August 6, 2017

The Independent, a website that thinks it’s a newspaper (or possibly the other way round), has weighed in on the general pummelling insurers are enduring at the hands of fake-news journos jealous of their soaring profits.

Weirdly impervious to underwriters’ unstinting efforts to explain patiently how motorists have only themselves to blame for sky-high motor insurance premiums, papers like the Independent are still trying to pin the blame on insurers (who are, let’s face it, the real victims here!)

While all around us we can plainly see that policyholders recklessly persist in making claims, it is still somehow supposed to be the fault of insurers that premiums have to go up!

James Moore (the Independent’s so-called ‘business commentator’) blames insurers for simply making a profit. Clearly, if Mr Moore actually knew the first thing about business he’d know that if insurers didn’t make a profit there would be no (mandatory) motor insurance for people to buy.

Either that or the state would have to step in to compensate accident motorists and their victims – and if that’s the sort of thing Mr Moore is after, perhaps he should go and live in Venezuela or Canada or North Korea or something!

Moore accuses insurer Direct Lime of being “the toast of the City having turned in a bravura set of results that sent the shares soaring skyward” as if that somehow disqualifies it from politely pointing out that insurance is going to carry on getting more expensive unless and until HMG takes effective steps to staunch the constant flow of new claims.

In Mr Moore’s confused mind, it’s as if things like Insane Punishment Tax (IPT), the Ogden Nash Rate, (ONR), out of control Claims Farming Companies (CFCs) and the rampant compensation culture (RCC) were simply figments of insurers’ collective imagination.

Instead he tries to pretend that Direct Lie and the like are hell bent on making huge profits and are benefiting from a lack of competition in the market. Absurdly, he tries to pretend that, despite all the many and various brand names who logos feature on Go Compare the Supermarket, there are secretly only nine (big) underwriters!

At one point, seizing on a perfectly innocent line in Direct Lime’s latest financial report, Moore tries to make out that the Ogden Nash rate is no big deal for insurers.

The report states simply that “Detailed case reviews conducted in Q2 of the additional costs arising from the lowering of the Ogden discount rate indicated a lower than expected increase to claims costs. This has resulted in a reserve release of £49m, leading to a total prior-year reserve release of £174.6m in the first half of 2017.”

This he somehow manages to construe as: “We’re not taking the hit we thought we would from paying out a bit more to compensate paraplegics, amputees, people in constant pain. So we’re kicking £49m extra over to our shareholders.”

Setting aside the gross distortions created by Mr Moore’s extreme left political views and inability to tell his financial arse from his financial elbow, let’s remember this: shareholders are people too (some of them)! What if they were somehow injured in an RTA themselves and they’d never received a dividend for all their selfless support of the insurance industry. Exactly how would that be fair?

Insurance is about drawing on the resources of the many to help the few in their hour of need. Let’s never forget that!

The nine secret masters of insurance underwriting (artist’s impression only)


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