Your Data is a Commodity – Your Privacy is not

Posted by 28 June, 2013 (0) Comment

This article is about car insurance, not that I can help with your car. It’s to do with the commoditisation of car insurance because of the thirst for our data, why insurance companies are slowly waking up to it’s pitfalls and 2 things you can do about it whilst they slumber.

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Car Insurance Crackdown

 

You may have noticed that there has been a significant increase in the number of arrests of people involved in staging fake car accident over the last 6 months.  Behind the scenes, this is because the government said it would crack down on whiplash claims. Most people thought this meant individuals making out they were hurt following minor shunts would find it more difficult to get compensation. In fact, the government have also put pressure on insurance companies to do something about the cartels who were taking money out of your pocket.

Organised criminals have had an easy ride with this money making venture over the past few years, because insurance companies turn a blind eye to these ficticious claims because they simply recovered most of their costs from the car insurance buying public.

 

Cheaper premiums come at a price

 

Insurance companies don’t make much profit selling car insurance, some make no profit at all. They do make money from different types of referral fees. Some referral fees are from solicitors who pay for leads for personal injury claims. Others are car hire companies who charge more to hire a car to someone who’s vehicle is damaged in an accident, than they would if you or I if were to hire.  The third, usually secret referral fees, are paid to those that sell or aggregate car insurance policy data. Yes your date of birth, address, your other personal, protected information.

I have used the aggregators myself, because it is a great way to find an appropriate provider. However, it never ceases to amaze me, the level of information people are prepared to disclose, to shave £10 off their annual car insurance premium. Very few people realise that the direct marketing they receive is highly targeted, and would probably reduce if they spent less time giving their personal information to the internet. All they need do is uncheck the boxes about marketing material. Insurers would then have to work harder at reducing fake claims to make money.

Round about gangs rounded up

 

It will take the authorities a while to round up the highly organised car crash syndicates that have been milking insurance companies for years. I mention roundabouts, because that is a favourite for these gangs. Insurance companies took their eye off the ball. When they analyse trends in their data, they realised that ridiculous amounts of accidents have happened at the same junctions. When they look into it deeper, with the help of the authorities and CCTV, they were astonished to find that there have been zero accidents at some of the said roundabouts or junctions.

Follow the money is the usual mantra, because individuals receiving the settlements are obviously tied into the scam in some shape or form. However, with organised crime being behind these scams those receiving the payments do not exist or are the victims of Identity Theft – their ID’s have also been fraudulently claiming benefit, living in a flat with heaven knows how many people, the story goes on.

When insurance companies are not losing money they may fail to analyse trends. This is not the first time that this scenario has played itself out. In the 1990s car thefts were a huge problem, leading to some “hot hatches” becoming virtually uninsurable, because they were so easy to break into. The car industry had no motivation to improve its security because they charged their clients to repair vehicles and install the new stereos. The insurance companies charged those suffering thefts increased premiums, and car insurance premiums across the UK rocketed.  It was only when the public made a racket that the government stepped in and ordered the car, and insurance, industries to do something about it. We now have largely plastic stereos embedded in cars with fantastic security features. The newest technology allows you to pay according to how safely you drive. Now that is progress.

Wrap Up: Some gangs are found with 1,000’s of fake ID’s and crossed referred them to create accidents and benefit claims. Insurers can pool their resources and cut this out and we can help ourselves by ticking the right boxes.

Top Tip: It will take some years for the dodgy claims to subside and premiums to reduce. Meanwhile the only sure way to reduce car insurance premiums is to increase the excess, here’s a link to a nifty tool that allows you to do just that. We cannot help with car insurance, because resolving claims is such a nightmare. So we decided to take advantage of this tool and provide you all with a solution. We do not ask for your inside leg measurement before offering you a quotation.

Categories : Accountants Insurance,After The Event,All Risks Insurance,Building Contractor,Business Insurance,Company Insurance,Contractors Insurance,Customer Service,General Requirements,Health & Safety,Legal expenses insurance,Liability Insurance,Litigation expenses insurance,Personal Insurance,Solicitors indemnity,Solicitors insurance,Trade,Uncategorized Tags : , , , , , ,

Warped Speed Decks Designer

Posted by 31 May, 2013 (0) Comment

This article is about how fads can cause problems, how items go out of fashion quickly and what happens when someone supplies a product that doesn’t stand the test of time.

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Decking your Clients

 

I’m often introduced to garden designers by my architect, and design & build clients, who rely on designers when undertaking large projects. A number of years after being introduced to one designer I had the urgent call saying “that issue we discussed has just come up, literally”. Our previous discussions included the provision of products including wooden decking, which was all the rage a few years ago.

