FEATURE
PROFESSIONAL SERVICES
Insurance market braced for shake-up
2019 has been a turbulent year for politics to say the least, with the last quarter set to be no different. From a new Prime Minister to a new Brexit deadline, the next three months are shaping up to have a significant impact for many industries. In July, changes to the Ogden Rate rocked the insurance industry for a second time in two years. This, together with Brexit and a hardening market, will change the way insurers are working over the coming months. Here, Mark Wilson, Sales Director at East Midlands insurance broker Cowens Survival Capability, discusses these upcoming changes and the potential knock-on effect they may have on customers.
CHANGES TO THE OGDEN RATE The Ogden Rate is the formula used to calculate the amount of compensation someone would receive from an injury claim. This rate applies to any liability insurance but has perhaps the largest effect on motor insurance, including motor fleets. When the rate was reduced from 2.5% to -0.75% by the
Government in 2017, there was uproar from the industry and a huge outcry from the Association of British Insurers (ABI), with insurers across the country brandishing the change as ‘extremely disappointing’ and a ‘punishment’ to consumers. Although the new rate means that amounts received for successful claims would increase, the knock-on effect to premiums for the vast number of customers is huge, as insurers are forced to build up their reserves to account for these larger pay-outs. Over the past two years, the insurance industry has
continued to lobby against the rate change, and success looked likely. However, disappointingly, the announcement at the end of July put the Ogden Rate back to only -0.25%, no way near as high as the anticipated one per cent. This inevitably means that liability premiums will be
affected as insurers are forced to rebuild their reserves for high pay-outs, with motor fleet premiums likely to see the biggest price increases, as ever-increasing vehicle repair costs continue to add pressure on insurers. It’s increasingly important that insurance brokers have
the market coverage and experience to secure the most competitive rates for customers at a time when insurers will be looking for increases.
Insurance premiums are set to rise as payouts increase for injury claims
HARDENING INSURANCE MARKET The insurance industry is in transition. Insurers are now taking less risks and have less capacity in some sectors. The factors behind this vary, from general changes in the
business landscape to recent record losses or controversy. Rather than using competitive pricing to win new
business, the market is ‘firming’, meaning insurers are becoming more cautious when it comes to insuring risks. Terms and conditions are tightening and there will be an increased emphasis on good risk management. Education is the best form of action – a broker will help
with ways to bring premiums down and make yourself or your business easier to insure, from installation of dash cams and telematics to regular health and safety training and more specific risk improvement measures tailored to your business.
BREXIT AND GREEN CARDS FOR MOTORISTS Uncertainty surrounding the UK leaving the EU will probably fill the headlines for the next few months, and the impact of a no-deal Brexit is bound to cause confusion for many people with travel plans in Q4 and beyond.
64 business network September 2019
‘Liability premiums will be affected as insurers are forced to rebuild their reserves for high pay-outs’
Whether you’re planning on driving in the EU, EEA,
Andorra, Serbia or Switzerland after the cut-off date 31 October 2019, in the absence of a specific Brexit deal, all motorists may have to carry a physical green card to cross international borders for insurance purposes. In addition to this, if the new PM doesn’t strike a Brexit
deal, UK driving licence holders may also need an IDP (International Driving Permit) to ensure they are fully covered, which vary depending on the country of travel. Insurers are unlikely to pick up the admin costs of all this additional paperwork for consumers, which could lead to more price rises for motorists. Maybe some underwriters will consider including Green
Cards in their policies as a way to attract new business. Only time will tell as the Brexit saga continues into the
last part of the year. The market advice would be to contact your insurer well ahead of the deadline to avoid any uncertainty.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88
