Posts Tagged ‘insurance claims

04
Jan
12

My top five headaches for the UK insurance industry

By Ralph Savage Leave a Comment
Categories: Insurance & Reinsurance, Investment and Legal
Tags: , , , , , , , , ,

For those running brokers and insurance companies in the UK non-life market, 2012 promises to be a challenging year with reputation topping my list of worries for the industry.

Issues ranging from closure of a £500m tax loophole to  how major property exposures can be managed once a decades-old pact to insure buildings at risk of flooding comes to an end; these and more will all vie for directors’ attention alongside the day to day running of businesses typically located at the grudge purchase end of the high street.

With concerns both legislative and market-driven requiring considerable thought, here’s my top five insurance industry headscratchers.

Continue reading ‘My top five headaches for the UK insurance industry’

07
Dec
10

Something for personal injury lobbyists in 2011?

By Ralph Savage Leave a Comment
Categories: Accounting & Insolvency, Insurance & Reinsurance, Investment and Pensions
Tags: , , , , , ,

So, the government has effectively rubber stamped the Jackson proposals and most of Lord Young’s recommendations will maintain their hearty Whitehall endorsements, despite the former Business Secretary’s indiscretion in November. However buried beneath this story in the papers is a topic which might get tongues wagging in personal injury circles from here on in.

It took the insurance trade media a couple of weeks to notice that the Discount Rate was officially under review but this certainly got the defendant lobby talking amongst themselves with the actuaries pulling out their calculators first off. Laura McMaster an insurance partner at the actuarial firm LCP, said: “To illustrate, a typical lump sum settlement of £6m agreed on a 2.5% discount rate could increase to around £7.2m on a 1% discount rate and to around £9.0m on a -0.5% discount rate.”

Insurance Times rounded on the topic on 2nd December in a subscriber only article and pointed to a potentially dark future for insurers. It suggested that a combination of the increase in numbers of Periodical Payment Orders being made by judges; their calculation now being linked to a faster inflating index ever since the Thompstone v Tameside judgement in 2008; and the potential of a reduced discount rate might mean premium inflation is essential to help them top up liability reserves. It appears the actuarial profession is warning the insurance industry to consider this seriously.

The review itself has been on the cards for some time. In another subscriber-only piece this time in Post Magazine from early 2009, Barlow Lyde and Gilbert partner James Dadge said: “General economics are clearly leading the claimant lobby to make its case to have the rate reduced.”

Dadge also produced a handy illustration of what a change in the discount rate would mean for damages awards:

That about wraps it up for the discount rate coverage (ok it is a bit dry, I admit) so back to the juicy stuff and at what had effectively become rolling Jackson reform newsdesks, the Lawyer’s Katie Dowell reported how it happened by giving the drama from a journalist’s perspective, including an exciting Whitehall press conference called at a moment’s notice.

Interestingly, Guardian columnist Neil Rose suggested that a better venue for the announcement might have been Tory Central Office.

As the dust began to settle, Linda Lee’s impassioned plea to the profession in last week’s Law Society Gazette certainly added some perspective and it’s clear that 2011 will be something of a red letter year for legal services.

08
Sep
10

Insurance sector PR spokespeople; Ready, aim, fire!

By Ralph Savage Leave a Comment
Categories: Insurance & Reinsurance, Public Relations and UK National Newspapers
Tags: , , , , , , ,

Like deserters facing a firing squad, the insurance industry’s PR spokespeople took it like brave soldiers in today’s Daily Mail. 

The story, Insurers hike flood victims\’ premiums by 500% and make them pay first £6,000 of claim | Mail Online, points out how flood victims have seen their renewal premium and excesses go up by astronomical figures and asks why oh why.

Of course the problem is that because everyone’s paved over their front gardens and the government won’t stump up the cash for some more sandbags so every year thousands of people suffer enormously as torrents of water rush into their lounge and destroy the place.

This is a lose lose situation for the insurance industry PR machine but it’s very interesting to see what tactic they adopt in meeting their maker. They can’t blame the government, because surely that can’t justify slapping on an extortionate £6000 deductible at renewal, and they can’t tell us about all the grateful homeowners who’se properties they did save from destruction because well, that would result in a headline like ‘insurer pays claim and fixes house’.

