Welcome to our December newsletter! In this edition; Whiplash reforms set to lower premiums by £40, what you need to know about cyber attacks and hacking, government plans to increase insurance premium tax again and finally, the new BIBA scheme that aims to help businesses minimise flood risk exposure.

Until next time,

West Craven Insurance

Millions of motorists could see their car insurance bills cut by up to &40 a year, after the government recently announce plans to toughen up and crackdown on fraudulent whiplash claims.

Despite a decrease in the number of car accidents, whiplash claims are 50% higher than they were a decade ago with one whiplash claim being paid out every 60 seconds. The Ministry of Justice (MoJ) described the situation as Britain being in the grip of an “epidemic of whiplash claims”. This high number of bogus claims pushes up insurance costs for honest motorists, but as a result of a clampdown, motorists could see their premiums reduced by &40 a year.

The consultation being carried out by The MoJ runs up until January 6 2017. The MoJ proposals would make obtaining a payout much harder and, according to insurers, will end the UK’s status as the whiplash capital of the world. The proposals are intended to stamp out the fraudsters and the “toxic” compensation culture that has forced insurance premiums up, led to consumers being harassed with nuisance texts and calls, and put additional pressure on our NHS.

The consultation could lead to scrapping the right to compensation all together or putting a strict cap on the amount people can claim. Putting a cap on compensation would push payouts for minor whiplash claims down from an average of &1,850 to a maximum of &425.

Justice Secretary Liz Truss said: "For too long, some have exploited a rampant compensation culture and seen whiplash claims an easy payday, driving up costs for millions of law-abiding motorists.

"These reforms will crack down on minor, exaggerated and fraudulent claims."

Reforms to the whiplash rules were first announced in last year’s Autumn Statement by former chancellor George Osborne but it has taken almost a year for the government to launch this consultation.

The industry has promised to pass savings from the latest reforms on to policyholders.

In the recent Autumn statement delivered by the chancellor Philip Hammond it was announced that &1.9bn will be invested to help strengthen UK cyber security and protect the country from hacking and cyber-attacks, both big and small.

Hammond announced “Our new strategy, underpinned by &1.9bn of support over five years and excellent partnerships with industry and academia, will allow us to take even greater steps to defend ourselves in cyber space and to strike back when we are attacked.”

While there have been similar efforts in the past and it could be argued that &1.9bn isn’t enough to cover all issues relating to cyber security, it is still viewed as a vital step in the right direction, as cybercrime becomes more prevalent throughout the world.

This was backed by minister for the Cabinet Office, Ben Gummer who commented on the autumn statement, saying that “The first duty of the government is to keep the nation safe. Any modern state cannot remain secure and prosperous without securing itself in cyber space. That is why we are taking the decisive action needed to protect our country, our economy and our citizens.”

So what type of attacks fall into the cyber-attacks and hacking category? Unfortunately, it’s quite a wide spectrum and quite a lot to consider from a security perspective, ranging from criminal organisations forming attacks on large businesses, to an opportunistic individual hacking the email account of a member of the general public.

In other cases, we also have the type of cybercrime that doesn’t actually require an individual to hack into a system, but instead use tactics such as phishing. This is quite a common practice in which a user will receive a fake email from a seemingly trusted source in an attempt to draw confidential information from them, allowing someone else access to one of their online accounts e.g. PayPal or Apple.

Another form of attack that many businesses may be vulnerable to is distributed denial of service (DDoS). This method of attack uses multiple systems to target a specific website or system with an enormous amount of traffic, in attempt to cause the system to crash and causing a massive disruption and potential harm to the organisation.

The government’s plans to protect the country against such crimes are to be delivered over the course of the next 5 years, with a strategy designed to “defend, deter and develop” UK capabilities. This strategy has a large focus on uniting all of the countries cyber operations under the newly formed National Cyber Security Centre, while raising awareness of vulnerabilities for organisations and members of the public, so that the majority of attacks can be prevented and in some cases countered against.

In the Chancellors Autumn Statement he revealed that insurance premium tax (IPT) will rise from 10% to 12% from June next year. Insurers and motoring groups are not happy with the government’s announcement at all.

It will push up the cost of home, car, pet and buildings insurance for policyholders. The increase means that this form of tax will have doubled in less than two years. Exempt from the tax rise is travel insurance as this has a separate tax rate.

Chancellor Philip Hammond said: “Insurance premium tax in this country is lower than in many other European countries, and half the rate of VAT.”

Huw Evans, director general of the Association of British Insurers, the industry trade body, said the move was a “hammer blow for the hard pressed”.

“Yet another increase ... will hit consumers and businesses alike, hurting those who buy business, motor, property, pet and health insurance. It marks a doubling of insurance premium tax since last year," he said.

Here are the key points to come from the Autumn Statement:
• No further welfare savings measures
• Increase in Personal Allowance to &12,500 by the end of the parliament, and the Higher Rate Threshold to &50,000 by 2020-21
• Increase in National Living Wage from &7.20 to &7.50 in April 2017
• Ban on letting agents charging fees to renters “as soon as possible”
• New three-year NS&I Investment Bond available from spring 2017
• Fuel duty frozen for a seventh year
• New national productivity investment fund of &23bn to be spent on innovation and infrastructure
• &1bn to invest in full-fibre broadband and trialling 5G networks
• &2.3bn Housing Infrastructure Fund for infrastructure for up to 100,000 new homes in high-demand areas
• Continued support for Help to Buy loan scheme and Help to Buy ISA
• Corporation Tax to fall to 17%
• Salary sacrifice schemes to be subject to the same tax as cash income from April 2017 (pensions, childcare and cycle-to-work schemes exempted)
• Autumn statement abolished. Instead, the UK will hold annual budgets in Autumn from 2017 and hold Spring fiscal statements

The British Insurance Brokers’ Association (BIBA) has announced a new commercial insurance scheme for businesses that will officially include flood cover "for many commercial premises and let properties located in areas at risk from flooding".

Back in January this year, BIBA revealed that it was working on a new solution for businesses that are excluded from Flood Re.

The new scheme has backing from Lloyd’s underwriting capacity and uses an advanced mapping facility developed by Landmark which pinpoints the exact location and features of an individual property. Having such specific information and details risk reflection allowed each business to actually have insurance based on its own specific risk.

There is also a ‘buy-back’ option which allows customers to purchase any flood excess that is applied because of the business location which means they can choose the amount of risk they want to bear themselves.

Here’s what Steve White, chief executive of BIBA had to say: Steve White, chief executive of BIBA said: "BIBA invested time in finding what our members needed to provide to business clients.

"We have been working closely with government ministers and their teams in relation to flood cover for some time. They were as keen as our members for us to find a solution for businesses struggling to access flood insurance.

"We are delighted that this scheme will now be able to provide protection for many of the businesses that have not been able to buy cover against flood damage."

Quotes for the news products are available to BIBA members from 7 December and cover from 12 December.