Another day and another news article about motor insurance, whether that is to do with price fixing allegations following the recent Dispatches programme, telematics insurance, the newly introduced gender legislation or rising premiums to name a few. Whatever the reason, you can’t seem to dispute the fact that the insurance sector is having somewhat of a tough time at the moment.
Scrutiny and regulation of the financial services industry seems to go through peaks and troughs – mortgages, life products, investments, banking etc. and now it’s insurance’s turn again. Research conducted by the Harris Poll at the end of 2012 showed just over half (55%) had at least some confidence in insurance companies, coming just above IFAs, credit card companies and the Government.
You can’t deny some of the developments are positive and should help in the long run. For example, the introduction of telematics insurance to help those for whom getting standard insurance would be too cost prohibitive – yes, it does have a ‘Big Brother’ feel to it, but surely getting people to drive more carefully and giving them an opportunity to get insurance is a win-win situation for everyone? An increasing number of insurers are now looking to offer this as an alternative option to insure those who are being priced out of the market. Hopefully, this should result in fewer accidents.
As for the gender legislation, I understand statistics have shown that being a female driver equals a more safer driver, which means they are less likely to have accidents therefore less likely to claim. That said, you often hear women drivers who are the ones being ridiculed for their (lack of!) driving and parking skills. But surely by removing this gender discrimination it will allow for drivers to be assessed on their individual merits and driving history? We would hope insurers are looking at each driver on a case by case basis.
The Dispatches programme was an interesting watch and just a few days ago, an official joint complaint was lodged against the Direct Line Group with the Office of Fair Trading. However, whilst I don’t dispute that there may be some element of negotiating prices within the chain, I did come away feeling the programme was very one-sided and very much an excuse to do some ‘insurer bashing’. What will come out from the Office of Fair Trading investigation will remain to be seen.
As for the issue of rising premiums in favour of the insurer’s profits and at the expense of the consumer, this doesn’t seem to be holding true. The AA’s price index shows the average motor premium for a comprehensive policy fell by 2.9% in the last 3 months of 2012, with a similar fall being seen prior to that and it is forecast that this trend will continue. Alongside falling premiums, insurers are having to bear the costs of dealing with an increasing number of personal injury and fraudulent claims, which are tending to be fuelled by the economic climate.
This leaves me with a couple of further thoughts – are consumers purely looking for someone to blame and is the financial services industry becoming the scapegoat for all that has happened with the economy? Whilst we can’t deny they may have a part to play, let’s hope they’re able to pass this test.
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