Support the IPT freeze

As a way of combatting a decrease in the money the government takes from fuel duty, there is a real concern in the insurance industry that Phillip Hammond plans to put a rise in Insurance Premium Tax in his next budget.

IPT, which currently stands at 12%, is a tax on premiums paid by the policyholder.

It has already risen in the considerably in the last two years; doubling from 6% to 12%. That, according to BIBA shows an increase larger than that of tobacco and alcohol duties.

Romero Insurance Brokers suggest that any rise in IPT would be grossly unfair and potentially dangerous.

Insurance is vital for any business, no matter the size, and an increase in costs could squeeze some bottom lines to breaking point. Or even more worryingly, some would avoid paying for insurance altogether.

You shouldn’t be penalised for doing the right thing.

There have already been calls from insurer, Ecclesiastical and the Charity Finance Group to make charities exempt from paying the tax. But if it’s unfair for charities to pay IPT, detractors could also argue that it’s unfair for 3rd sector contractors, businesses with low profits and those with high premiums after a series of no-fault claims, to pay.

Romero MD, Simon Mabb, had these words on the matter:

The government have increased the Insurance Premium Tax rate in the last few years from the original 2.5% when first introduced to 12%.  This has been an extra source of revenue for the tax man but this is now affecting customer’s insurance purchasing decisions which can’t be right.  The 12% rate is excessive and on motor business the government is taking more in tax than the broker that is arranging the cover, advising the customer on cover and assisting with claims.  The broker is also having to fund regulation costs from their income as well.  We regularly see customers that need specialist covers, for example, flood cover, that are just priced out of taking this with the additional 12% tax on top.  Likewise a young driver paying £2,000 for their insurance premium is paying a further £240 in Insurance Premium Tax. 

There is talk of the government looking to raise this 12% higher still in the next budget and this is something we all need to be vocal about.  The insurance industry and the end customers alike.  At the end of the day it is wrong to penalise people for doing the responsible thing, which is why we’re calling for an end to rises in Insurance Premium Tax which is a tax on the consumer not a tax on insurers as has been portrayed by the government with previous increases.

If you feel as strongly as we do about freezing IPT, it’s important that you lobby your MP and make your voice heard. This proposed rise is unfair and anti-growth, and must be stopped.

You can follow the #IPTsUnfair hashtag on Twitter for the latest updates.

Directors and Officers Claims Trends: How is D&O changing as we head towards 2020?

At Romero Insurance Brokers, we look at every case individually and assess the requirement of each company for each type of insurance. We make sure that our clients are covered for all eventualities. We know what a large impact even a single claim can have on your business, so making sure you’re financially protected is the first line of defence.

In our latest article, we look at the how D&O claims will change and evolve in the near future. This article features comment on changing regulations, a growing claims culture and increasing costs. If you have any thoughts on anything you read below, we’d love to hear them! Contact us today via the contact information at the top of this page or find us on LinkedIn, Facebook and Twitter.

Regulations tighten, but people are still people.

The attitude of a claimant drives the claim, and sometimes the actual merit of the case takes a back seat. No matter how blameless the defendant, determined claimants taking action without legal action can incur thousands in costs and drags cases over months and sometimes years.

Contract disputes will always be a major part of everyday business

In a slightly frustrating continuing trend, D&O claims from contract disputes will probably continue indefinitely. There will always be a supplier or purchaser who isn’t happy with a certain product and service, and no matter how blameless the other party, people don’t like paying if they don’t think they’re getting value for money.

Depending on the insurer, there are different levels of cover in D&O depending on the dispute. It’s vital in this area that you study your policy wording. We work with a large panel of British insurers, all of whom have their own definitions of what would be covered under their D&O policies for contract disputes. Some may cover simple contract disputes, but it’s rare. It’s likely that your circumstances will have to meet a certain number of specified criteria. If you’d like us to help you examine your policy in more detail, or explain the ins and outs, please don’t hesitate to get in touch.

In the age of social media and digital footprints, bad news travels fast.