When I first start discussing risks with the client they indicated that they did not require any cover for products because they kept a full list of who they purchased from. I did explain that sometimes product suppliers went bust, leaving those that bought them holding the baby. It was in a stronger financial climate and the designer felt that the supplier was “too big to go down”. They also said that if something did go wrong, they would ensure that client targeted their legal action towards the people who made the product. I explained that this would be wonderful, typically, most people complain or take action against the person who issued the invoice when a project fails or didn’t meet their expectation when it was completed. It also happens sometime after work is completed because new Products take some time to get used to or bed in.

 

No surprise there then

 

It wasn’t a surprise when I received a call from the client to say that they would now like to investigate the cover I previously recommended. When I asked what had changed it was the supplier who had disappeared from the decking landscape and therefore unable to provide back-up if something went wrong.

I said I was happy to look into it, and asked relevant questions, because it’s important that I understand the current issues before making an accurate assessment of risks. It transpired that another designer had been supplying decking from the company concerned and it had deteriorated quicker than it should have. This made the client concerned because they thought it could happen to them. They could be accused of being erroneous in their selection of the product which seems harsh at first. What would you do if you had paid someone to design something that broke or failed within an unreasonable amount of time?

 

A stitch in time saves nine

 

The unfortunate designer had recommended this decking on a number of occasions when they were under pressure to reduce their costs in order to win projects. This short term gain usually leads to a long term pain. And people who get tough on price may well be the same kind of people who will complain when they don’t get their moneys worth.

The issue that concerns me is the number of business people, especially those who need products to complete their projects, who believe they can refer a disgruntled client to the product supplier when something goes wrong. It’s odd that they expect clients to leave them in peace when it was they who recommended the product in the first place. Yes, many designers have terms and conditions which say the product supplier is responsible for the quality of a product. However those Ts & Cs are somewhat meaningless when a client issues proceedings because “the product should never have been used”. There are many grey areas that contracts fail to address. They will still have to find a way to ensure their client turns their aim towards the actual miscreant, product supplier. Which takes time that should be spent doing business.

 

Wrap Up: Insurance helps reduce the financial impact when things go wrong. It does not prevent things going wrong. Businesses can get caught in the firing line even when it is 100% clear that they are not at fault.

 

Top Tip:Request copies of insurance of anyone you work with. If they go bust, their insurer can be persuaded to deal with certain claims.

Categories : Accountants Insurance,After The Event,All Risks Insurance,Building Contractor,Business Insurance,Company Insurance,Contractors Insurance,Customer Service,General Requirements,Health & Safety,Legal expenses insurance,Liability Insurance,Litigation expenses insurance,Personal Insurance,Solicitors indemnity,Solicitors insurance,Trade,Uncategorized Tags : , , , , , , , ,

Directors need a law degree to understand their liabilities

Posted by 19 April, 2013 (0) Comment

When the going gets tough, everybody gets the blame. This article is about how recessions bring increases in claims, why this happens and why insurers are always well prepared.

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Out of touch, means out of pocket!

 

There’s a growing debate on Directors protection (they need protecting from regulators looking to fill Government coffers), fuelled by an article in a legal publication. Directors are finding that the cover they thought protected them actually doesn’t, because of small print. Lawyers are not being paid as a result and they’re starting to wonder “why?”

TheLawyer.com are a bit late in noticing this issue – we highlighted it back in 2010 when we wrote about the withdrawal of legal defence for mad Bernie Madoff.  In mad Bernie’s case, Lloyds of London spent £4 million defending him before they pounced on the opportunity to withdraw cover, when one of his co-defendants pleaded guilty to fraud and admitted Madoff was purposely stealing client money, rather than accidentally stealing people’s money.

I agree with most of the comments in the article, yet the paragraph that says that insurance “will cover all Directors defence costs” only mentions one exception to the rule. There is always more than one exclusion – plus each policy is different. If they weren’t, insurers would be suing each other for breach on copyright, at the very least. And that’s another legal matter entirely.

How do insurers avoid getting caught out?

 

Insurers were prepared for this recession, as a result of the last recession. They’d worked out what caused the majority of claims last time and reduced, excluded or watered down the options they made available thereafter. They sneak most such changes into renewal documents because they know brokers and policyholders don’t read them.

It doesn’t help that a lot of Directors have been advised that a limited company protects them personally. No it doesn’t, as I keep telling them….gently, it covers shareholders. Directors that are shareholders do not get the benefit of shareholder protection. After all, they are supposed to be running the business and keeping an eye on everyone else in it, not turning a blind eye to rogue Directors riding roughshod over clients, employees and shareholders.

