Motor insurers shelling out £23m per day in claims

In this month's edition, we look at why motor insurers are having out an average of £23m per day in claims to British drivers. 

There's also news of the success of a DVLA-led scheme in catching uninsured drivers, the cyber insurance market is set to double by 2020 and if you're traveling this Christmas, save yourself some potential problems and read our handy guide to how not to invalidate your travel insurance. 

Motor insurers shelling out £23m per day in claims

 

Motor insurers are currently paying out over &23 million per day, according to the Association of British Insurers (ABI). The pay-outs, the highest since records began in 2013, include pay-outs for theft, personal injury compensation, self-damage and third-party damage, with a rise in both the number of claims and cost of repair both cited as key factors for the record figures.

It’s been an unprecedented year for the industry, and the ABI’s figures shed further light on why pay-outs have increased to such levels.

To begin with, a total of &6.4 billion has been paid out in the first nine months of 2018 to private motorist and victims of crashes, equating to around &23 million per day. This is a 4% increase on where the figures lay at the end of the third quarter of 2017. Claims of theft have risen by a startling 32% this year and sit at &271 million, with the total number of claims settled seeing an 11% increase on the same period in 2017.

Repair bills have also hit unprecedented levels with an increase of 5% on last year’s numbers. The average repair bill is currently sitting at &2,137, with the total amount paid out by insurers this year standing at &3 billion for the first nine months of 2018. This has been put down to an increase in more sophisticated vehicles with bumper and windscreen sensors requiring a rise in the cost of repairs.

It’s of significant note that the industry is still maintaining a highly competitive market for motor insurance, even during this period of increasing payouts. Huw Evans, director general of the Association of British Insurers offered: “motor insurers are delivering when it matters, keeping Britain’s motorists on the road when things go wrong, and compensating those who suffer injury in road crashes.
It’s of significant note that the industry is still maintaining a highly competitive market for motor insurance, even during this period of increasing payouts.

“Despite rising claim costs, all drivers will appreciate the fact that the average price paid for motor insurance has been falling this year. This in part reflects the continued competitive market, and that some insurers may be reacting to the progress of the Civil Liability Bill that is proceeding through Parliament that will bring much-needed reforms to the personal injury compensation system.”

Cyber insurance market set to double by 2020, says City Minister

 

Cyber insurance arrived at a particularly well-timed moment in the industry; due to the ever-evolving threat of cyber-attacks, it was imperative for insurers to offer flexible but sturdy policies that could protect businesses of all sizes should they be targeted.

And despite criticism stemming from misunderstandings of the nuance of cyber-related insurance products, the outlook for the industry’s future is particularly bright, according to City Minister and Economic Secretary to the Treasury, John Glen.

Speaking at a recent roundtable event held by London Market Group, Glen offered the following on the state of the cyber insurance industry: “the global cyber insurance market is expected to double by 2020 and as a world-class centre for financial services, the UK is in an ideal position to provide that insurance.”

Still, the Financial Times are suggesting that a rise in the number of disputes between insurers and policyholders points to a need for the industry to simultaneously continue evolving with the threat that cyber attacks provide, whilst also understanding the need to provide appropriate cover in the event of a breach.

“The mismatch between what people think they have bought and what they have actually bought is often very significant,” offered Mactavish’s technical director Rob Smart via the Financial Times. “The products are put forward as an all-singing, all-dancing solution to cyber risk, but the reality is more nuanced than that. Cover can be limited to events triggered by attacks or unauthorised activity – excluding cover for issues caused by accidental errors or omissions.”

The FT also quoted Airmic’s Julia Graham recent criticism suggesting that cyber insurers ‘are not offering the breadth of cover that people would like,’ but despite this, fewer cyber claims are denied after reporting when compared to claims for other business-related insurance products. In that sense, the suggestion that claim disputes are on the rise seem primarily to be down to a misunderstanding on what their cyber insurance actually covers, as opposed to a fundamental flaw with the product itself. Given that several months ago, NTT Security reported that 66% of the UK businesses they surveyed were unaware if they even had appropriate cyber protection, it’s clear that there remains some confusion on the subject.

“Pressure is however still growing on businesses to look even more closely at the risks they face from the increased number and variety of attacks,” offered Glen. “In addition, they also must be conscious of the introduction of new data protection laws which impose more transparency of reporting and higher penalties for failure."

