Tag Archives: Money

What the potential “auto-renewal ban” could mean for brokers

image of calculatorA number of insurers and brokers have been re-evaluating their automatic policy renewals recently due to the amount of customer complaints rising dramatically. When it comes to insurance policies, most customers know when theirs is up for renewal and therefore begin looking for cheaper or more extensive policies during this time. However, there are those that claim that insurers are not always clear enough or do not inform their customers properly about their auto-renewals.

In certain circumstances, customers who are not aware of their auto-renewal policies can accidently end up purchasing a new policy and then find themselves paying for both. This could result in overdrawn bank accounts meaning a potential charge from the bank. This is why a number of insurers include information concerning policy auto-renewals within their Product Disclosure Statements which are usually sent to customers once they have purchased their initial policies.

In order to prevent such situations from occurring and to reduce the number of complaints made to insurers and brokers, a new industry code of conduct is being bought in to protect any “vulnerable” customers such as the recently bereaved and the elderly. This is particularly important due to the fact that Insurance Premium Tax (IPT) and therefore insurance premiums are rising, making the average cost of an auto renewal around £200 a year.

The new code will be put into place for the “vulnerable” which includes the elderly, bereaved and also those with low literacy and mental health issues. It is believed that people who fall into these categories are more likely to pay for an auto-renewal and it is likely that they wont realize that they are paying for it. Regardless of the auto-renewal, the average car insurance price has increased by £13 since quarter 3 of 2015. This means the vulnerable could unintentionally be paying a lot more than they need to be.

The Association of British Insurers (ABI) has stated that in order to protect their customers, brokers need to speak to their underwriters and ensure they are clear with any policy changes that could affect their customers’ fees for next year’s payments compared to the previous year. The ABI states that brokers should also ask for consent when it comes to renewing policies which could hopefully end up saving motorists over £100 a year.

They added: “People with low literacy or numeracy skills, mental health issues, old age or a recent bereavement” will pay extra money needlessly, without realizing.

Here at Victor Millwell we often discuss how insurance brokers can navigate complex regulations to ensure the success of their businesses as well as provide excellent customer service. This change is just another example of where the ABI and customers will be able to determine the good brokers from the bad, as those that already communicate well with their customers won’t have to change much in order to adhere to the new regulations.

In fact, these new regulations could increase the lifetime value of customers if brokers take this opportunity to build up trust with them. Conversely, brokers that aren’t completely transparent with customers could end up damaging their company’s trust and respect.

The new “vulnerable consumers’ code” is voluntary but will apply to policies sold by brokers belonging to the ABI or British Insurance Brokers Association (BIBA). The Chief Executive of BIBA, Steve White, said: “A published code will raise awareness. We are still working through the practicalities of how the code will operate, but we expect it will boost trust in the insurance sector.”

Brokers should also be sure that they are completely transparent about any premium increases when it comes to renewals, as in some cases price increases are not provided to customers either clearly or at all. If customers notice it will, once again, completely damage the trust they have for the broker. Most other companies (i.e. gas and electricity suppliers) are obliged to show broken down information on any price increases however motorhome insurers and brokers are currently not – something that will likely change in the future.

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Brokers Vs. Claims Companies

Image of IphoneAlmost everyone these days knows the frustration when receiving a call from an ‘0800’ number or ‘no caller ID’ and it has even gone as far as receiving texts and WhatsApp messages from these nuisance companies. Whether it be a real person or a recorded message at the other end of the phone it normally starts with something along the lines of ‘have you been in an accident recently’? Most people will just hang up the phone however there are some that have actually been in an accident and are potentially owed some money.

An ABI commissioned survey has shown that 83% of people are contacted by claims management companies. These companies spend their time encouraging people to claim for compensation for most types of accidents. With 92% of people saying that the call was completely irrelevant to anything in their life and 83% feeling these calls are unacceptable and that something needs to be put into place to stop them.

James Dalton, the ABI’s Director of General Insurance Policy, said: “These shocking findings show that, despite recent reforms, the UK’s compensation culture is alive and well and continues to thrive. For too long, too many people have been plagued by these nuisance calls and action is needed to clamp down on them. The industry fully supports genuine claimants receiving compensation in a timely and proportionate manner, which is why we have campaigned for the changes to our civil litigation system.

