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 Insurance Matters....with Europa General |
Somebody Has Got it WrongRecently the Assembly Finance Committee, following a recommendation from the Consumer Council, agreed to set up an inquiry into the high cost of insurance in Northern Ireland. Joleen Cunningham from the Consumer Council told the finance committee that the establishment of the new Department of Justice could have an impact on lowering the cost of insurance in Northern Ireland. Ms Cunningham further added that Car insurance costs 80% more in Northern Ireland - an average of £282 extra than in Britain. The Consumer Council said that NI households pay an average of £278 more for all their insurance than in the rest of the UK. We then had Mitchel McLaughlin MLA accusing the Insurance Industry of "playing fast and loose" with NI consumers and said there was a lack of competition. Mr McLaughlin then added the comment “all insurance companies were dealing with a small number of clearing houses in Northern Ireland” On the other hand The Financial Regulator stopped a major player in the Insurance Market in Northern Ireland from trading because they are too cheap and have lost money in the last 2 years. They were allowed to go back underwriting Private Car only after increasing their rates by a minimum of 20%. They have been told they cannot go back into other lines of business until they stop underwriting Loss leaders. Press reports last weekend said that they needed to increase commercial rates by 3000%. I take that with a large pinch of salt but think it is nearer 100%. So who is right? Lets look at THE FACTS “All insurance companies were dealing with a small number of clearing houses in Northern Ireland” Mitchel, a small point, Banks use clearing Houses not insurance companies. If you are talking about Insurance Brokers there are 124 Registered Insurance Brokers and Agents resident in Northern Ireland and several more based in GB (Lloyds and London Market) and RoI who offer facilities in Northern Ireland. “Lack of competition.” If the rates the Consumer Council say are charged in Northern Ireland “an average of £282 extra than in Britain,” you could not get office space in Belfast with all the Insurance Companies trading in the UK setting up shop. After all we are only an hour from London, use the same currency and speak the same language – or roughly the same language I am no supporter of Aggregator sites but I took the opportunity to go on GoCompare.com. For both Household and Motor Insurance I was given no less than 21 alternative quotes. I changed the address getting quotes for the same risk in London, Manchester, Edinburgh and Glasgow – and where the cheapest area was – yes Northern Ireland. Try the site - but don’t tell the people in GB they will only want to move here and push house prices up. The Consumer Council are busy enough without that problem. It makes you wonder if Ms`s Gildernew and Foster joining the Quinn protest in Enniskillen was less to do with saving jobs and more to do with keeping cheap and loss-making insurance – who cares if an Insurance Company goes bust. Jack McIlduff is Managing Director of Europa General Underwriters (NI) Ltd. Europa General offers bespoke conventional and non-conventional indemnity and motor insurance products to suit your business requirements. For more information on any of the above feel free to contact Europa General by phone on 028 9034 8856, online at www.europageneral.com or by email. The content of this article is provided for information purposes only and does not constitute professional or other advice. Insurance hits the headlines The best guide I found was in the Q&A article in the Irish Times which I reproduce in part here. What happened in the High Court today? The Financial Regulator made and was granted an application to have joint provisional administrators appointed to Quinn Healthcare and Quinn Direct, which offers motor, home and business policies. Is this move significant? Very. Quinn Insurance is the second-biggest insurer operating in the Irish market. It has 19 per cent of the motor insurance market, 3 per cent of the property insurance market and 13 per cent of the public liability market. Quinn Healthcare has in the region of 400,000 customers and the companies employ almost 2,800 people in Ireland and the UK. How has Quinn Insurance responded? It described the court action as “deeply disappointing in the context of the continued profitability of the group which is currently in excess of €20 million per month” and expressed the belief that the issues could have been resolved “to the benefit of all in a relatively short space of time”. It stressed that its business outside of Quinn Healthcare and Quinn Direct, including its life assurance arm, were unaffected. If Quinn Insurance is so profitable, why was the administration order sought? Counsel for the regulator told the High Court the company had "significantly breached" its solvency ratios. It heard that subsidiaries of Quinn Insurance had made guarantees in relation to the group's assets which reduced the amount of cover for policyholders’ liabilities and was told that its assets were reduced by €448 million. Should customers be worried? No. The most important thing people who have policies with the affected elements of this company should bear in mind is that they continue to be covered. Can consumers who have paid premiums in advance get refunds if they leave the company before the policy term ends? No, when an insurance company enters administration, its customers do not have a legitimate reason to break the terms of their contract. The company continues to honour its side of the bargain by continuing to offer cover so there is no legally valid reason to break the agreement. Consumers who are still concerned by should contact their broker. What happens next? In the very short term, probably very little. The administration process can be a long one. There are three scenarios which could come to pass: the company could come out of administration as a profitable, independent company and continue to trade as it has done in the past; it could come out of administration and be sold to a rival operator who would assume any of its losses or it could remain in administration ahead of a long winding-up process. What about Quinn’s business and Northern Ireland? In a separate development, the Financial Regulator has directed Quinn Insurance to cease taking on new business in the UK to prevent the company “suffering further financial losses from its currently unprofitable UK business”. The Administrator has now written to all Policyholders in Northern Ireland telling them that their policy will be honoured until expiry but they will not be offered Renewal. This is the