However, perhaps knowing the battle can never be won, ‘Honest’ Adrian Webb, of Esure gives it to us straight and is almost praised by the reporter for doing so;  ”We are not an insurer for flood-risk postcodes. We have lobbied the government for nearly eight years to improve flood defences,” he says. “We cover flooding in areas where it is a genuine accident, not an accident waiting to happen because of nearby undefended water sources. Insurers do not cause floods, neither do they build flood defences.”

31
Aug
10

Good cop bad cop with Admiral after H1 results

By Ralph Savage Leave a Comment
Categories: Insurance & Reinsurance, Personal Finance and UK National Newspapers
Tags: , , , , ,

There’s an interesting dichotomy to the coverage regarding insurance company Admiral’s first half results. The national media focuses in on the company’s share price alone, while the trade media puts the spotlight onto its declaration that it isn’t like other motor insurers and has no problem with bodily injury claims inflation.

The Guardian’s Market Forces Blog points the story out with a cheerful headline that Admiral’s staff are likely to cash in after a profit boost; Admiral staff cash in after profit boost, as FTSE edges higher | Business | guardian.co.uk.

However, it reports that analyst recommendations placed Admiral’s stock on the sell list straight away. Two analysts, Charles Coyne and Eamonn Flanaghan attached for sale signs to this particular share which they say is ‘materially overvalued’. It’s hard to disagree when the price is so very much in excess of the company’s net asset value.

The trade media however focuses in on the reason perhaps that Admiral is able to command such loyalty from its shareholders and a factor that may well inform that sky-high equity.

Amidst spiraling claims, most of the UK motor insurance sector can’t bring in money any quicker than it goes out of the back door, so to hear a company confidently reporting that it has seen no ‘unusual trends in bodily injury or damage claims’ is rather refreshing.   

Could it be down to good underwriting in the first instance? Well, Admiral’s quota share arrangement means it carries less liabilities on its own balance sheet than many rivals in favour of having the risk spread amongst a group of reinsurers – see one example here – and that means the consequent claims exposure is also shared. However, such arrangements exist to secure a profit on underwriting and as such there is no more or less demand upon Admiral’s underwriters than there would be for those at Royal Bank of Scotland Insurance, Aviva or RSA.

Admiral has enjoyed a purple patch for some time now and if the analysts’ story is to be believed, that could be about to end. Some credit should be extended to an insurance company that manages its portfolio well though. Motor insurance is a great leveller in financial services and those who make a margin in it should get a pat on the back from their investors.

17
Aug
10

No win-no fee advertising – a tough one to call

By Ralph Savage Leave a Comment
Categories: Insurance & Reinsurance, Legal and UK National Newspapers
Tags: , , , , ,

Neil Rose’s latest column in the Guardian illustrates the difficulty facing policymakers in curtailing the negative consequences of a system that is unpopular with the public while simultaneously being one of the only ways to fulfill our basic right of access to justice.

The proposals to ban ‘no-win-no-fee’ advertising are juxtaposed with Rose’s assessment of the bigger picture – something often lacking in media reportage. His point that claims management companies – those felt largely responsible for the advertising campaigns in question – are simply filling a gap left vacant by solicitors who would probably add this marketing cost into their own if it were up to them.

This fact then leads to issues of restrictions in trade and a further quandary for policymakers. Changes to the rules on who can own a law firm will be introduced next year under the Legal Services Act, with CMCs widely expected to be circling the very law firms on whose behalf they currently advertise. with £40m of revenue made from NWNF advertising each year, Rose asks whether David Cameron can comfortably remove this particular rug from under the feet of the very people for whom he used to work?

09
Apr
10

From facebook to sales book – Postonline

By Ralph Savage Leave a Comment
Categories: HR & Employment and Insurance & Reinsurance
Tags: , , , , ,

From facebook to sales book – Postonline.

Social networking, broker focus

 This piece by Amy Ellis looks into the facebook/twitter/linkedin world of social networking and asks brokers if they reckon they can use it to make money. In short, the answer is no. But they’re definitely interested in it. Ironically, lawyers are actually way ahead of brokers on this one, developing networks on facebook which capture claims like wildfire… where you on that bus which stopped quickly and gave all 57 passengers whiplash???