With today’s technology and the immediate and public access customers have to companies, PR and reputational protection is important. We have seen recent examples, such as the multiple profit warnings at Provident Financial in 2017, where thousands of disgruntled customers and employees have taken to social media and other PR channels to vent anger.

If the reputational damage is a result of mistake or breach of duty of a director or officer, the financial implications for the business could be huge.

As more and more people become digitally literate, and the economic and ethical performance of companies is more open to the public, D&O protection of this kind is a growing requirement.

Changes in insolvency rules will increase claims against D&O.

As the number of company and individual insolvencies continues to rise, it’s predicted that claims against D&O insurance will do the same. Changes in the rules regarding insolvencies have led to more focus on the behaviour of directors (who now have to have their previous 3 years conduct examined, not 2) and shadow directors (who were previously hidden from scrutiny). The Insolvency service also now have longer (3 years instead of 2) to bring about action.

HSE fine levels will increase the financial repercussions of health and safety breaches.

Recent regulatory changes now allow the HSE to hand out larger fines to companies that are found to have been in constant or serious breach of health and safety law. Whether through causation or correlation, the number of fines over £1m in 2017 was more than the previous 20 years put together.

HSE investigations and prosecutions were already a frequent source of D&O claims. We’re possibly set for a cat and mouse game of the HSE chasing more prosecutions because of bigger fines, and the companies themselves taking health and safety and the avoidance of such prosecutions more seriously.

Breach of fiduciary duties claims will grow, but still create big grey areas.

The number of claims by investors against directors failing to fulfil their fiduciary duties has risen. Many fiduciary duties are vague and can incorporate many aspects, so whether or not an individual has fulfilled or is in breach of their duties, is often debatable. Prime and common examples of these type of claims include dual interest (where having interests in another company hinders performance for the business in question), upholding the positive image of a brand or irresponsible pay outs for former employees or contractors.

It’s become more expensive to fight D&O claims

Alongside a rise in claims culture, the cost of defence and barristers is increasing. As the waters of D&O claims become murkier and murkier, claims that would once have been settled out of court via legal advisers are no requiring the support of barristers and other expensive defence personnel. And with more information and data available to claimants and defendants than ever before, more hours are required to examine all evidence.

In this article, we looked at the latest report by AIG into the changing landscape of D&O insurance. For the full article from AIG, click here.

Premium Credit back online after Cyber Incident

Premium Credit, the UK company which provides finance to customers to pay their insurance premiums, is back online after suffering a ‘cyber incident’ which left their systems offline and with no access to phones for more than a week.

Many brokers were left in the dark by the situation with very little contact coming from Premium Credit. However, the major FS company say that no data breach was identified and they’ve now released a statement on their website thanking customer for their patience.

The call centre is taking calls although they still only have limited access to emails.

From a customer perspective, it appears that there may still be a little bit of a waiting game. Despite the communications lines becoming available once more, the investigation continues into the exact nature of the attack.

But they do say that to their knowledge, no customer data has been compromised.

There had been rumours which suggest hackers were in complete control of the Premium Credit database.

Premium Credit has though confirmed that any customer payment delayed by the incident will not incur charges or be classed as a default.

Cyber-attacks like these are unfortunately becoming more and more common. And the fact the aftermath of the attack lasted over a week, shows how serious an incident it was.

In a changing criminal landscape, cyber insurance is becoming a must-have. Many companies could not function without their IT. They store sensitive and personal data, as well as information that keeps systems running day-to-day.

We are here to offer advice on cyber insurance to all our clients. Contact us today for more information.

For now, Premium Credit is open for business.  We’ll keep you up to date with progress on this story. Follow us on Facebook and Twitter for more updates.

Fire Door Safety Week 24-30 September 2018

It’s the last week of September, but you probably already knew that. It’s also the 39th week of the year and just 89 days till Christmas, although you probably knew that as well.

But you probably weren’t aware that it’s also Fire Door Safety Week. If you did, hats off to you.

Fire Door Safety week acts as a reminder to everyone to make sure that all fire doors are in proper working order and fit for purpose. Fire doors save lives; they’re not just for box-ticking.

