Admiral’s water-walking act at risk?

July 7, 2011

Curse that Cap’n Jack Straw! All this hoo-ha over referral fees is threatening to scupper the Admiral’s formerly formidable (but apparently quite unstable when you look at it closely in the current climate) motor insurance business model, the Daily Telegraph revealed this week.

A quick sift through Admiral’s statutory reporting reveals that more than half the firm’s UK motor insurance profits come from something called “ancillary sales.” Investec analyst Kevin Ryan told the Telegraph that a lot of these mysterious ancillary sales are referral (or “acceptance”) fees, describing Admiral’s business model as “a complex balancing act.”

Shore capital’s Eamonn Flanagan was more direct: “The apparent lack of impact on Admiral’s combined ratio of a near epidemic in bodily injury claims, has left many in the insurance industry somewhat incredulous over the group’s seeming ability to walk on water,” he told reporter Jamie Dunkley.

An Admiral crew person attempted to bore the Telegraph off the story as follows: “When one of our customers calls us for help with a claim that was not their fault, we refer them on to a retained accident management company who help sort out their claim, but only if they give us their permission. If they don’t want to be passed through to our accident management company we do not put them through. If the claim needs to be referred to a lawyer then the accident management company will pay us a referral fee.”

Sounds pretty innocuous, doesn’t it?

Or at least it would have done before the world woke up to the evil of referral fees and the government started talking about maybe doing something about them.

July 6, 2011

A new survey from the Confederation of British Industry and PriceCoopersWaterhorse will make sober reading for UK broking firms. General insurance brokers will hear themselves saying that they expect business volumes to drop over the next three months.

April to June was “quiet” according to the survey, with only marginal growth and with transaction costs on the rise. A majority of brokers said they anticipated a negative trend on fees and commissions over the coming quarter. “Terrible weather we’ve been having,” one broker added, gloomily.

The news for insurers was better – despite claims costs continuing to mount at unprecedented rates. “General insurers’ confidence has been boosted this quarter by strong growth in business volumes and the biggest increase in premium income since 2007,” noted PriceCooperWaterCoopers insurance partner Armoghan Mohammed.

“Further premium improvements are predicted,” he predicted, “as the recent hardening of motor rates and the knock-on effects of the Japanese tsunami and US spring storms start to materialise.

“However, profits are still suffering due to higher operating costs and inflated claims levels forcing insurers to continue to recognise the need to focus on underwriting and pricing.”

Thank God for waves and windstorms!

July 1, 2011

Less than 24 hours to go now until Bankstone’s motley crew of monkey-bike-back knight riders sets off to ride (what else would they do?) round 10 Yorkshire castles over two days (2 and 3 July) raising money for the Yorkshire Air Ambulance service (YAA).

All 15 riders – along with literally dozens of support crew and charity donation collectors – will be dressed in suitably medieval attire. The riders even have helmet covers designed to look like knightly helmets (see previous stories).

The itinerary looks like this (in theory):

Saturday 2 July

Depart Bankstone Offices, Brighouse – 09.00

Skipton Castle -10.00

Bolton Castle – 11.00

Middleham Castle – 11.30

Richmond Castle – 12.00

Simon Bailes premises, Northallerton – 12.40

Helmsley Castle – 14.20

Pickering Castle – 15.00

Arrive “Grand” Hotel Scarborough – 16.00

Sunday 3 July

Depart “Grand” Hotel Scarborough – 09.00

Scarborough Castle – 09.05

Sheriff Hutton Castle – 11.00

U-Pullit premises, Full Sutton – 11.30

Knaresborough Castle – 14.00

Ripley Castle –  14.25

Arrive BLD premises Brighouse – 16.00

Among the corporate entities taking part are motorcycle hire and repair firm BLD (who are providing the main support vehicle and junction marshall), The Bike Insurer, Copart, Bott & Co, Bikesure, Examworks, U-Pullet, Easy Rider, Take That Car Hire, Simon Bailes and Steve Pepper Training Associates.

It is neither too late nor too soon to start donating generously on charity donations website Just GivingBetter still, turn out and see Bankstone and co at one of the stops along the way – but please bear in mind that some of the timings for stops in the latter stages of either day may be subject to revision as things inevitably go tits up along the way.

July 1, 2011

However often and however much Bankstone News writes about potholes, it seems our readers just can’t get enough. So we’re sure you’ll be thrilled to learn of some extraordinary new developments in the pothole world.

Top potholeologists have calculated that Britian’s two million potholes currently cost UK motorists an average £400 a year – whilst generating, it must be allowed, a welcome flow of additional income for motor repair firms and auto parts suppliers.

