whose insurance premium goes up and up every year so the insurance company covers its losses. Insurance fraud is also illegal. In case you hadn’t worked that out.
Peter Harrison, insurance expert at MoneySupermarket, said: “It’s extremely concerning to discover so many people are contemplating making a false or exaggerated claim on their home insurance. With recent news the UK has slipped into a double-dip recession, household finances will undoubtedly be stretched, but no matter how tempting, fabricating a claim for a payout is illegal, and you could face being prosecuted as a result.”
Insurance companies take fraud very seriously, no matter how big or small the amount being claimed for. If insurers are suspicious of a claim’s validity it will be investigated with specialist detection processes and anti-fraud technology. Anyone caught and found guilty of insurance fraud would find it extremely difficult to get insurance cover in the future. Previous convictions for insurance fraud must be disclosed on application forms for any type of insurance. Insurance premiums will be much more expensive for someone guilty of making a false claim, and in some cases insurers may not be willing to offer cover at all.”
“For a homeowner, being declined buildings insurance would go against the terms of your mortgage, and for a driver, not having valid car insurance would leave them unable to take to the road as it’s illegal to drive without valid insurance,” finished Mr Harrison, himself unable to compute that, much as 2 plus 2 equals 4, those scurrilous individuals who would make a fraudulent claim are unlikely to have any crisis of conscience of driving without insurance.
So there you have it. If you are thinking of making a fraudulent insurance claim-don’t. If your home insurance premiums go up on renewal- go and sort out your neighbours with the new 47” 3D TV…
Consumer champions of the world, Which!!!, have compiled two separate reports (TWO! Count ‘em! Like the White Album, it could’ve made one great report, but there’s no telling Which!!!!!! is there?) which state that insurance customers are facing unnecessary costs.
They found that 10 out of the 12 largest water companies are promoting pipe insurance from third parties, and this apparently costs customers more than £100m (in total) and in many cases, the money being spent is absolutely needless.
This is because water companies provide their own repair schemes which are free-of-charge. This service overlaps with what’s being offered by insurance companies. In addition to this, some water supply problems could be covered by your home insurance.
Another problem is that many water companies are promoting Homeserve policies through direct mail promotions, often on their own headed notepaper. You could argue that this is a little misleading, which is neither use nor ornament if you’re paying for things that are covered for free elsewhere.
Which?!?!? have also highlighted that insurers could well be charging hidden fees for insurance policy changes and renewals. It seems that AXA and Swiftcover are charging customers £30 to update your personal details with them.
Peter Vicary-Smith of Which!!!!! said: “These charges should reflect the real cost to the company and not a way of making easy money from consumers who are already struggling with high and rising insurance premiums.”
In other words, they’re all greedy swine. Keep an eye on ‘em.
You know, you can get anything insured these days. Supermodels insure their legs, page three girls can insure their assets and even Len has insured his signature good looks against damage in the ring. But what about normal, everyday stuff? Naturally, your home insurance will cover most of your worldly possessions, but there is one thing you could have paid a lot of cash for over the years, but that might not actually be insured- your digital content and software.
That’s right. While you can back up photos and some apps to the cloud, what about proprietary program software for your laptop, like Office or Adobe? What about your lovingly curated digital music collection, the stuff not ringfenced in by iTunes? Could you afford to replace it all if your laptop literally went up in smoke?
Boffins over at Moneysupermarket.com, who genuinely have nothing better to do all day than poke around in the underwear of insurance policies have discovered that different insurers have wildly different levels of cover for your non-tangibles. Top of the shop is Hiscox, who offer up to £2,500, followed by LV= and Direct Line with £1,000. However, at the other end of the chart are companies like Barclays, LloydsTSB and the Post Office who offer no cover at all.
Importantly, some insurers make distinctions between covering digital downloads and software stored on home entertainment equipment and computers compared with how they cover data downloaded on mobile phones. It’s important to be aware of any differences should you need to make a claim and examples of policy wordings (from those that actually do offer cover) are as follows:
Peter Harrison, insurance expert at MoneySupermarket, said: ” It’s easy to overlook the value of digital downloads and computer software as they are out of sight and potentially out of mind. I’d advise homeowners to be sure they have sufficient protection against loss or theft of digital downloads. Check the details of your home contents insurance to see if you have cover in place and if you are unsure after reading through your policy documents, speak to your insurer to clarify if you do have cover and to what extent. It’s worth spending some time to value your virtual content to ensure you have adequate cover for all your digital downloads as the upper limits on many policies can be modest.”
“Where possible, keep copies of invoices or bank statements as proof of purchase in case you need to make a claim” he finished.
But what if you have a massive hard drive and some serious music or software files? If the value or replacement cost of your digitals is more than the limit imposed by your insurer (not difficult if that level is £0), you may need to add exceptions to your policy, in the same way that jewellery over a certain value is often detailed separately to ensure cover. Although then, of course, you will need to see whether the extra cost is worthwhile.
Still, once downloads and digital software become commonplace, surely the insurance companies will keep up with the times and adjust their policies accordingly. Oh, wait…
AXA, the car insurance behemoth, says that they’ve seen a big increase in the number of customers who are not able to authorise repairs to their damaged cars due to lack of cash to pay for the excess.
They said that , last year, 61% of motor claims saw drivers not having the money available in claims, “leaving people with potentially unroadworthy cars, or at the very least with damage that will deteriorate due to lack of repair”.
One-third of motorists don’t have enough in available savings to cover their excess, with 48% having savings of less than £500 and a third (34%) less than £200.