Here are some facts about the proper use of fire doors that you might not know:

  • It is illegal to keep fire doors wedged open
  • You need to carry out formal checks of your fire doors at least every six months to look for damage
  • You must carry out maintenance to ensure that your fire doors continue to remain effective.
  • Smoke from a fire can spread rapidly if unchecked – thick, black smoke can fill a building within minutes.

Fire Door Safety Week was established by the British Woodworking Federation and the Fire Door Inspection Scheme in 2012. The idea was to raise awareness about poor installation and inadequate maintenance.

As much as it seems like overkill to have an entire week dedicated to it, the need for this awareness campaign is greater than you’d think. In fact, a review undertaken by the Fire Door Inspection Scheme in 2015 found that:

  • Over 61% of fire doors inspected had problems with fire/smoke seals
  • More than one third of fire doors had incorrect signage
  • A significant number of fire doors had a gap between the door and the frame greater than 3mm
  • More than 20% of doors had unsuitable hinges
  • Almost 1 in 6 had damage to the door leaf.

Fire door management is a key part of your risk management, an area of insurance that we take extremely seriously. We’re not just here to help cover against claims. We want to prevent them in the first place.

Speaking to a certified fire door inspector, or a member of our risk management team, is essential in ensuring that you are completely up to date with regulations and your doors are properly maintained and installed. Some of the issues that the professional will examine are:

  • Handles that have been replaced with aluminium ones or other non-fire door related door furniture
  • Locks that have been installed which have an open keyhole, not protected by intumescent material
  • Ventilation panels have been installed and not suitably fire rated
  • Glass has been replaced with non-fire rated glass, or has been covered over with privacy film
  • Parts, such as magnetic locks, have been removed leaving holes in the doors which would allow smoke to spread through
  • Hinges have become worn or misaligned, leaving gaps in the door that will allow smoke to spread through
  • Intumescent seals and smoke seals that have been damaged or removed and not replaced
  • Damage around the edges of the door where trollies and sack carts etc have been pushed through, leaving gaps around the edges
  • Fire doors have been completely removed.

If you’d like to take the first steps to make sure your doors are compliant, get in touch today! Click that ’email us’ link at the top of this page!

What will change with the new Manslaughter Definitive Guidelines?

On 31st July, the Sentencing Council published new guidance on sentencing for manslaughter cases. The new guidelines will be retrospective, meaning they will apply to any gross negligence manslaughter cases not concluded before the 1st November deadline.

So why is this important to you?

Gross Negligence Manslaughter, where the breach of duty of care by an individual causes or significantly contributes to a death, is the most serious offence that an individual can commit for a health and safety breach. The new sentence guidelines show just how serious the consequences can be. It’s important that your business has the tools in place to avoid such action being taken against you, or your employees.

The guidelines propose four levels of culpability ranging from ‘low’ to ‘very high’, but all of which will result in some form of gaol time. For the lowest level of culpability, culprits can expect a two year sentence, but this moves up to 8 or 12 years very quickly if a judge determines that new flashpoint features such as cost saving and disregarding very high risk of death, are met.

How is culpability decided?

As previously stated, there are a number of flashpoints, or contributing factors that determine an individual’s culpability. For the most part, these are determined based on the level of the negligence, such as if more than one life was put at risk, or that warning were not adhered to.

A high culpability would meet a number of those factors and would result in a gaol term of over ten years. The most common factors are cost saving as a motivation for the breach, and blatant disregard for risk of death. Typically, if either of those two factors aren’t met, the culpability would be considered medium at most. This just shows how important it is that thorough checks are committed and that all risk warnings are actioned.

It is difficult to foresee what a judge would regard as ‘blatant’ disregard, so our advice would be that any disregard could fall into that category.

In cases where the culpability is considered ‘very high’, both cost saving and high disregard for death will be found. Sentences for this level of culpability range from 10 to 18 years.

Very high culpability cases range in type and scenario. Consider the case of Indian takeaway shop owner, Mohammed Zaman of Huntington, who was found guilty of the manslaughter of customer, Paul Wilson, after he had replaced almond powder with ground nut mix as part of a cost cutting exercise. Zaman showed a blatant disregard for the safety of his customers by showing a ‘no-nuts’ message in his menu. He also triggered the cost saving factor.

