Consumers see no value in expensive motor policies

The vast majority (89%) of British consumers do not believe that paying more for their car insurance results in the delivery of a better product or service from their insurance provider according to a market survey conducted by Datamonitor.

“These findings are extremely worrying for UK insurers,” said Liz Hartley Datamonitor’s Principal Consultant for Financial Services Consulting.

“It shows that British consumers do not see any point of differentiation among providers, and essentially believe that car insurance is a price-based commodity. It is therefore important in this economic climate – particularly given that premium rates are currently hardening due to weak investment returns – that insurers look to reinforce their value proposition with consumers.”

This view is supported by other findings from the study. Compared to the US, for example, where over half of car insurance policy holders automatically renew their policies each year, only 9% of British consumers actively allow their policies to roll over, while 44% claim that they shop around for better deals each year.

According to Datamonitor, these inherent high rates of customer churn mean that, for UK insurers, the cost-to-serve will continue to rise. However, it appears drivers in Britain do see comprehensive car insurance as being an essential insurance to hold and maintain, even during the economic downturn, and are not willing to compromise the features and perceived benefits that they currently receive.

Indeed, only 5% of survey respondents claimed that they would look to trade down to third-party-only cover in an effort to save money, and 13% said that they would look to reduce their premiums through increasing excess amounts or through reducing the total sum insured.

“This is reflective of the open and competitive insurance market that exists in the UK generally,” said Ms Hartley.

“It is a buyers’ market and, as such, consumers do not believe that they need to compromise when negotiating their insurance policies; indeed, there is almost an expectation of ‘more for less’ each year.”

Datamonitor said the price mentality adopted by British consumers is in part being fueled by the high penetration of price comparison websites in the UK, with 34% of respondents claiming to have used a site of this type to find the best priced car insurance, compared to only 23% of respondents who used a comparison site to find the best priced house and contents insurance.

“The economic downturn and the high cost of motoring in the UK generally mean that consumers will continue to spend a disproportionate amount of time looking for savings on their car insurance policies,” said Ms Hartley.

“However, over the medium to long term, the onus will be on car insurance providers to actually begin to re-establish value in their proposition through understanding the need states and drivers that are important to consumers, and marketing their products accordingly. At the moment, nearly every car insurance marketing campaign in the UK centers on reduced price, and the essential benefits of the product, such as safety, security and well-being, are lost.

“These messages and the underlying importance of needing to have car insurance have to be re-emphasized, along with the reassurance that, if people do need to make claims, they will be treated equitably and fairly.”

Police and Insurers Crack Down on Car Theft

A new partnership between stolen vehicle recovery firm Tracker and the police could help car insurance companies save thousands of pounds.

The recovery company has joined forces with the Association of Chief Police Officers Vehicle Crime Intelligence Service allowing the police to track and recover vehicles once they have been taken, following a two month pilot scheme.

The initiative, which is known as Operation Semita, has the backing of a number of insurers, including Tracker parent company RBS Insurance. As part of the initiative, the proceeds gained from the vehicle recovery, will be split evenly between Tracker and the insurers.

Tracker managing director Bill Raynal said that around 50% of UK insurers had signed up to the deal, although others were unhappy with halving the proceeds.

He added: “We have a large number of insurers taking part in the scheme but some want to hold out for a greater percentage. However, we are keen to have all insurers signed up.”

Tracker said that around one million cars currently had their tracking facilities installed and that it had recovered more than 18,000 vehicles since 1993.

Car insurance premiums see first Q1 rise for six years

The average quoted premium for an annual comprehensive car insurance policy rose by more than 1% over the first quarter of 2009, according to The AA’s latest benchmark British Insurance Premium Index.

This is the first time for several years that there has been a first-quarter increase in car insurance premiums. The average quoted premium, based on data from over 80 insurance providers on a basket of 1,000 customers, rose by 1.3% to £751.60. The Shoparound index, an average of lowest three premiums for each customer and is closer to the premium most people will pay, rose by just under 1% to £504.38.

Simon Douglas, director of AA Insurance, says: “Although 1.3% may not sound much, premiums fell during the same period in each of the past five years, so this increase is a significant indication that insurers are determined to address past underwriting losses this year, as we predicted last year.