 

Wrap up: Not all Directors are the same so why would their insurance be? Work out what could go wrong before embarking on a search for comprehensive cover. It doesn’t exist.

Top tip: Insurers rarely lose so peek at their exclusions to see what they are prepared to take  a chance on.

P.S. Look out for our next blog which highlights how a lady reported the obliteration of a garden wall to a home-owner, shared a cup of tea with them and the “investigating officer”, then (after excusing herself) be unveiled as the perpetrator – only thanks to a neighbour’s CCTV.

Categories : Accountants Insurance,After The Event,All Risks Insurance,Building Contractor,Business Insurance,Company Insurance,Contractors Insurance,Customer Service,General Requirements,Health & Safety,Legal expenses insurance,Liability Insurance,Litigation expenses insurance,Personal Insurance,Solicitors indemnity,Solicitors insurance,Trade,Uncategorized Tags : , , , , , , , , ,

Health and Safety can make you feel ill

Posted by 16 March, 2013 (0) Comment

This month is about the perils of consultants who, errr, don’t consult, why anyone offering insurance as an “add-on” should be carefully checked, and the scale of the trail of damage they can create.

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‘Elf & safety chancers

 

My hotelier clients are truly wonderful people. Like myself, they ensure that their clients get a good night’s sleep 🙂

One of them called me the other week and asked if their insurance covered them for the new regulations. “I must have missed something… what new regulations?”

It transpired that a Health & Safety consultant had turned up out of the blue,  making out they were some sort of official and asked to look around.  After lots of tutting, he then told the hotel staff that their boss was going to be jailed if they didn’t sign a contract for three years advice.

Putting the frighteners on (best gravelly voice required)

 

The fact the hotel already had an up to date and robust Health & Safety policy hadn’t crossed the consultant’s mind. He just wanted to scare people into signing up. It’s why Health & Safety has such a bad name. It’s used to frighten people into parting with their hard earned money instead of protecting people as they go about their day to day life.

Even worse than “the frighteners”, is the fact he included insurance in his offering. This would have been, in part, a duplication of cover that was already in place. What’s wrong with dual insurance, I hear you ask?  Well, it causes delays at the very least, because each insurance company will suggest that the other is responsible for settlement , a case of “after you, Claude”.

So who pays – not the con man

 

In the worst case scenario, it can lead to claims being declined because insurance companies get a bee in their bonnet when they assume that claimants are trying to claim twice. It’s seldom true – people resent the hassle of insurance, never mind paying for it twice. It can lead to policies being cancelled because of something called non – disclosure.

And it doesn’t end there. If someone’s policy is cancelled by an insurance provider then they must inform future insurance providers of the cancelled policy, at the time that they are seeking alternative insurance solutions. Insurance companies can void the claims of those who have an an incidence of non-disclosed cancellation.

If the current insurer decides to increase their policy premiums because they suffered losses elsewhere in their portfolio, you wouldn’t want to be stuck with them forever.

Wrap up: Health & Safety is important, yet should be treated as a way to prevent issues, rather than be used as a stick to beat people with.

Top tip: Check your Health & safety, employment tribunal and other business protection practices do not include duplicated insurance.

Categories : Accountants Insurance,After The Event,All Risks Insurance,Building Contractor,Business Insurance,Company Insurance,Contractors Insurance,Customer Service,General Requirements,Health & Safety,Legal expenses insurance,Liability Insurance,Litigation expenses insurance,Personal Insurance,Solicitors indemnity,Solicitors insurance,Trade,Uncategorized Tags : , , , , , , , , , , ,

Cowboys and Insurers catch policyholders in bug fight

Posted by 11 February, 2013 (0) Comment

This article looks at why insurance companies are not paying out on as many claims as they normally would, why inflated claims are not usually due to policyholders being greedy and how insurance companies can reduce costs by settling promptly.

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Insurance payouts on the decline

 

The Money section of The Sunday Times confirmed that insurers are using the current climate as an excuse to decline more claims than they normally would. The report confirms that 41% more claims are being needlessly declined, and this suggests a shift by all insurers to look at things with a “fine tooth comb”. The Association of British Insurers argues that insurance companies are always willing to pay valid claims quickly and speedily.

However, the Association of British Insurers do not deal with claims on a daily basis… I do, and I can confirm, categorically, that insurance companies are using any excuse and making people fight to get what they are contractually obliged to. Yes, your insurance policy is a contract, and they should be honouring the terms and conditions, rather than using spurious clauses to avoid making a fair settlement.

