Government must take action

“The findings of the recent survey by the Insurance Times excellently highlight the public’s anger at the state of the car insurance market and the current level of premiums. With 91% of respondents answering that they feel premiums are too high, there is clearly a strong desire for action to curb rising costs. With a sizeable chunk of people blaming lawyers for the level of premiums, it is vital the government presses ahead with its ban on referral fees, reduces bloated legal costs and gets to grip with the whiplash epidemic.”
MP for Blackburn and former secretary of state for justice Jack Straw

Get rid of parasitic practices

“The results of the research are no great surprise. The public are quite rightly unhappy that claims fraud and referral fees have pushed up premiums for the honest majority. Our reputation as an industry has suffered by association and we need to ensure that the law is changed to get rid of the parasitic and unethical practices that plague the sector.”
LV= managing director John O’Roarke 

Message to claims firms

“There’s a clear message to claims management companies to review their marketing tactics, with the vast majority [of respondents] finding their texts and phone calls intrusive and irritating.”
Bluefin chief executive Stuart Reid

We’re getting the message across

“It is pleasing to see that the work being done by the industry is getting the message across about the impact of financial crime. The fact that over 90% of respondents blame fraudsters and criminals for the rising cost of cover shows that we are on the right track and we need to ensure that our efforts continue.”
Groupama Insurances personal lines director Kevin Kiernan

Industry faces some critical issues

“The survey provides some interesting and useful views and opinions that can help guide the industry on the important matter of our image. Perhaps the biggest challenge for the industry is to turn people’s ‘neutral’ scores on the industry to ‘positive’ ones. There are a number of critical issues that will develop this year, including debates around the cost of motor insurance, alternatives to the Statement of Principles for flood insurance and the introduction of the gender pricing ban. These issues need proactive and joined up answers that are fair, and equally important, are seen to be fair by our customers.”
Ageas UK chief executive Barry Smith

The year ahead

2012 looks set to see continued political focus on insurance as the Office of Fair Trading’s ongoing investigation (see below) into motor gears up. But the focus is likely to shift to flooding over the next few months as the June 2013 expiry of the statement of principles agreement approaches.

Flooding

Just before Christmas, the government snuck out a long-awaited announcement on how its plans to deal with insuring flood plain areas after next year when the Statement of Principles agreement  expires. Flood minister Richard Benyon told the House of Commons that the focus was on preventing flood risks rather than subsidising premiums. Ministers said they would continue talks with the industry, but a stand-off becomes increasingly likely the longer that the issue is unresolved.

OFT motor investigation

The Office of Fair Trading has instigated the second stage of its wide-ranging investigation into the motor insurance industry. The good news for the industry is that the watchdog will be focusing on its ‘bête noire’ - credit hire companies and legal expenses providers. But the OFT’s decision to probe insurers’ third-party vehicle repair arrangements could be an uncomfortable experience for the industry.

Health and safety

One of prime minister David Cameron’s first acts in the new year was to announce the latest stage in his drive to clamp down on the so-called ‘compensation culture’. In a speech to small businesses in Berkshire, the prime minister said that he had summoned insurance bosses into No 10 Downing Street to quiz them on whether they are requiring businesses to exceed health and safety law requirements when securing insurance cover. For Cameron, tackling health and safety issues is a good way of appeasing his hard-line backbenchers.

Jackson Review

The government’s Justice Bill, which implements the bulk of the 2009 Jackson Review, has reached the House of Lords. There, peers are expected to give the proposals a rougher ride than their counterparts did in the House of Commons. A debate before Christmas gave the government a taste of the hostile reception that its proposals, including the mooted referral fee ban, are likely to encounter in the upper House. With the Lords generally in a mutinous mood, the legislation is unlikely to emerge completely unscathed. The issue for the industry is whether or not opponents of the bill will focus on the civil litigation cost elements of the bill.

Financial Services Compensation Scheme

The next few months will see the launch of the postponed review of the way the FSCS is funded. The review will look at whether the scheme’s cross-subsidy of different types of financial services businesses by one another will continue.