Moody’s warns OFT motor referral will "hurt profitability"


Insurance

Insurance (Photo credit: Christopher S. Penn)

Somehow I suspect that, if this is the first time industry leaders take notice such a "warning", any criticism about arrogance or ignorance in the sector would be immediately vindicated!

"At a minimum it [the investigation] will create uncertainty for the industry and more significantly could result in lower motor premium rates.

"A reduction in revenue from lower premium would hurt profitability, particularly for those UK general insurers with the greatest market share in private motor insurance."

via Moody’s warns oft motor referral will "hurt profitability" Insurance Age.

How much does the industry actually care about its “policyholders”? Well, a big clue for me is that they are still, too often, referred to in that manner. Even the term "customers" really doesn’t do the relationship justice.

After all, as a policyholder, I haven’t just walked out of your shop having spent £1 on a newspaper or some sweets.

I have purchased a promise of protection against a future event that may result in financial loss or injury…I am a STAKEHOLDER in your business and NOT just some "sap" who believed the promises made in an over-priced advertising campaign – that manages to irritate and insult in equal measure!

Perhaps if you thought of me and treated me like your marketing people say you do, I might find it in my heart to look beyond the one-dimensional price message that pollutes my daily existence and ignore the constant reminders that shopping around is good – but being disloyal isn’t!?

Still, it is reassuring to know that, whether I’m old, young, male, female good or bad risk you aren’t singling me out for special treatment…you’ll mistreat and cheat us all across the board.

At least, in (allegedly) cheating re pricing you’re not discriminating against me. Well, until OFT tells me otherwise!

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Driver sued for refusing to sue


I’m sure that most people will be shocked by this story but, for me, it is the back-story of the claim culture, the role of the insurance and secondary industries that it “feeds”. Sooner or later we realise who the victims are!

No-win, no-fee lawyers such as this can pay claims companies up to £500 for passing on the personal details of people injured in car accidents, although there is no evidence that this particular firm has done so. In January, Mr Hopper says he was contacted by a GP surgery asking him to attend a medical in respect of the claim. At this point, any lingering stiffness in his neck was long gone. Mr Hopper’s conscience kicked in. He would not lie to a doctor, so he pulled out of the claim before his appointment. He told the law firm he no longer wished to pursue the claim. They sent him a letter saying that as he had discontinued the court action, he was liable for their costs, which amounted to £1,140. h

You may already know that the Government have already sought to shake up civil justice related to the “no win no fee legions”.

This is a topic I have written about in much more detail before and these may aid your understanding of the true nature of the problems and who actually benefits from

So we have a “dysfunctional” motor market…or is that just the tip of the iceberg?


MY point is that, whilst steps are now being taken to tackle this problem the fact remains that, as usual, it is the “customer” who foots the bill.

Sadly, it is a similar story when it comes to dealing with household claims, except that the lawyers have been replaced by insurer-sponsored Repairer Networks and nationwide franchise operations. Their interest is in recovering the margin (and more) – squeezed out of them by insurers in return for “approved repairer” status – by cutting corners or inflating reinstatement or repair costs on multiple claims.

Both of these scenarios are “extensions” of the practice – that has exploded in the commercial insurance market in recent years – of paying brokers excessive and unsustainable commissions to sell and service their products.

Get "fit for randomness" [with Ontonix UK]

Insurers are so desperate to maintain GWP that they will forego underwriting profit in its pursuit!

Every time the premium bar rises it benefits them but hurts individuals, households and businesses…in short the whole economy! This is how skewed the “logic” of the prevailing culture in financial services has become. And, believe me, they are comforted by the fact that Politicians, FSA and the general public concern themselves with “effect” rather than dealing with “cause”:

A morally corrupt corporate culture.   

The secondary industries that have sprung up around insurance claims – in particular motor accidents – bear testimony to this culture. Massive costs come back around to policyholders in the form of increased premiums. No surprise there then but did you know that much the costs come about as a result of insurers’ desire to secure income from lawyers who are happy to pay for details of claimants. Still not…

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