 

Someone is going to draw their weapon… smallprint?

 

One of the examples The Time reported was when an insurance company tried to decline paying a claim for damage caused by a water leak, by referring to woodworm that was found in the floorboards where the damage occurred. They stated that woodworm was not covered by the policy, and they are right. However, the claim was not for damage caused by woodworm, it was for damage caused by a leak, which every policy covers, unless there is a specific exclusion due to previous claims or unusual circumstances.

There is a good reason why this happens so often. Regrettably, people who are involved in the claims process sometimes make simple situations far more complicated than necessary.  In this particular case, the builder decided to mentioned woodworm in their report, encouraging the home-owner to have the woodworm repaired. On one hand, you can’t really blame a contractor for mentioning it. On the other hand, small print in the insurance contract meant that the home-owner initially didn’t get paid for something they should have been paid for. Fortunately, they didn’t give up.

 

Can’t we all just get along?

 

A better way to deal with it would have been to issue a report on the water leak, and issue a separate report for the woodworm, or estimate for fixing the problem. Sometimes the insurance company appoint contractors, and whenever they do, my head starts to hurt. Recent cases I have dealt with include an appointed inspection company visiting a premises three times because they failed to carry out a correct “validation” on the first and second occasions.

Our nationwide Insurance companies and local contractors can, and should be encouraged to, work together quickly and cohesively, in order to help their mutual clients, because they are clients to both parties. Local work keeps costs down and quality contractors work hard because repeat business is really important to them. Insurers only make a profit on repeat business so it makes more sense to keep clients happy instead of  leaving them hanging.  

 

Wrap up: The Times article finished off by recommending that policyholders enlist the help of their insurance broker. I would not recommend anyone to report any claim to any insurance company, until they have taken the advice of someone who understands why insurers decline claims, and can make sure it never happens.

Top Tip: When you are choosing any insurance always call the claims line before you make a purchase. This will give you clues as to how your claim is going to be dealt with, especially if they fail to answer the phone quickly, put you in a call queuing system, fail to call you back, or are downright ignorant. It is the claims department who will ensure that you get what you deserve, so it makes sense to try before you buy.

Who to share this with: SME Business Owners & Contractors.

 

Categories : Accountants Insurance,After The Event,All Risks Insurance,Building Contractor,Business Insurance,Company Insurance,Contractors Insurance,Customer Service,General Requirements,Health & Safety,Legal expenses insurance,Liability Insurance,Litigation expenses insurance,Personal Insurance,Solicitors indemnity,Solicitors insurance,Trade,Uncategorized Tags : , , , , , , , , , , , , ,

Insurance agent or double agent?

Posted by 8 December, 2012 (0) Comment

A few of our property owning clients seemed confused when I advised them that we handle all their claims personally. Their previous suppliers had been settling claims on behalf of the insurance company. This article highlights how not all insurance suppliers are the same, how to check and what to do if you’re shocked to find your supplier is not on your side.

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Who pays the claims?

 

The insurance company will, ultimately, yet sometimes they will have authorised an agent to manage claims and write cheques on their behalf. This is supposed to speed up the process yet there’s a hidden downside. Agents that pay out less in claims get a bonus from the insurance company. This bonus can amount to hundreds of thousands of pounds. Faced with arranging payment of a few thousand and losing thousands in return is just too tempting for some people. Morals and money are not good friends.

 

How can you tell it’s possible?

 

The FSA thinks these practices are OK. They insist providers make it clear in their documents. Look out for small print stating “we act on behalf of the insurer when settling claims”. It may not be clear but it must be on there somewhere. Most people are surprised when the service they expected doesn’t materialise. Yet the clues are always in the T&Cs.

 

What if your expectation isn’t met?

 

Policies can be cancelled if they are not a “minimum and deposit” wording. As long as a claim has not occurred, refunds can be obtained. If they refuse to refund their fees in a huff it’s not good news. I’ve heard of some suppliers hiding the fact they collect 48% of the annual investment. It’s never too late to check small print (unless the paperwork gets damaged before you get around to it). The law of the sod is the number one law of insurance.

 

Wrap up: Not all agents are independent. It’s not always easy to tell at first glance. Look again.

Top tip: A quick flick through the documents that detail your cover will determine exactly whose side an agent is on.

Who to share this with: Property Owners, Facilities Managers, Business owners that rely on their premises to stay in business.

Categories : Accountants Insurance,All Risks Insurance,Building Contractor,Business Insurance,Company Insurance,Customer Service,General Requirements,Liability Insurance,Personal Insurance,Trade,Uncategorized Tags : , , , , , , , , , ,