best advice; you do not need to do anything until renewal. Be wary of some Insurers and Brokers who are offering Rollover cover immediately. There is no benefit to you as you will be paying a premium up to renewal on cover you already have with Quinn. Talk to a Professional advisor and prepare your Portfoilio for submission to the market at next renewal. Jack McIlduff is Managing Director of Europa General Underwriters (NI) Ltd. Europa General offers bespoke conventional and non-conventional indemnity and motor insurance products to suit your business requirements. For more information on any of the above feel free to contact Europa General by phone on 028 9034 8856, online at www.europageneral.com or by email. The content of this article is provided for information purposes only and does not constitute professional or other advice. March 2010 Over the last 12 months we have heard nothing but bad news in the Financial services Sector which has given me a bad bout of Financial Fatigue. The Press have concentrated on the Banks, Investment Houses, Hedge Funds. We have read reports about the great and good in the Financial markets reporting disastrous results. We have seen footage of staff from Lehmans leaving their offices with no jobs - just a box of memories. Many household names have bitten the dust. Governments have bailed out their banking systems and indeed now some governments need bailed out themselves!! One sector of the Financial market has been quiet – Insurance. Despite all the gloom the Insurance Companies seem to have ridden out the storm without rate increases. That is all about to change. Over the next 2 months Insurance Companies will be reporting their 2009 results. Without exception they will not be good. Traditionally Insurers accepted marginal profits but mostly losses on their Underwriting however they made up for it by achieving good Investment results on their Reserves. Hands up anyone who knows anyone who made reasonable investment returns in 2009. Therein lies the problem. Despite some efforts by some Insurers to introduce underwriting discipline to the market, competition and a desire to retain market share has resulted in underwriting losses and in many cases under-performing investments. So what does it mean to use rate increases. Insurance rates increased substantially from 2001 to 2005. Insurance companies built up their reserves during this period waiting for the next 9/11. It did not come. From 2005 they reduced rates to attract more business and retain market share. Underwriting losses were supported by the release of unused reserves. 2008 saw an unprecedented use of reserves. The pot is now empty and the only way to survive is to increase rates. How far have they fallen – Motor Insurance rates in Northern Ireland for example are now at 1997 levels. This level is not sustainable. January and February renewals have already seen rate increases and we will see these rises continue in 2010 across most classes by 15%-20%. Now is the time to look at your Insurance programme and consider measures to contain these increases. Higher Excesses, Risk Management or even a programme of self-insurance will help contain these costs. Don`t wait until renewal time. Engage with your Broker and Insurer. Act now and discuss ways of having your risk looked at as an individual business and not just rated as one in a herd. Sorry for the bad news but remember.......Don’t shoot the messenger. Jack McIlduff is Managing Director of Europa General Underwriters (NI) Ltd. Europa General offers bespoke conventional and non-conventional indemnity and motor insurance products to suit your business requirements. For more information on any of the above feel free to contact Europa General by phone on 028 9034 8856, online at www.europageneral.com or by email. The content of this article is provided for information purposes only and does not constitute professional or other advice.
Feb 2010 - The ‘Inevitables’……Death, Taxes and Insurance Renewal The old saying goes, that the only things inevitable in life are Death and Taxes. If you are in business, your Insurance Renewal can be added to the list and the one thing the three have in common is, nobody looks forward to them. Why does insurance fall into this unfortunate trio when it is designed to protect balance sheet against loss of your property or claims arising from your legal liability to others? You pay a premium and your Insurer pays the losses - nothing could be more equitable. Your CFO can sleep easy at night knowing that the Balance sheet is protected, at least from these risks. So..., where does it all go wrong? ....................................... Claims. You are happy transferring risk to the Insurer, but when a claim occurs you get stressed. If it is loss or damage to your property, you may feel that the claim is not being settled quickly enough or at a value you consider accurate. Real stress usually creeps in when a claim is made by a third party or employee, especially when the Insurer plans to settle the claim or holds a substantial reserve on the claim, when you are adamant that you are not a fault. The first knowledge you have of this is when Renewal comes around and claims experience is produced by the Insurer. This all leads to conflict. When Renewal comes around, the Parties are at war. Usually caught in between, is your Insurance Broker who tries to bring the parties together. They are torn between the desire to satisfy the client’s needs and recognition of the wording in the Insurance Policy. Some time ago, BT had an advert running in which that great actor Bob Hoskins says, “It’s good to talk”. Talk to your Insurer on a regular basis during the year - quarterly is good for low claims frequency. Have them produce a claims review with planned action and rationale. Get to know each other better. Insurers would much prefer to build a long lasting relationship with a policyholder – it gives them a chance to know and understand your business and work together with you, to reduce risks going forward. Insurers are more than happy to engage with their Policyholders, after all, there are only two names on the contract: You and Your Insurer. It’s good to talk, but better to understand. End the war today. Jack McIlduff is Managing Director of Europa General Underwriters (NI) Ltd. Europa General offers bespoke conventional and non-conventional indemnity and motor insurance products to suit your business requirements. For more information on any of the above feel free to contact Europa General by phone on 028 9034 8856, online at www.europageneral.com or by email. The content of this article is provided for information purposes only and does not constitute professional or other advice.
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