“Premiums tend to fall a little during the first three months of the year. It’s when most car insurance renewals take place while the new March car registration change prompts customers to look for new insurance cover, so competition between insurers tends to hold premiums in check.

“But the industry is facing escalating costs, falling investment income and underwriting losses. Premium rises are therefore inevitable.” Mr Douglas pointed out that theft, fraud, personal injury claims and legal expenses were all contributing to increasing costs.

“Figures issued by The Association of British Insurers show that the value of detected fraud rose by 30% last year. Insurance cheats add an estimated extra £40 to the average premium paid by honest motorists.

“In addition, theft claims for modern expensive cars, where thieves first steal the keys by either robbery or burglary, rose by 15% over the six months to April, compared with same period last year.

“Personal injury claims and their associated legal costs also continue to rise, especially as the recession takes hold.” Mr Douglas said that for every £100 in premiums received by motor insurers, around £105 was paid out in claims. He added that the economic downturn had also contributed to reduced investment income and depleted reserves from which insurers pay claims.

“Over the past 12 months, the average quoted premium for comprehensive insurance rose by nearly 11%. I expect premiums to increase by at least a similar percentage over the rest of 2009,” he added.

IAM backs move to crack down on uninsured drivers

The UK’s estimated two million uninsured drivers face an instant fine should the latest Government proposals go ahead. The IAM (Institute of Advanced Motorists) has backed the move, claiming it will protect the vast majority of law abiding motorists – as long as databases are reliable.

Under new proposals from the Department for Transport, using the 2006 Road Safety Act, vehicles and motorists will have to be continuously insured, whether the vehicle is kept and used on a road or not. The DVLA will send reminder letters to motorists whose insurance is soon to expire. If they ignore this letter and don’t renew their motor insurance, they will be issued with an automatic fine.

IAM chief examiner, Peter Rodger, said: “The proposal will help reduce the numbers of people who had genuinely forgotten their motor insurance was up for renewal. However, those who deliberately flout the law are unlikely to be fazed by the new proposals as they will continue to find ways to work the system.

It’s worth remembering that a crash involving an uninsured driver is particularly fraught. A worst case scenario is when the uninsured driver will be in an unregistered vehicle, untaxed and without a current MOT – there are a host of road safety issues when some drivers choose to simply drop below the radar.

“These illegal motorists not only represent a threat to other road users, but also place a financial burden on the remaining 94 per cent of law abiding motorists.”

The proposal entirely depends on the accuracy of both the DVLA keeper records and the Motor Insurance Database (MID). The IAM is concerned about their reliability.

Mr Rodger added: “There are regular instances where the MID has provided inaccurate information to police enforcement units, leading to mistaken action against drivers and vehicles which are in fact insured. It would be unfair for a motorist to receive a fine if the database in incorrect. We also recommend that a check against the Police National Computer is carried out, so the victim of a crime, such as theft, does not have to prove to the police that they already hold a report.”

The IAM would like assurances from the DVLA that these accuracy problems will be addressed before placing unnecessary concern onto law abiding motorists. Enforcement measures such as Automatic Number Plate Recognition (ANPR) and road traffic policing are crucial for any new scheme to be effective.

Confused Adds Female-Only Insurer to Car Insurance Panel

Price comparison site Confused.com has added Women on Wheels to its car insurance panel.

Commercial director at Confused, Peter Ablett, comments: “Over a million women have visited Confused already this year, for a motor quote – an increase of nearly a third on last year – so we are delighted to welcome Women on Wheels to our insurance panel.

We are committed to finding our customers the best car insurance policy for their circumstances at the right price. “By adding another female-only insurer to our already extensive panel, we can offer our female customers both choice and competitive prices.”

Spotlight on KwiK Fit Car Insurance

To kick of this month we bring our readers an updated spotlight on Kwik Fit Car Insurance policies.

‘Fed up with the cost of car insurance?’
It’s time to put your foot down! Up to 20% online discount, plus a whole lot more.