Another very recent and high profile case is that of Grenfell Tower. The investigation is still ongoing, but it is very possible gross negligence manslaughter sentences will be considered, given the repeated ignored warnings that the tower wasn’t safe, and the cost saving on the cladding.

Risk Management

We asked our Risk Director, Jane Dronsfield, what impact she thought the new guidelines would have:

“Following implementation of the Guidelines, we expect a rise in the sentences handed down in manslaughter cases, with lengthier, custodial sentences and fewer suspended sentences. The old guidelines allowed for a much higher degree of judiciary discretion, whereas the new guidelines seek to create a framework taking into account the culpability of the offender. Culpability categories are defined with reference to a number of factors set out within the Guidelines. Whilst a number of the factors would not necessarily be relevant in the context of workplace deaths, there are many factors that are common within many of the cases we see, which could potentially push offenders up through the category ranges. One example would be where the offender showed a blatant disregard for a very high risk of death resulting from negligent conduct and the negligent conduct was motivated by financial gain (or avoidance of cost).

We have seen a sharp increase in the number of individuals being prosecuted for health and safety related offences.

Gross Negligence Manslaughter is not just an offence that can be directed towards senior management in a business following a workplace death; any person can be implicated.”

If you’d like to speak to Jane, or any of our fantastic risk management department about how you can stay on top of your risk management, use the contact form on the top of this page. Remember, in gross negligence cases, inaction is a crime.

Contractors Professional Indemnity- when to notify your broker and insurer of a potential issue?

In the latest of our series of insurance opinion articles by our Claims Director, Jody Thirkell, he discusses when you should notify your broker and insurer of a potential issue.

As a specialist in contractors’ insurance we are well aware that things often go wrong on construction projects. But when should you notify your Broker and Insurer that you have a problem?

Your professional indemnity insurance will likely be arranged on a claims made basis. This means the insurer on cover at the time the claim is made is the insurer who deals with the claim, not the one on cover when the problem first arose. Your policy will also likely contain a condition that requires you to notify ‘any circumstance that may give rise to a claim’ and this is where it can get tricky!

What exactly is a ‘circumstance’ in this context? Your insurer is unlikely to want to be bombarded with notifications for every snagging issue you encounter on site but on the flip side would certainly want to know from the outset if there is a fundamental flaw with the design of the building, or part of it. However it is what lies in between these extremes that often causes a problem.

If you are aware of an issue and choose not to disclose it and that issue manifests itself in a claim in the future, your insurer could well have the right to decline the claim for non-disclosure, particularly if the policy has gone through a renewal or you have changed insurer.

What, then, is the solution? At Romero we will speak to the insurer when cover is being placed and ensure that we are very clear on what the underwriters would expect to be notified and what they wouldn’t.  We then convey this to our client in clear terms. If all parties are aware of what is expected and everyone complies, it becomes much less likely that a claim will run into difficulties when they do arise.

As always, communication is the key!

If you’d like to speak to Jody about anything you’ve read in this, or any other of his articles, send us a message and we’ll put you in touch! You can do so via our Facebook, Twitter or LinkedIn accounts!

Are Whiplash claims about to be consigned to history?

This week, our Claims Director, Jody Thirkell, gives his thoughts on another key change for the insurance industry. Let us know your thoughts on the future of Whiplash claims by commenting on our Facebook, Twitter or LinkedIn.

The new Civil Liability Bill is set to be introduced into legislation in April 2019 and could have far reaching consequences for the landscape of Road Traffic Accident (RTA) claims.

The Bill proposes to significantly restrict the damages payable for whiplash injuries and also increase the small claims limit for RTA injury claims to £5000.

In practical terms, this means the following limits will apply:

  • Whiplash injury with pain and suffering for less than 3 months – £225 maximum damages
  • Whiplash injury with pain and suffering up to 6 months – £450 maximum damages
  • Whiplash injury with pain and suffering up to 9 months – £765 maximum damages
  • The maximum fixed tariff for whiplash injuries where victims have suffered up to 2 years will be £3725

Claims will also only be payable with supporting medical evidence.

