Publications

It is a fact that motor insurance rates in Northern Ireland are now at 1997 levels! The bad news is that this is not sustainable and insurance rates will increase at a time when firms can scarcely afford additional costs. With this in mind I thought it would be worthwhile to offer a few thoughts to ensure that you gain the best you can out of your insurance programme. The information below will help you understand what an insurer looks for when underwriting your insurance and may help when it comes round to renewal date.

Click on the Fleet Insurance icon to the left to download your free guide.

It’s a well worn cliche – a business is only as good as its people. But it is true and particularly true for commercial vehicle fleets. Much of the running costs of commercial vehicles depends upon the driver – fuel consumption, insurance costs and vehicle wear and tear. But surely if someone holds a driving license then they are competent to drive a particular class of vehicle and is there any more to it than that?? YES!!

Click on the Better Drivers Mean Less Expense icon to the left to download your free guide.

Somebody has got it wrong

Recently the Assembly Finance Committee, following a recommendation from the Consumer Council, agreed to set up an inquiry into the high cost of insurance in Northern Ireland.

Joleen Cunningham from the Consumer Council told the finance committee that the establishment of the new Department of Justice could have an impact on lowering the cost of insurance in Northern Ireland. Ms Cunningham further added that Car insurance costs 80% more in Northern Ireland – an average of £282 extra than in Britain.

The Consumer Council said that NI households pay an average of £278 more for all their insurance than in the rest of the UK.

We then had Mitchel McLaughlin MLA accusing the Insurance Industry of “playing fast and loose” with NI consumers and said there was a lack of competition.

Mr McLaughlin then added the comment “all insurance companies were dealing with a small number of clearing houses in Northern Ireland”

On the other hand The Financial Regulator stopped a major player in the Insurance Market in Northern Ireland from trading because they are too cheap and have lost money in the last 2 years. They were allowed to go back underwriting Private Car only after increasing their rates by a minimum of 20%.

They have been told they cannot go back into other lines of business until they stop underwriting Loss leaders. Press reports said that they needed to increase commercial rates by 3000%. I take that with a large pinch of salt but think it is nearer 100%.

So who is right? Lets look at THE FACTS

“All insurance companies were dealing with a small number of clearing houses in Northern Ireland”

Mitchel, a small point, Banks use clearing Houses not insurance companies. If you are talking about Insurance Brokers there are 124 Registered Insurance Brokers and Agents resident in Northern Ireland and several more based in GB (Lloyds and London Market) and RoI who offer facilities in Northern Ireland.

“Lack of competition.”

If the rates the Consumer Council say are charged in Northern Ireland “an average of £282 extra than in Britain,” you could not get office space in Belfast with all the Insurance Companies trading in the UK setting up shop. After all we are only an hour from London, use the same currency and speak the same language – or roughly the same language

I am no supporter of Aggregator sites but I took the opportunity to go on GoCompare.com. For both Household and Motor Insurance I was given no less than 21 alternative quotes. I changed the address getting quotes for the same risk in London, Manchester, Edinburgh and Glasgow – and where the cheapest area was – yes Northern Ireland. Try the site – but don’t tell the people in GB they will only want to move here and push house prices up. The Consumer Council are busy enough without that problem.

It makes you wonder if Ms`s Gildernew and Foster joining the Quinn protest in Enniskillen was less to do with saving jobs and more to do with keeping cheap and loss-making insurance – who cares if an Insurance Company goes bust.

Jack McIlduff
MD
Europa General Underwriters (NI) Ltd
(An RSA Group Company)
Contact telephone number: 028 90320190

The content of this article is provided for information purposes only and does not constitute professional or other advice.

No Insurance publication/blog/commentary this month can avoid mentioning the news reports on the problems affecting Quinn Insurance. There are many detailed reports on the matter but few on the actual impact on you the Policyholder – that is if you are insured with Quinn.

The best guide I found was in the Q&A article in the Irish Times which I reproduce in part here.

What happened in the High Court today?  The Financial Regulator made and was granted an application to have joint provisional administrators appointed to Quinn Healthcare and Quinn Direct, which offers motor, home and business policies.

Is this move significant?  Very. Quinn Insurance is the second-biggest insurer operating in the Irish market. It has 19 per cent of the motor insurance market, 3 per cent of the property insurance market and 13 per cent of the public liability market. Quinn Healthcare has in the region of 400,000 customers and the companies employ almost 2,800 people in Ireland and the UK.

How has Quinn Insurance responded?  It described the court action as “deeply disappointing in the context of the continued profitability of the group which is currently in excess of €20 million per month” and expressed the belief that the issues could have been resolved “to the benefit of all in a relatively short space of time”. It stressed that its business outside of Quinn Healthcare and Quinn Direct, including its life assurance arm, were unaffected.

If Quinn Insurance is so profitable, why was the administration order sought?  Counsel for the regulator told the High Court the company had “significantly breached” its solvency ratios. It heard that subsidiaries of Quinn Insurance had made guarantees in relation to the group’s assets which reduced the amount of cover for policyholders’ liabilities and was told that its assets were reduced by €448 million.

The court was also told that the group had gone from having assets over liabilities of some €200 million to an excess of liabilities of more than €200 million.

Should customers be worried?  No. The most important thing people who have policies with the affected elements of this company should bear in mind is that they continue to be covered.

Both Quinn Healthcare and Quinn Direct remain open for business and the Financial Regulator has stressed that consumers will be able to renew policies, take out new business and expect pay outs on all “valid claims” in the normal way.

Can consumers who have paid premiums in advance get refunds if they leave the company before the policy term ends?  No, when an insurance company enters administration, its customers do not have a legitimate reason to break the terms of their contract. The company continues to honour its side of the bargain by continuing to offer cover so there is no legally valid reason to break the agreement. Consumers who are still concerned should contact their broker.

What happens next?  In the very short term, probably very little. The administration process can be a long one. There are three scenarios which could come to pass: the company could come out of administration as a profitable, independent company and continue to trade as it has done in the past; it could come out of administration and be sold to a rival operator who would assume any of its losses or it could remain in administration ahead of a long winding-up process.

What about Quinn’s business and Northern Ireland?  In a separate development, the Financial Regulator has directed Quinn Insurance to cease taking on new business in the UK to prevent the company “suffering further financial losses from its currently unprofitable UK business”.

The Administrator has now written to all Policyholders in Northern Ireland telling them that their policy will be honoured until expiry but they will not be offered Renewal. This is the best advice; you do not need to do anything until renewal.

Be wary of some Insurers and Brokers who are offering Rollover cover immediately. There is no benefit to you as you will be paying a premium up to renewal on cover you already have with Quinn.

Talk to a Professional advisor and prepare your Portfoilio for submission to the market at next renewal.

Jack McIlduff
MD
Europa General Underwriters (NI) Ltd 
(An RSA Group Company)
Contact telephone number: 028 90320190

The content of this article is provided for information purposes only and does not constitute professional or other advice.

Over the last 12 months we have heard nothing but bad news in the Financial services Sector which has given me a bad bout of Financial Fatigue.

The Press have concentrated on the Banks, Investment Houses, Hedge Funds. We have read reports about the great and good in the Financial markets reporting disastrous results. We have seen footage of staff from Lehmans leaving their offices with no jobs – just a box of memories. Many household names have bitten the dust. Governments have bailed out their banking systems and indeed now some governments need bailed out themselves!!

One sector of the Financial market has been quiet – Insurance. Despite all the gloom the Insurance Companies seem to have ridden out the storm without rate increases. That is all about to change. (more…)