Kwik Fit Insurance Services was launched in 1995 and has grown to become one of the UK’s leading motor insurance distributors. 

Originally employing 130 people, their outstanding call centre at Uddingston, Lanarkshire, now employs more than 800 people, handling an incredible 10 million calls every year. In November 2002 Kwik-Fit was sold to CVC Europe, and in June 2005 the company changed hands again, this time to PAI Partners.

The company are entirely focused on providing the best possible service to their insurance customers.

You can obtain your quote in double-quick time. Policies that are right for you, at the right price – right away. Kwik Fit work with a number of specially selected partners to bring you the best quality products at the very best value prices. Let them search our panel of leading UK car insurers to get you a cheap car insurance quote, using our simple and fast quote process.

In particular they can deliver excellent low rate premiums for motor insurance especially for women, mature drivers, drivers with full no-claims bonus, and drivers of older vehicles.

LV Car Insurance Records £200m Loss

Whilst it has been widely reported on the exciting new website from LV car insurance, by contrast it has been reported that whilst the company has reported a sharp increase in operating profit, in line with many other insurers, investment losses have dragged the results down.

The group reported a 128% increase in operating profits, to £62.8m (2007: £27.5m), and a 38% increase in gross premiums to £917m (2007: £665m).

However, LV’s investments contributed to a loss after tax of £202m (2007: profit £50m). It maintained a capital surplus of £1.1bn, 2.1 times the level required (2007: £1.3bn).

The mutual emphasised its long term business management, reporting that policyholders with a 25 year with-profits policy maturing in February 2009 were at least 22% better off than equivalent policyholders with major proprietary companies.

The average value of a maturing LV 25 year with-profits policy fell 1.2% year-on-year, despite a 32% fall in the FTSE All Share in 2008.

LV also said that it had strong growth in member numbers, up to 1.13 million at the year end (2007: 937,000). Additionally, LV’s general insurance (GI) premiums grew by 19% from £342.9m in 2007 to £423.5m, excluding acquired business Highway Insurance.

Mike Rogers, LV group chief executive, commented: “Throughout a turbulent year our single-minded focus on helping our members and customers to look after what they love has held us in good stead. The very strong growth in operating profit reflects significant progress over the last two years in re-shaping our business portfolio and strengthening our organisational capabilities. This was underpinned by strong sales growth across our GI and retirement solutions businesses, and by our withdrawal from banking.

“Our focus on high quality, long-term investments has allowed us to maintain our relatively strong investment performance and financial strength, despite very volatile short-term markets. In particular we have had no direct exposure to failing Icelandic banks, nor to the sub-prime mortgage market.

“Trading has started well in 2009, with sales in the first two months strongly ahead of the same period last year, although investment markets remained volatile.”

LV expands regional network

The LV broker division has further expanded its regional network with the opening of a new office in Birmingham. The office is based in Baskerville House in the heart of the city and will manage broker relationships in both the East and West Midlands. Mark Hands has been appointed branch manager for the office.

One of the largest insurance markets with most leading insurers either having offices or a presence in England’s second city. The move is designed to provide a better service to insurance brokers in and around the midlands. The Broker division offers LV car insurance and fleet insurance to the public in addition to commercial products for businesses, shop owners, property owners and surgeries.

Following the rise of direct and online insurers insurance brokers have been slowly squeezed out, however, the news that LV is widening its operation will no doubt give hope this sector of the insurance market. In a statement, the insurer said it plans to continue to develop its network to ensure brokers have easy access to local decision makers.

Phil Bunker, managing director of LV broker said: “We are delighted to be adding an eighth branch to our network. We are fully committed to a nationwide network as we believe this enables us to provide the best possible service to brokers”.

Welcome back Happy!?

We have recently seen the latest adverts from Aviva Insurance signalling the return of – Happy!? If you haven’t seen the current TV campaign then we can provide below a brief overview of the new ad! 

Ad Story
Seen from the perspective of the eponymous lead character, a man watching wildlife through binoculars on a remote Scottich loch takes a mobile phonecall and replies that he is on his way. By small fast boat, 4WD, light aircraft and taxi we follow the journey to a city board room, where surprised colleagues greet us with “Happy, you’re back!”.