 

Guard against invalidating your travel insurance this Christmas

 

It’s difficult not to get swept up by the myriad of tasks that Christmas brings every December. Presents to buy, decorations to put up, various family members to appease…it’s a lot to keep track of even before you add a festive holiday into the equation. Travel insurance might not be high on the list of your priorities, but a small action could invalidate your policy. With that in mind, we’ve compiled a list of tips to make sure you stay covered and protected when you go on your travels this Christmas!

Timing is essential
Starting the policy at the right time is a crucial component of travel insurance, so if you’re looking at buying single-trip cover, make sure you do so when you’re booking the holiday itself. It’s important to fulfil policy criteria in the event of an accident or an illness that stops you from taking your trip; purchasing travel insurance at the right time is a big part of that.

Declare all of your medical conditions
It’s important to make sure you detail any relevant pre-existing conditions when choosing your policy, even if you aren’t experiencing any health issues at the time of purchase. The reason behind this is that you won’t be covered in the event of issues during your trip should you fail to disclose any important historical or current ailments.

Don’t leave important possessions unattended
When it comes to taking care of your important possessions on holiday, it’s always better to be as safe as possible than sorry. That’s why we recommend putting anything highly valuable into a locked safe when you aren’t carrying it with you or it’s not in sight, as your insurer will view anything stolen as unattended property should it not fulfil the above criteria.

Make sure your documents are up to date
It can be a pain keeping on top of your travel documentation, and if your passport has a few months to go before it expires then it might be tempting to try your luck and use it before your trip. Unsurprisingly, we don’t recommend that! It’s a well-established fact that a large proportion of countries around the globe will require your passport to have at least six months validity on your passport before they will allow you entry and should border patrol refuse you entry on your arrival, your insurer won’t offer any cover. The same approach should be taken with visas; make sure you get the correct one to save yourself any bother.

Get inoculated
For those of us planning a trip to a more exotic location during this festive season, it’s essential that you book an appointment with your GP to talk about any inoculations or vaccinations that you may require. Again, it’s simply not worth the risk of contracting an illness that will invalidate your travel insurance, so make sure to plan ahead accordingly.

 

Uninsured drivers being caught out by DVLA-led scheme

 

Uninsured drivers have been costing law-abiding motorists for years, with the bill for accidents caused by them paid for by the insurance premiums of fully-insured drivers. Given the danger posed to the general public and other motorists by uninsured drivers, alongside the fact that the Motor Insurers’ Bureau (MIB) reported receiving over 11,000 claims last year against them, it’s clear that more stringent measures are required to catch out those driving their vehicle without appropriate cover.

However, it seems as if a scheme operated by MIB and the Driver and Vehicle Licensing Agency (DVLA) has already achieved success in keeping uninsured drivers off the road without the need to catch them in the act of driving.

Legislation introduced in 2011 allows action to be taken against the owners of uninsured vehicles which includes fixed penalty notices, &1,000 fines and the potential for their vehicle to be crushed. The scheme works by cross-referencing data from the Motor Insurance Database record of UK motor insurance policies with vehicle records held by the DLVA to identify vehicles that don’t appear to have any insurance.

On average, 3,000 letters are sent out to the drivers of uninsured vehicles that aren’t declared to be off the road every day, with the scheme’s 5 millionth letter sent out in October of this year marking a significant milestone in an initiative which has notably reduced the amount of uninsured drivers across the country. The letters insist that the driver either insure their vehicle or make a statutory off-road notification (or SORN) to the DVLA, with fines and court prosecution the punishment for failing to do so.

The dangers posed by uninsured drivers are stark, as detailed by Inspector Simon Hills from Thames Valley’s Police service: “In my experience, drivers who willingly use vehicles without insurance are often committing secondary offences. These range in seriousness from minor road traffic offences, to driving whilst disqualified and other crimes such as drug dealing and burglary. The effective enforcement of uninsured vehicles allows us to deny criminals the use of the road and prevent further offending.”

"There really is nowhere to hide. Data enables us to easily identify vehicles that appear without insurance,” offered the MIB’s head of enforcement, Neil Drane. “By using automation alongside ongoing police efforts, we've helped to halve the number of uninsured drivers on UK roads over the past 10 years."

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