Quinn, aggregators, regulators and more...


wasteland of abandoned legislation.


Can we draw some comfort from a written ministerial statement of 30 March which clearly points to CIE being in place in sufficient time to allow the issue of advisory letters no later than 31 March 2011? Traffic and vehicle activity continue to be affected by the general economic conditions with SMMT suggesting that the active car count for 2009 had fallen to its lowest level for 64 years - even I do not go back that far!


No doubt the scrappage scheme has led to a significant number of older vehicles being permanently removed from the road whereas in the past they would have been sold on. Without doubt the financial dynamics of car ownership have changed considerably in recent times with fuel prices climbing to unprecedented levels. And if you have the wrong type of vehicle you will have also experienced a substantial rise in road tax. Oh, and there are also strong rumours that insurance premiums are going up. Will the increased income from IPT, road and fuel tax be used to help repair our road network - a network left ravaged by the lengthy period of extreme weather that many parts of the


UK have experienced and years of inadequate maintenance? If the past is anything to go by the answer is a resounding “No!” As the cost of motoring grows, the attraction of car sharing increases, particularly in the major conurbations where free street parking seems to be at a premium these days. Car sharing has of course been around for a long time but has normally associated with privately owned vehicles. We are now seeing increasing interest in car clubs such as Streetcar and Zipcar where the vehicles are owned by the car club and rented out on an as- and-when required basis inclusive of insurance. The traditional car rental market appears to view these clubs with some suspicion, and there can be little doubt that the growth of such schemes is likely to pose a threat to the existing car rental model.


There appear to be


compelling reasons for rental companies, car manufacturers and distributors to jump on this bandwagon.


Any levelling off or, indeed, reduction in the vehicle parc is bad news for motor insurers as the annual increase in the number of vehicles has traditionally helped to sustain the excess capacity in the market.


Too much capacity and fewer potential customers is surely a recipe for increased competition. However, all may not be lost! Is the Department for Transport galloping to the rescue of motor insurers? In the last few weeks the DfT has issued a consultation paper on the subject of mobility scooters and powered wheelchairs. Traditionally referred to as invalid carriages their use has so far been governed by the Use of Invalid Carriages on Highways Regulations 1988 and are currently exempt from any compulsory insurance requirements.


The consultation paper


explores a number of areas such as driver training and insurance and asks whether now is the time to impose a compulsory third party insurance requirement on these vehicles.


That is not to say that insurance schemes for these vehicles do not already exist but these are, of course, voluntary and operate outside of the Road Traffic Act. Introduction of a compulsory cover requirement would represent a significant shift in market dynamics, particularly if this was achieved by amending the Road Traffic Act.


Going down this road would surely not be without its problems - for example, who would be


prepared to provide the cover? How would licensing for drivers and vehicles be managed? And how would the compulsory requirement be policed? Who remembers the market debates when the Sinclair C5 first appeared?


●


Talking of market debates, the latest FSA consultation on fees and levies has not been met with rapturous applause by the insurance market.


All in all, the UK insurance market appears to have coped exceptionally well with the adverse economic conditions of the last couple of years, although clearly Solvency II will have implications for many market players.


The FSA focus during these turbulent times has surely been on banking, and there are strong feelings that the insurance market is being unfairly associated with the banking crisis.


Intriguingly back in 2002 there was a considerable amount of activity and debate surrounding a proposed merger of the Association of British Insurers and the British Bankers’ Association. At the end of the day the status quo was maintained -a close call and surely one that today we would have lived to regret!


JUNE 2010 insurancepeople 15


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