Fear not, however, comparisonistas confusing.com have taken it upon themselves – for reasons in no way related to gaining a bit of cheap publicity – to design a new road sign warning of potholes ahead. Confusing.com is now petitioning the DfT to encourage local authorities to erect these signs alongside potholey roads as an attractive lo-cost alternative to actually filling the b*ggers in.

A confusing.com spokesbeing attempts to explain as follows: “A constant source of frustration for drivers, the sign has been developed in response to recent findings that, even with sufficient budgets, it would take councils at least 11 years to repair the UK’s damaged roads.”

Bankstone News must confess itself a bit confused about how the sign can have been causing frustration – constant or otherwise – without anyone having seen it yet. And is that 11 years assuming no new potholes appear? Could it take even longer if councils are busy erecting all those danger potholes signs?

If we can have signs for wild horses and toads, argues confusing.com’s Mike “Hulk” Hoban, why not potholes? Couldn’t agree more, agreed someone called Ted who last year made his own sign warning Kentish drivers about a particularly holey road near his home.

“We all moan about potholes,” said Ted, a plumber by trade. His DIY potholes sign, sadly, was removed by unenlightened council officials, perhaps because – unlike confusing.com’s sign – it was not designed by Phil Baines from Central St Martins, University of the Arts London in accordance with the signage guidelines set by the Department for Transport.

That’s probably it.

July 1, 2011

Venerable fashion chain BIBA made a bewildering contribution this week to the raging debate over so-called referral fees. “Biba advocates that brokers should only work with companies that send unsolicited text messages,” Insurance Times reported.

This seems somewhat perverse, when BIBA has spent much of the past week proclaiming that both referral fees and the unsolicited texts to which they are apt to give rise are very bad things indeed, with which none of its members should be sullying their lily white hands.

Responding to Captain Jack Straw’s anti-RF call to arms, BIBA said that “although claims management companies can offer important services to clients,” they also added a new level of costs “which some believe are exaggerated.”

Jack Straw, readers will recall, has branded referral fees and those that accept them as rancid evil parasites feasting upon the innocent lifeblood of UK motorists, or something like that. How reassuring then for BIBA that none of its members would dream of accepting them. Especially after BIBA warned them this week to “monitor carefully the developments from the Legal Services Board and the Ministry of Justice.”

Insurers too, are vehemently opposed to RFs, with one, AXA, even going so far this week as to announce that it will stop accepting them, and others boldly declaring that they will too, as soon as everybody else does.

Describing them as a “form of legalised bribery,” Jack Straw complained that RFs “drive up costs and actively encourage individuals.” “Everybody in this chain is on the take,” he lamented. And it does indeed seem that nobody in this country wants to work for free any more – a conclusion boding ill for the current Government’s cherished Big Society vision.

Lib Dem backbencher Alan Beef backed up Captain Straw, calling RFs “a scandal,” but went on further to identify the real cause of the problem not in RFs or CMCs but in “a system of fees in which a lawyer can still make a profit from a relatively small claim having paid hundreds of pounds for the privilege of pursuing that claim.” Arguments such as this have already prompted the Government to take advice from representatives of the legal profession on whether lawyers earn too much.

RFs fall outside the presently envisaged scope of the forthcoming Legal Aid, Sentencing and Punishment of Offenders Bill.  Justice Minister Ken Clarke claims that the government has not acted on RFs because it was waiting to hear back from the Legal Services Board, who have now decided they should not be banned.

Meanwhile, the Transport Committee Inquiry into the Cost of Motor Insurance is to be re-opened to take account of Captain Straw’s views, with committee chairperson Louise Ellman worrying aloud that there may be “growing evidence that the insurance industry itself is part of the problem” of rising motor insurance premiums. Let’s hope that absurd misconception is quickly cleared up!

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July 1, 2011

Accountancy firm Mazars predicts young drivers will face motor insurance premium increases of at least 50% over the coming year. This would take young adults’ typical average premium from the current £2,431 to a staggering £3,600 per annum.

In other words, young people will need to have disposable income of £300 a month just to insure their vehicle – then there’s tax, fuel, upkeep, repairs, parking, fines, finance etc. etc. So the total cost of operating a personal motor vehicle would be more like £400 or £500 for most.

How many young people have this kind of cash going spare? The average net income for wage earners under 20 is around £670 a month. For 20-24 years olds, it’s more like £900. In either case, driving a car legally is going to take a big chunk out of that income.

So what will happen? More young people will live with their parents, choosing mobility over residential independence. More parents will be fronting for their offspring. More young people will decide to do without insurance. Fewer young people will drive at all. Hot hatch resale values will plummet.

We can safely assume that most young people still driving a car in 12 months’ time will up to no good of one kind or another. If the police have a mind to go after all the young frontees and insurance avoiders, traffic congestion could be eased considerably, leaving the roads to the rich kids, whizz kids and dealers.

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