UKRC puts rehabilitation on the general election agenda

Lynn Rouse’s story reports how the chair of the UK Rehabilitation Council has written a letter to all the main parties demanding that they declare whether rehab and return to work is on their general election agendas. UKRC has opted against partisanship but if single issue politics was my area, I’d follow the example of those business leaders who’ve sided with the Tories about national insurance – they’ve milked that PR cow dry.

comment;  ‘Fit for purpose’

This piece from Tony Urwin of Shaw Trust uses the introduction of GP ‘Fit notes’ as an excuse to talk about vocational rehab and how successful it’s been in Australia, the US and Canada. He says all the same things about why it’s never really taken off and then makes you read all the way until the end of his 1000 words to say why he thinks the fit notes could provide a spark. He says they will be a procedural problem for insurers and employers that they will be looking for someone to solve and that outcome-focused vocational rehab could be it.

10
Feb
10

Pick of the bunch from the Insurance Trade press

By Ralph Savage Leave a Comment
Categories: Insurance & Reinsurance
Tags: , , , , , ,

Post Magazine – IAG linked with Provident after GMAC quits UK motor

Less than three years since GMAC bought Provident, the motor insurer is up for sale once again. 2010 clearly is going to be a year of M&A speculation as the industry awakes from its slumber and this story points out how the insurer previously acquired for £170m in May 2007 will fetch considerably less right now – presumably because amongst its flagship deals were a tie up with a bunch of General Motors car brands including the recently rescued Saab, of which only an estimated 40 000 vehicles were sold in 2009. Unfortunately, there is not much more one can do with a small motor insurer M&A story than put the name of Neil Utley alongside it as a possible suitor; he is the most usual of the usual suspects.

Drive Assist alleged to have falsified hire days (Insurance Times)

CHO acts to defuse backlash over malpractice promoting email (Post Mag)

With Post Magazine helpfully putting their issue up online at the same time as IT, it means we can compare the same stories at the same time. It’s a close call, but I’m going to give the prize to Post’s interpretation of this story which involves credit hire firm Drive Assist allegedly hiking up the numbers of days they charge to insurers; they are blaming the grease monkeys at the garages and trying to mop up the ensuing PR mess. Both magazines giddily reveal their having had access to a ‘leaked email’, although IT goes one further and decides the source is in fact a ‘whistle blower’, obviously intent on smashing the system from the inside – needless to say this whistleblower had been made redundant last year amongst 400 other seditious malcontents.

However, the winning line comes in Post Mag’s coverage from the Accident Management Association which praised Drive Assist for its prompt response and argued that this incident had in fact ‘enhanced’ the reputation of credit hire.

One man’s fight against the FSA

Insurance Times’ cover story this week tells an unlikely tale of one man’s fight to clear his name against the mighty financial regulator. It’s actually a gripping yarn and knowing how hard it can be to pin down these human interest stories, I salute the Danny Walkinshaw for the achievement.

Michael Bright could be emerging from his term at Her Majesty’s Pleasure at some stage during 2010; now that would be a good read.

28
Jan
10

Post Mag news roundup

By Ralph Savage Leave a Comment
Categories: Insurance & Reinsurance
Tags: , , , , ,

Asbestos claims to cost insurers £11bn by 2010

I had to re-read the Insurance Times article on this topic because its headline read ‘£11bn by 2050’. So which is it?

Both articles quote the same research and detail the same figures from the Actuarial Profession’s UK Asbestos Working Party, which said that ‘undiscounted claims to the insurance market for asbestos could reach £11bn for the period 2009 to 2050.

So not ‘by 2010’ then.

 Axa Strikes personal injury first with CEDR

Axa insurance has become the first insurer to sign up to the Centre for Effective Dispute Resolution’s personal injury service.

The service is aimed at small claims and offers phone (£145) and face to face (<£700) mediation and according to this story, Axa has been trialling its use since June last year. The piece cites ‘average costs’ for a litigated case to be £30 000 – £70 000, but I get the feeling the CEDR said that.

DAS to cut temporary staff after loss

Getting some good news out quickly after the legal expenses insurer’s hellfire that was the Jackson Review must have been top of DAS’ priorities. A software deal could save the company £1.75m a year apparently, but there is the small amount of chopping 30 temps from its call centres which may have a more believable impact on its bottom line.  