This will save insurers billions for minor whiplash claims but the increase of the small claims limit for RTA’s to £5000 may sound the death knell for these claims altogether. This increase will mean that solicitors would not be able to recover their costs from the defendant if damages are under £5000 and so their only option would be to take a percentage of the damages won.

Future claimants will therefore have two options

  • Act as a claimant in person and go through a laborious process of entering details onto a Portal and visiting a medical expert (and paying up front for the pleasure) for a minor neck strain
  • Instruct a lawyer who will take a large chunk of their damages at the end of the process

It is unlikely that firms of solicitors will see small whiplash claims as profitable business and will withdraw from the market altogether. Also, a large portion of claimants in person just won’t be bothered with the hassle for the sake of a £225 cheque.

The whiplash culture and self-perpetuating industry it has created may be coming to an end, and many will not be shedding a tear at the news!

If you’d like to discuss any future changes to insurance legislation, Jody and other key members of our team are happy to help. Simply give us a call on 0113 281 8110.

The top ten worst areas in Britain for car theft

Does it ever seem like stories about car theft in your local area are an everyday occurrence? If that’s true for you, maybe you live in one of Britain’s car crime hot zones.

Recent research by MoneySuperMarket has revealed the 10 areas with the most car theft, and the 10 with the least. Surprisingly, major urban hubs such as Leeds, Manchester and Glasgow are missing from the list.  You can see the full data below.

It’s interesting to note that the midlands remains relatively quiet across both lists. The worst areas and the best areas tend to be grouped, with the North West and London the two crime hotspots, and the south west, north Scotland and the channel islands remaining fairly car theft free.

Romero Private Client insurance can help protect your most prized possessions wherever you are in the world. If you’d like to talk to us about the tailored cover we can deliver, call us today on 0113 281 8110.

*Please note, these diagrams initially came from a PDF supplied by Robertson and Co.

The Insurance Act – 2 years on

It’s been 2 years since the Insurance Act came into force. In our latest blog, our Claims Director, Jody Thirkell, talks about whether he felt the act had actually produced any tangible changes.

Before the act was introduced, I told people there was no cause for early panicking. It had taken over 100 years of legal precedent to work out what the duty of disclosure under the Marine Insure Act 1906 actually meant, so nothing drastic was going to change overnight.

In reality, it seems like I’ve been proven correct.

We’re still finding out as much as we can about our clients and their risks and presenting that information to insurers as normal. Insurers are still writing business on the same information they always have.

The insurance world keeps on turning.

That may seem glib, and it’s still crucial that a Broker gets to know their clients and their risks to ensure a fair presentation of risk to insurers. But the main changes we’ve seen so far have been very positive.

Insurers can no longer avoid paying claims for breaches of warranty that are not relevant to the claim.

Before the Insurance Act, an insurer could avoid a fire claim for a breach of a burglar alarm warranty. This always seemed perverse and the Act has restricted insurers’ remedies for breaches of policy conditions in a positive way for policy holders.

A further positive is that if the insurer alleges that there has been an innocent non-disclosure of a material fact, they also have to prove that the underwriter had been induced to write the risk due to the lack of fair presentation. This may be simple to prove in personal lines insurance where there is clear underwriting criteria available, but not so easy when looking at complex commercial risks.

This is where your Broker comes in and Romero’s have had great success in using cogent arguments based on the Insurance Act to achieve excellent results on claims for our clients. Are you confident that your Broker has the requisite claims expertise to do likewise should you find yourself in a difficult situation following a loss?

If you’d like to pick Jody’s brains a little more on the impact of the Insurance Act, you can find him on LinkedIn. Alternatively, if you’d like to find out how Romero can save you money and make sure you have the complete tailored policy, call us today on 0113 281 8110.

Unrated Insurers: Why quotes that seem too good to be true, just might be

The insurance market is built on stability and trust. The trust that you will do all you can to prevent accident and injury at your business, and the stability that the insurer will provide by paying out on claims.