AXA found that nearly two thirds (62%) knew that at least part of their excess is voluntary, and with that, drivers might have cut their cost of insurance cover but if they can’t afford to meet their part of a claim, they there’s a chance they could be left with what is ostensibly a dangerous vehicle.
Sarah Vaughan from AXA says: “We appreciate that premiums have risen a lot in the last couple of years and we can understand consumers looking at ways of saving a bit of money. But if this means that they can’t afford their excess, it is a completely false economy.”
And fuel isn’t getting any cheaper either! Hurray!
Satnavs have one job – to tell you how to get to your destination. However, 83% of British drivers reckon that they’ve been misled by their directional gizmo with some even going as far as to blame some car damage on them.
Research from Confused.com has concluded that satnavs have caused over £200 million worth of damage to drivers on UK roads, thanks to accidents caused by misleading directions.
68% of drivers have worked out that they’ve ended up doing longer journeys after following the directions given by their gadgets. 45% have felt angry and frustrated while behind the wheel thanks to satnav-rage (which needs a much catchier name), leading to 31% of British motorists spending between £100 – £500 on satnav related car damage.
As Gareth Kloet, Head of Car Insurance at Confused.com, says: “As car insurance costs continue to rise, it’s never been more important to keep your motoring costs as low as possible. Our research has shown that the satnav is not always the blessing it was once hailed to be and increasingly, motorists appear to be sighting the device as a source of frustration and danger!”
Confused have created a satnav blackspot map, where you can enter details of the ones you’ve discovered or know about, which they hope “will not only help reduce risk, but we also hope that frustrated drivers get back behind the wheel a little happier.”
There is also legislation due, which means that satnav manufacturers will have to update their maps more regularly to prevent this misdirection.
Insurance clowns Direct Line and Churchill (both owned by RBS incidentally) have been fined £2.17m for tampering with customer complaint files before submitting them to the Financial Services Authority (FSA). That’s lousy isn’t it?
The FSA said: “The firms failed to give clear instructions resulting in staff making inappropriate alterations with one individual even forging the signatures of colleagues.
“The firms’ management did not know what changes had been made or when [but] it is of critical importance that material provided to the FSA must reflect the picture as it is – not as they might like it to be.”
Paul Geddes, chief executive of RBS Insurance, said: “We very much regret the findings of the FSA investigation. Although no customers were disadvantaged, we are very disappointed that we did not meet the standards we expect of ourselves and which the FSA expects of us.”
The tampering happened when the insurers tried to deal with the FSA’s inquiries, which have been going for three years. The inquiries were to look at the way financial firms deal with customers’ complaints. Of course, RBS have previous with FSA fines, getting a £2.8m slap in the face in January 2011 for failing to adequately deal with routine complaints from customers.
And now, in the case of the insurance subsidiaries, the FSA asked for a sample of 50 complaints so a review could be undertaken. Before handing them over, the insurers management got external accountants to carry out their own review, finding that over a quarter of complaints were likely to fail the FSA’s assessment. That is when the companies started tampering with the files to make sure they were all up-to-scratch.
The FSA state that 27 of the 50 had been tampered with and seven contained signatures of employees, which had been forged by one member of staff. “In this case, the alterations did not impact on the FSA’s ability to do our job,” the FSA said.
If driving didn’t make you angry enough, the latest annual figures on the cost of motoring will make your knuckles whiten with anger. The increase in the costs of driving is now at almost three-times the rate of inflation, which is just great if you rely on your car to, y’know, live.
Now, the average annual cost is around the £6,500 mark, or, if you prefer, around £129 per week or 55.74 pence per mile. That’s an average of £1,556 more, per year, than motorists where paying in 2007.
The Telegraph reports that, when vehicle depreciation and finance are excluded, day-to-day running costs are also up by 11.1pc to £2,743. Of course, the biggest hike is in fuel costs which have increased by £160 annually since 2010.
Petrol is up from 118.4p/l to 134.78p/l and diesel has shot up from 122p/l to 140.49p/l. To rub salt in the wound, insurance costs have also seen a sharp rise, climbing up 14.4pc to an average of £551.
Adrian Tink from the RAC says: “This year’s index highlights the tough conditions being faced by Britain’s motorists. With the annual cost of motoring approaching £7,000 the price burden of car ownership is hitting drivers hard. The increase of almost three times the rate of inflation is crippling drivers’ wallets and something needs to be done to stem the tide.”
“With fuel prices continuing to be the biggest single running cost, UK drivers want action from the Government”
- Drivers under 25 should have a minimum one-year learning period.
- They should also hold a ‘graduated driving licence’ for two years before taking a second test.
- Restrictions would be made on the number of passengers they could carry during the graduated period, as well a restriction on them driving between 11pm and 4am, unless necessary for work purposes.
- Drivers under 25 should not be allowed to take the wheel if they have drunk any alcohol.
The ABI have made the proposals in an attempt to help cut the high level of deaths and serious injuries that involve young drivers. Nick Starling, ABI’s director of general insurance and health, said: “Our proposals are not designed to drive young drivers off the road, but to ensure that they become safer drivers. We must act to reduce the tragic loss of young lives on our roads.
“While recent years may have seen a reduction in road accident fatalities and serious injuries, the figures are still too high. Every young driver statistic is a tragedy. Whether it is inexperience, youthful bravado or sheer recklessness, we need tough action to better equip young drivers to handle the dangers of driving.”
What do you think about all that, readers? Especially if you’re under the age of 25 and these proposals would affect you.