The reply is a determination to cut these Norwich Union car insurance prices down to size. The narrator repeats the message that ‘Happy’s back’ and the contact details are shown on screen to be changing soon from Norwich Union to Aviva (The Company).  Further information from The Company on the name change is given below:

From Norwich Union to Aviva
Sometimes a simple change of name can unlock the potential that was there all along. If you want people to remember you, it helps to have a name that sticks.

For us, it was just a case of outgrowing the name we started out with. ‘Norwich Union’ fitted us fine in 1797, when we began selling protection against fire in rural communities. It still worked for us 200 years later, when we’d become the biggest insurer in the UK. But since we’ve joined up with Commercial Union and General Accident, we’ve got that bit bigger. In fact, we’re now the fifth-largest provider of insurance, savings and investments in the world.

As a global company, we need a name and a brand that will be recognised anywhere. The name Aviva brings together more than 40 different trading names around the world. It’s perfect for us because it’s short, memorable and feels positive and lively.

Apart from the new name, we’ll be carrying on as usual. We’re proud of our heritage and our values. We’ve got to know our customers, and have found that the best way to provide financial services is to treat every person as an individual. That’s something we’re definitely not going to change.

ENDS

Winter Driving Tips

At this time of year it always makes sense to remind our readers of the best practices for driving safely through the winter months. Not only will this help to keep your car insurance premiums down but most importantly keep you and your family safe over this festive period.

The Highways Agency provides a fully featured, comprehensive guide to safer winter driving. During these months you will see their salt spreaders and snow ploughs out on the roads whenever freezing temperatures are forecast.

Severe weather is not just about snow and ice. It includes strong winds and floods too. Hence it is always advisable to check the most up-to-date weather forecasts and road conditions before embarking on your journey. It is also advisable to always check your planned route before you set out.

If really bad conditions are forecast, think about whether you need to travel at all, even if you are only going on a short, familiar journey. And make sure your vehicle is in good running order before you leave.

1. Check your vehicle

• Get your vehicle serviced. That way you know it won’t let you down even if the weather does.
• Keep the cold out of your vehicle by checking and replacing the anti-freeze in the radiator.
• Most batteries last between two and four years. Make sure yours is fully charged and replace it if you’re not sure it’s reliable.
• Lights can get filthy with all the spray in winter. Keep them clean and check the bulbs regularly so you’ll be prepared for lower visibility and shorter days.
• Getting a better grip on the road takes more tyre tread in wet or icy conditions. Ensure your tyres are inflated to the manufacturers’ recommended pressure and have at least 3mm of tread depth.
• Make sure your wiper blades aren’t worn so you can keep your windscreen as clean as possible for the extra spray, ice and rain you get in winter.
• Dirty windows and mirrors can make it hard to see as the low winter sun hits. Make sure you keep them clean and free of ice and snow in colder weather. Ensure your windows are clear and de-misted before you set off!
• Don’t forget to take a map with your for any unplanned diversions.
• Take an emergency kit.

2. Change the way you drive:
A lot of collisions are caused by people not braking in time when the roads are wet or slippery. If it’s foggy, raining, snowing or icy, make sure you slow down and keep well back from the vehicle in front of you.

Stopping distances in winter
When roads are slippery it will take longer to stop. Up to 10 times longer. So, drop your speed, and give yourself more time to slow down and stop. Drive with care even if roads have been treated.

When the road’s wet, it can take up to twice as long to stop so it makes sense to slow down when it’s raining. If your vehicle loses its grip, or “aquaplanes”, on surface water take your foot off the accelerator to slow down. Don’t brake or steer suddenly because you have no control of the steering or brakes.

3. Breaking down on the motorway
Pull onto the hard shoulder, park as far over to the left as you can, away from traffic, and turn on your hazard warning lights. Get yourself and any passengers out of the vehicle immediately, using the doors on the left hand side furthest from the traffic. While you wait for help, keep well away from the carriageway and hard shoulder and do not try even the simplest of repairs.

Try to use the emergency roadside telephones rather than a mobile phone. This will help traffic officers and emergency services know exactly where you are.