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.

Would a broker comparison tool really work?

It may not be insurance news, but the FCA recently recommended that all mortgage brokers should be placed on a comparison site to allow house buyers to compare and contrast.

We’re not going to get drawn into that debate, but it did get us thinking. Would a comparison tool work for comparing insurance brokers.

We decided it wouldn’t, for the following reasons:

1 Price isn’t everything

Comparison sites work because they allow you to compare like for like. The only difference between the options is price and added benefits.

This wouldn’t work for insurance brokers because you’re not just comparing tangible differences like cost. You also have to take into account the broker’s experience, their commitment, their personalities etc. What might be an added benefit for some (e.g regular communication) could be a negative for others.

2 You couldn’t put all the relevant information into the filters

When you compare car insurance, you tell the comparison site the make and model of your car, any accidents you’ve had and what level of excess you’re willing to pay.

You couldn’t do that with insurance for your business. A good insurance broker won’t just ask you about the size and shape of your business. They’ll want to understand the industry you’re in, future changes you’d like to make, what risk management procedures you’ve gone through historically. Image typing all that into a comparison site!

3 Somethings, you just can’t compare

Take Romero for instance (and this isn’t intended as a sales message). We’re proud of our award winning claims department and the dedication of everyone who works in it.

How could a comparison site compare dedication? Or determination? Or experience?

4 You need to meet your broker face to face

Comparison sites usually work on a click, quote and purchase model. Some may require you to send in some documents to confirm the information you’ve given, but it very rarely goes further than that.

But we’d advise you to meet any prospective broker face to face. Getting the right insurance could be the difference between your business thriving or failing. How can you trust someone with your business if you’ve never met them?

5 Aggregators work in black and white

This is a bit of a long winded point, but stick with us because it is relevant.

Comparison sites are aggregators and they work on percentages from a number of different questions and formulas. Remember, we said this was long winded.

In simplistic terms, the person searching for insurance has to answer questions in a very exact way to see an insurer in the comparison results.

For instance, an insurance broker might tell the comparison site that it will only work with businesses that keep their cash in a safe because that’s the best way of preventing theft. However, your business might not use a safe because you’re next door to a bank and you deposit any takings as soon as you have them. The insurance broker would most likely still work with you because you care about keeping money safe, but they wouldn’t appear in your comparison results because you said you don’t use a safe.

 

If you’d like any more information on what you should look for in a quality insurance broker, give our friendly team a call on 0113 281 8110.

Romero Sponsors 2018 VW Cup Championship driver

We’ve always been proud to sponsor some of this country’s best young talent in a number of sporting events, and this year is no different.

In 2018, we’ve given our support to VW Cup Championship driver, Ethan Hammerton. You can see the Romero logo displayed on both sides of his car.

There’s only eight rounds left in this year’s race calendar, and Ethan currently sites in 14th place in the championship table.

The championship supports the British GT Championship and the UK TCR Championship. The remaining eight races will take place at:

  • Round 9 and 10 Spa Francorchamps 21st – 22nd July
  • Round 11 and 12 Oulton Park 4th Aug – 5th Aug
  • Round 13 and 14 Croft 8th – 9th September
  • Round 15 and 16 Donnington 22nd – 23rd September

Tickets can be purchased from the track websites.

Our feet are getting a bit wet now! Walk the World challenge update

Our walk around the world continues, but wading through the Indian Ocean is getting quite tricky! Luckily, there are less sharks than we thought there’d be.

There’s been some really top effort from all the staff taking part. It’s not about winning or losing, but credit must be given to the five who top our leader board so far. They are:

Mark Seels – 2,444,945

Gaynor Elliott – 1,664,725

Dan Learmonth – 1,476,949

Emma stokes – 1,457,329

Toni Midgley – 1,427,552

Mark is currently way ahead, walking about 14,000 steps every day. But in a few weeks’ time, a few members of the team are walking the three peaks; a chance to get that mileage up!

We’ve still got a long way to go, and like the saying goes, ‘walking the first half of the world is a doddle, the second half is the tricky bit’, but the health benefits from this part of the wellbeing challenge will make it all worthwhile in the end.

The deadline to walk the remaining 36,490,862 steps is the 31st August. Which means we need to walk a mere 570,169 steps per day.

Dress down for charity day

In other company news, we wanted to give a little bit of an update on the success of our ‘dress down for charity’ days. Once a month, on as Friday, we ignore the usual office-smart dress code and instead, turn up in our civvies. The cost of comfort is £1 each, and each month the money raised goes to a different charity.

The day has always been a success and in the last three months, we’ve raised £525.85! Our chosen charities were:

March – British Heart Foundation

April – West Yorkshire Dogs Trust

May – OPAL

If you’ve taken inspiration from any of the above and would like to know how to do something similar at your company, send us a message today!

GDPR: What you need to know

With GDPR upon us and firms being forced into frenzied ‘data dumps’ little regard has been given to what we ‘don’t know’.

Many long tail disease claims have latent periods of decades, as do abuse and ill-health claims before they materialise. When they do, insurers are reliant on robust historic record keeping to enable a defence which now seems to contradict all guidance offered by the Information Commissioners Office.

The reality is that as long as organisations can explain why data is being kept, and the reason is authentic, then data can be kept for as long as is deemed necessary.

It will be years before we know how insurers will respond to claims where their defence has been ‘dumped’, but it is predicted that premiums will sore if the policies respond.

At Romero we are advising our clients to look at their risks. Personal injury claims normally have a limitation period of 3 years from the date of accident, or 3 years from a child’s 18th birthday. Records should be retained for a period that makes records available if a claim is made.

For disease, ill-health and abuse claims the period records need to be kept for is indefinite.

Latent periods can be 30 years and many years after before employment records are able to identify all employers during the working history of the claimant. It is for organisations to factor this into their GDPR Retention Policy. If possible it may be sensible to retain only the necessary data such as identification data ie name, date of birth, NI number along with positions held and areas worked. Pre-employment health information and any occupational health records will also be valuable but other data such as bank details and emergency contact information could be filtered out.

You don’t know what you don’t know but in any environment it is foreseeable that there will be exposure to the hazards associated with disease, ill-health and abuse claims. These may be noise, asbestos, safeguarding, dust or anything which could result in historic claims.

Retention Policies can be reviewed as and when issues are clarified but in the meantime we are advising our clients to side with caution and retain records for as long as they can.

Image Credit: https://smeders.nl/