“But the continued behavior of some claims management companies encourages fraudulent and frivolous claims that push up the costs of insurance for honest customers. We will be working with the Government in their review of the claims management sector to ensure that this day-to-day nuisance is tackled once and for all.”

False claims are not only harming the regular customer but also insurance brokers too. These companies are pushing people to claim which could eventually make the insurance industry more expensive. There is a vast amount of money being paid out that perhaps would not be if customers were not being pushed into claims they had not even considered previously.

Brokers are reminded to work closely with their underwriters to ensure that any claims being paid out are legitimate. The more people who claim means a bigger loss ratio which will inevitably lead to an increase in premiums and encourage customers to shop around when looking at policies.

Previously, the Government has cracked down on false whiplash claims in which apparent ‘tough new rules’ were set by the Claims Management Regulation to prevent regulation companies presenting poor quality claims. These claims cause delays to genuine applications which, in turn, slows down the whole process.

Therefore, tougher rules must be set for claims companies to ensure none of these issues occur. They should not be able to pester people about false claims and should not be allowed to offer “no win, no fee” bonuses.

Recently laws have been put in place for any claim companies that are breaking these rules. A director of a claims firm who are producing documentations that are not real could receive a 12-month jail sentence. Claims company The Hearing Clinic has been found to constantly pester people by calling them and encouraging them to make a claim and has been fined £220,000 after hundreds of complaints. These measures will hopefully be the stick companies need to prevent them behaving this way in future.

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The effects of the Insurance Premium Tax Increase on Insurance Brokers

Image of book keeping In November this year the Insurance Premium Tax (IPT) will be raised from 6 percent to 9.5 per cent which is a considerable change. This increase will affect anything from contents insurance to motorhome insurance and includes all of the insurances that Victor Millwell offer. The increase is thought to make around £1.75 billion a year which will go straight into the Treasury’s pockets. Continue reading

FCA claims insurance payments are not clear enough

Image of insuranceThe Financial Conduct Authority (FCA) has recently stated that some insurance companies aren’t being transparent enough when it comes to premiums being paid in instalments and the added cost this often implies. Those in the insurance industry will already know that the clearer you are about the services you offer the better, however sometimes this can be forgotten when presenting information to customers online. Continue reading

The Rise in the Silver Motorhomer

Image of motorhomeJust over one year ago the Chancellor of the Exchequer George Osborne announced that as of 6th April 2015 retirees would be able to choose between purchasing an annuity and receiving their pension payments on a regular basis or cashing out their entire pension in one lump sum. The case behind this decision was that pensioners should be given the freedom to decide how they want to receive their pensions and have the ability to use them to their full potential. Continue reading

Motorhome Owners Take More Time to Renew

Economic booms and busts work in strange ways and the behaviour that results in reaction to an upturn is often exactly that which causes a downturn in the future. When things are going well, it’s our instinct to spend and not worry about money, just choosing to enjoy ourselves while we can. Exactly this overconsumption causes prices to rise too high, and the economy to overheat, eventually crashing. However, when things get tough we tend to be a little more careful with our spending and this can start to get things going again.

We’ve seen exactly this effect in the motorhome insurance market over the last year. Previously insurance was a subsidiary good; something you just need to get your motorhome on the road and to cover you in the event of damages. However, more and more consumers are seriously evaluating their motorhome insurance policies to make sure they’re getting a good deal.

When inflation is rising and money is getting tighter, every penny you spend is more and more important. Customers are looking to make small saving across the board on everyday utilities so they have more disposable income to spend on leisure time. Equally, customers are looking to make their money go further and get more features from their policies. European breakdown cover, for example, is a popular addition to a policy.

Customers are now starting to see the equation as a part of their working time. Though it may take an hour or so to sort out a policy, that saving can be thought of a wage saving. Making a £100 saving in an hour is most certainly worth taking the time to do!

The economic downturn isn’t necessarily making us more frugal, it’s making is think harder about what we spend and where we spend it. We’re making every penny count and we’re seeking to get more from the things we have to buy.