A recent report caught my eye the other day alleging that UK Motor Insurers made an underwriting loss in excess of one billion pounds in 2009. Sadly, and having just got used to the term millions of pounds, we are now becoming all too familiar with the term billions of pounds, thanks to bankers and Government spin doctors. Either way one billion is a staggering amount of money; more so than ever in this case when one stops to think just how much hard work was carried by countless people in the Insurance industry to result in such a loss.
To my mind this brings to the forefront two issues that must have a direct bearing on “our industry.” Firstly, Insurers still seem to be swamping prime time television advertising space with invitations to check out the savings they can offer. So, given their alleged losses, surely this beggars the question, why spend money to lose money? And, despite bargain price premiums (unless you happen to be under 25), an estimated two million or so drivers still seem to regard having insurance cover as an optional extra. So, even the attraction of lower priced premiums is not appealing enough to the hard core who deliberately choose to ignore their legal responsibilities. In fact, as reported in the national press, some areas of the country are vying for the title of being the uninsured capital of the UK! And this is despite intensified police activity supported by number plate recognition systems and access to a date base of insured registrations.
So, with the “boys in blue” not being seen as a deterrent, and Court fines for uninsured driving generally being lower than average premiums, why should this section of society bother about insurance?
Therefore, might one ask if we are missing the point here altogether? Because, while the continuing inter Insurer “range war,” on low cost premiums is clearly not getting the “can’t pay won’t pay brigade” back on side, might it actually be part of a campaign to drive out some Insurers? As two Insurers have recently ceased trading is this an indicator of the future? Could this be seen as a comparison with the long term contest between the supermarkets and the corner shops? In this contest, as we know, a small number of big players triumphed over legions of small shop keepers. Clearly, when push comes to shove, we are all motivated by the prospect of lower prices even if does mean that they can come with some disadvantages.
Therefore, and given that Insurers would now seem to have even less money to play with, this must move repairers further down the line when hoping for any much needed improvement in the terms being offered by their work providers.
