News Review: General Insurance


How Facebook is becoming a fear for insurers by


Kevin Paterson, sales and marketing director, Assurant Intermediary


the watch word of the moment is ‘cuts’; all sections of the uK are feeling the pinch and the area of general insurance is no exception. Social networks seem an unlikely reason to prompt price rises, but the likes of Facebook and twitter are presenting some very real threats to personal security and subsequently the cost of general insurance. a recent


report


commissioned by Legal & general called ‘the digital criminal’ has prompted claims from some quarters that users of social networking websites could face higher insurance premiums because burglars are using them to ‘shop for victims’. there are now 8.5 million Facebook users in the uK and at least 2.4 million twitter users and it has become commonplace for users to openly advertise personal details and plans like upcoming holidays for example – giving an opportunity for potential burglars to exploit the absence of occupants. one in seven have seen


other users’ home addresses posted on pages that can be viewed by strangers, and teenagers are the worst when it comes to openly giving away personal information, with two thirds of 16-24 year olds sharing their holiday plans online according to the report.


Burglars use these sites to


find out as much information as they can about their victims’ whereabouts and movements and even what goods the user might have in their home that are worth stealing. they can even then go on to use sites like google Street View to scope out the premises, any security lights or alarms evident on the walls etc – all from the comfort of their own sofa. the number of burglaries


in the uK rose for the first time in six years in 2009 to 284,445. in the uS last month police busted a three- man burglary ring that stole at least $100,000 worth of cash, electronic equipment, jewellery and other valuables in more than 50 break-ins targeting the homes of people who shared their whereabouts on social networks. the problem is more widespread in the uS where geolocation features built into applications have taken off in a big way already, but these are only just now coming to the uK. geolocation is widely accepted as the next big development in social networking. it is the wireless detection of the physical location of a remote device and it allows users to broadcast their exact location at any time and how long they’ve been there. Being able to keep such tabs on complete strangers at the push of a button from anywhere in the world is a burglar’s (or at the very least a stalker’s) dream! is it any wonder that home insurance premiums could rise by up to 10% this year due in part to burglars’ ‘internet shopping’ (according to gocompare), or that insurers


12 mortgage introducer NOVEMBER 2010


might question whether the use of social networks should have an impact on rates? Whether social media use


is going to become a rating factor or not for insurers remains to be seen, but it certainly seems to be the case that brokers’ customers are exposing themselves to fraudsters and even burglars on a daily basis and arguably you have an opportunity to add value to the relationship you have with your customers by warning them of these dangers and ensuring their homes are adequately protected. after all, while the vast majority of social or digital media users might not be homeowners, their parents probably are, and their premiums could be affected. Here are some tips you can


pass on to your customers to help them avoid falling foul of these internet thieves: • don’t be obvious. if you are using geolocation based services like the recently launched Facebook Places, or even if you simply use twitter, don’t put a time stamp on your arrival at a location or when you leave… there’s nothing stopping you from tweeting after you’ve left a venue rather while you’re there. • don’t advertise your routine. establishing a pattern of behavior makes it easy to predict your moves and makes you a target. • restrict your Facebook profile and don’t accept everyone who asks to follow you on twitter. according to Legal and general 13% of Facebook users and 92% of twitter users tend to accept requests or followers without checking out the source.


IPT INCREASE IS A REASON TO CONTACT CLIENTS


While the growth of our love affair with the internet and all things digital is threatening to put up the cost of general insurance, elsewhere the government is squeezing the industry where it can to refill its coffers. In the emergency budget the Chancellor George Osborne set out his plan to reduce the massive budget deficit of £155bn. As part of the plan Osborne announced an increase in Insurance Premium Tax (IPT). Insurers who receive premiums under tax- able insurance contracts and some intermediaries responsible for collecting taxable premiums will all be affected by the change. The 5% standard rate of IPT applies to most general insurance and the 17.5% higher rate applies to travel insurance and some other general insurance (e.g. extended warranties) sold alongside cars and some consumer goods. Many if not most insurers are likely to pass on the hike to customers through higher premiums.


The introduction of the Finance Bill will mean an increase in the standard rate of IPT to 6% and an increase in the higher rate to 20%. The 1% rise on standard IPT will amount to an extra £6 per policy per year (on motor insurance for example) and an extra £500m a year for the Trea- sury on top of the £2.5bn it currently generates from IPT.


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