Scots take English referrals

A Scottish claims management company has seen a 40% increase in personal injury claim referrals from English firms as a result of a proliferation of television advertising. Accident Claims Scotland said it had received over 1100 referrals from England in 2009 as opposed to 750 the year before. English firms are apparently receiving enquiries from Scottish claimants encouraged by advertising broadcast for an audience south of the border.

Irish personal injury claims down 6% on 2008

Compensation totalling 200m Euros was awarded in respect of 8645 PI claims in 2009 according to the Irish Personal Injuries Assessment Board. The average settlement was 23 263 Euros, 6% down on 2008 but 5% higher than the 2007 average.

21
Jan
10

Science fight in today’s Post Mag

By Ralph Savage Leave a Comment
Categories: Insurance & Reinsurance
Tags: , , ,

Post Magazine – Fraud & Lie Detectors

A decent scrap emerges from Daniel Dunkley’s feature on Voice Stress Analysis in the insurance industry, making this article one of those things you might not have wanted to read, but you’re pleased you eventually did.

After poring over the established issues surrounding market leader Digilog and the use of VSA by insurers so far, the story reports how several academics have incurred the wrath of Nemesysco – the provider of Digilog’s voice analysis engine – by criticising its validity.

Apparently, one such critic is Professor Anders Eriksson from Gothenburg who published a paper which was removed as Libellous by Nemesysco.

But this didn’t stop Prof Eriksson getting on the blower to Post Magazine to repeat his defamatory remarks, with this little beauty: “There is no validity at all in the technology itself…It doesn’t make any distinction between you, a dog or a bus”.

20
Jan
10

Readallaboutit – Insurance Times news roundup

By Ralph Savage Leave a Comment
Categories: Insurance & Reinsurance
Tags: , , , , , , ,

JACKSON REVIEW COVERAGE

IT’s coverage is very good. It is comprehensive and makes an otherwise dull subject as exciting as possible with a wild west theme!

DAS awaits new law before snapping up stake in solicitors

Legal expenses insurers have come out fighting from the Jackson review after their core business was challenged. Saxon East’s story in IT this week says firms including DAS are ‘poised’ to buy stakes in solicitor firms once the Legal Services Act comes into force.

DAS boss Paul Asplin gave the following snippets:

  • “Referral fee ban is ‘nonsense’”
  • “Defendant insurers won’t buy lawyers cos they can get cheap rates now”
  • “Legal Services Act is ‘taking too long’”

Jackson proposes scrapping of ‘abhorrent’ referral fees

Jack Straw called referral fees ‘abhorrent’ so did LJ Jackson. This round-up piece asks some likely suspects what they think so here’s a mini-roundup for you.

David Williams – Claims manager, Axa

  • “Reforms must not be diluted”
  • “progress will take years’”

Roy Hebburn – technical claims manager, Allianz

  • “‘Removal of referral fees & non-recoverability of success fees are crucial recommendations”
  • “Insurers shouldn’t flinch at 10% uplift”
  • (my favourite) “Insurers can return to an environment of underwriting-led pricing, untainted by non-risk income.’ Did anyone ever publish how much money was being made by accepting referral fees? What kind of a dent will it make in their bottom line?

Peter Staddon – British Insurance Brokers’ Association head of technical services

  • “Philosophical – the money’s important but it’s not the be all and end all”

OTHER NEWS

Zurich Pledges 20% increase in motor

Following on from EMB suggesting last week that motor rates will have to increase by 20% to cut insurers’ combined ratio down from a whopping 115%, Zurich is promising to do exactly that. Who needs actuaries!

Zurich’s CEO Stephen Lewis says he’s seen a 30% increase in bodily injury claims frequency with a worsening trend throughout 2009. This combined with high inflation has resulted in a 50% increase in cost of recovery.

Litcomp gains new owner and £200m capital injection

Some fairly canny timing here given Jackson coverage. Litcomp wrote £28m in ATE premium last year, so now with some new private equity money – up to £200m – it’s planning to expand into Professional Indemnity, pet and warranty insurance.

Insurers lead the fight against plaques ruling

Axa, RSA, Aviva and Zurich have lodged an appeal against the Court of Session in Edinburgh after it upheld the Damages (Asbestos-related Conditions) (Scotland) Bill. Pleural Plaques are symptomless, yes they are, no they aren’t. You get it. Oh, and the Westminster meeting between MPs and Gordon Brown has been delayed without a new schedule yet.

Apologies – lost the will to live on that one…

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