That’s why name and reputation have always been big factors in deciding which insurer to place your business with. It’s also why so many people use insurance brokers to get the best insurance packages; they’re trusting the broker to use their knowledge of the industry to choose the most trustworthy and financially stable insurer.

Getting your cover through the wrong insurer can be devastating. If the insurer can’t or won’t pay out when you have a legitimate claim, it could mean the end for your business.

How do you know if an insurer is financially stable?

The very best way to know if an insurer is financially stable, is to use a recognised, experienced and respected insurance broker. After all, they know the industry like the back of their hand.

There are a number of insurance industry awards which reward companies for factors ranging from their customer service, claims handling, retention etc. But as good as those are for finding top performers, they don’t give you the underlying confidence that your business is in safe hands.

For that, you need evidence of an insurer’s financial stability.

How do you find out if an insurer is rated?

In the insurance industry, financial stability is graded AA to D, where AA is extremely secure and D is very weak. The gradings are based on an insurer’s ability to repay creditors or pay claims, so in essence, a AA rating suggests that the insurer has large cash reserves or a fantastic credit rating.

There are a number of insurance rating organisations, including A.M Best, Fitch, Moody’s and Standard & Poor’s, but their ratings are largely the same.

You can find these ratings by visiting the websites of the companies listed above.

What is an unrated insurer?

An unrated insurer is a company that hasn’t been given a rating by the rating organisations. This can happen for a number of reasons, but primarily it’s because they either; a) have requested not to be ranked or b) can’t be ranked because of restrictions in the country in which they’re based.

Both of these reasons should ring alarm bells with any company looking for insurance. Choosing not to be rated suggests they have something to hide, and not being rated because of location could suggest they’re based in an unstable economy.

If an insurer is unrated, it doesn’t necessarily make them bad, it just means that their stability can’t be proven.

Why would anyone place business with an unrated insurer?

Although it may seem like a risky move, many businesses do intentionally buy their insurance policies from unrated insurers. Primarily, this is because they’re usually cheaper than rated insurers (they have to be, they wouldn’t be able to compete if they weren’t as their cover isn’t usually as comprehensive). But they also tend to offer cover for businesses who couldn’t get cover elsewhere, much like a payday lender lending to people with a poor credit rating.

Some businesses, especially those who have never had to make a claim, see insurance as an irritation – money they pay out for nothing in return. For that reason alone, a much cheaper policy is far more attractive to them.

If it’s cheaper, what’s the harm?

If your business never has to make a single claim, unrated insurers and their cheap prices may look ideal. Unfortunately, real life doesn’t work like that. Accidents, by their very nature, can’t be completely eradicated and so all businesses may have to make a claim at some point.

If your insurer can’t pay out on that claim, the result can be catastrophic.

There have been a number of examples in recent times of unrated insurers collapsing and leaving their customers in extremely difficult circumstances.

In 2014, the European Risk Insurance Company (ERIC) suddenly announced to brokers that they could no longer comply with regulations relating to minimum solvency requirements. In 2016, unrated Gable collapsed, leaving policyholders down £161m in unpaid claims. Two years later, unrated Alpha also collapsed. That left 10,700 taxi drivers without insurance and thousands of new-build homeowners without critical structural defects cover.

Cheap policies with unrated insurers may seem like a good idea, until you’re left to pick up their tab after a claim.

How do I know that an insurance broker won’t place my business with an unrated insurer?

Quite simply, it depends which insurance broker you choose. Admittedly, there will be some smaller and lesser known brokers who will look to place your business with unrated insurers to keep costs down. But for experienced brokers with reputations to maintain, it wouldn’t be a risk worth taking. Money isn’t made by saving a few quid on a certain policy. It’s earned over years of offering a great, trustworthy service to customers.

We show every customer exactly who they’re insured with, so they can verify the rating themselves. And we only ever insure with unrated insurers if the customer asks for it (although we would try to convince them to change their mind).

If you’d like more information on how the rating system works, or how we assess whether an insurer is trustworthy, you can call us today for a no obligation chat. Just click on the ‘contact us’ button of this website and fill out the form.