Sajid Javid – why he’s backing brokersSajid Javid. Sajid has recently been promoted to Financial...

Get into Gear with iiaDDBig changes are coming to the motor market

all chanGeUnderstanding the Fca’s new approach

BrokerTheIssue 4 November 2013 The British Insurance Brokers’ Association

www.biba.org.uk

Financial Secretary to the Treasury writes for BIBA members

Sajid Javid – why he’s backing brokers

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16 SPECIAL FEATURESMotor – get into gear with IIADD

The Insurance Industry Access to Driver Data (IIADD) initiative is preparing to launch and is poised to bring significant positive change in terms of reducing fraud and more accurate pricing. Make sure you are ready to brief your customers

20 Local heroes BIBA is supporting Small Business

Saturday, a new event aimed at putting the UK’s independent firms in the spotlight. With events taking place up and down the country, find out how you can get involved

17 COVER STORY Sajid Javid – why I’m backing brokers

BIBA has been working with the newly promoted Financial Secretary to the Treasury. Here, he spells out his thoughts on the challenges facing the insurance industry and the opportunities which exist for brokers

Contents

While every care has been taken in the compilation of this magazine, errors or omissions are not the responsibility of the publishers or editorial staff. © All rights reserved. Products and services advertised within The Broker do not carry endorsement or recommendation by BIBA. The BIBA logo is added free by request to members’ advertisements. It warrants or signifies nothing more than the advertiser is a member. The views expressed in the articles within The Broker are those of the authors alone. They do not represent the views or opinions of BIBA.

@BIBAbroker

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Group BIBA

THE BROKER ISSUE 4 / 2013

Regulars05 CEO update Steve White speaks to members about the key

issues on his agenda 06 Member news Latest from BIBA HQ and the regions including

dates for your diary 9 Media news Check out our latest commentary, including filming

with BBC’s Holiday Hit Squad, plus discover how video could help build your brand

12 Technical news Peter Franklin on the intricacies of loading and

unloading in commercial motor insurance policies 15 Regulation The FCA is already showing it will be taking a

different approach from its previous incarnation, the FSA, as Compliance & Training Manager, David Sparkes, explains

25 Representation Executive Director Graeme Trudgill runs through

the crucial meetings attended recently – including one at No 10 Downing Street – and our hot campaigning topics

28 Schemes Landlords, equestrian and freelance cover are under

the spotlight, with Head of Technical Services Steve Foulsham, showing why our schemes and facilities give members the winning edge

30 Professional indemnity Brian Boehmer, a Partner with BIBA-accredited PI

broker Lockton has the ins and outs on common claims against brokers and how to avoid them

03

Member Helpline:0844 77 00 266

Labour Party Conference 2013: Page 25

Welcome

We have recently attended both the Labour and Conservative conferences as part of our ongoing lobbying work on behalf of members. There, we met with influential politicians including Iain Duncan Smith, Greg Clark, Chuka Umunna, Ed Balls, and Ed Miliband, each receiving a copy of our manifesto. No other lobbyists had a document like ours and politicians of all persuasions have praised its content and transparency.

Conference season also gave us an opportunity to meet again with Sajid Javid. Sajid has recently been promoted to Financial Secretary to the Treasury and he has also taken the time to outline his views to members on page 22.

We’d also like to thank members who attended our recent regional tour. Steve White and Graeme Trudgill were there to listen to the issues that affect your businesses. These are being fed in to our 2014 manifesto – which will be given to influential Parliamentarians and Ministers – ensuring it reaches to the very heart of Government.

Your opinions are vital to us and we remain – as ever – in listening mode.

Andy thornleyCommunications Manager

ISSUE 3 / 2013 www.BIBA.org.uk 04

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the Broker ISSUE 4 / 2013 05

Steve White, BIBA Chief Executive

CEO UPDATE

The issuesOn the hOrizOn…BIBA’s technical committees, made up of member experts, do a sterling job and have two particular issues that will interest the wider membership. The Motor Panel have been involved in the Competition Commission’s enquiry into the cost of motor insurance, looking specifically at price comparison websites, accident and claims management and whiplash. BIBA’s Property Committee is now involved in amendments to the Riot Damages Act, being reviewed following shortcomings with the current legislation highlighted by the August 2011 riots.

eurOpe Despite the revised Insurance Mediation Directive looking like it might be delayed into late 2014, we continue to work behind the scenes in Brussels to try and ensure a level playing field and to promote commission disclosure upon request as the most appropriate pan-European solution. This involved meeting the new civil servant in the EU Commission responsible for the directive and, contrary to reports, we did not get lost on the Brussels metro afterwards!

1

2 FCA supervisOry ACtivityAs you will have no doubt been reading recently, the Financial Conduct Authority is actively reviewing a number of ‘issues’ in our space this year – from commercial premium funding, add-on products, claims handling and motor legal expenses to conflicts of interest, unrated insurers and residential landlords. The BIBA Board recently met with John Griffiths-Jones (FCA Chair) and Martin Wheatley (FCA CEO) to discuss these issues and more.

3

Delivering for membersSummer 2013 will live long in my memory – not for the major events that studded 2012 (Golden Jubilee, Olympics etc) or even the untypical ‘heatwave’ we enjoyed throughout July and into August. My first summer as BIBA CEO has seen the association embroiled in a range of activities that I have summarised below.

From a personal perspective I have tried to balance my time between the focus on member and market issues, delivering on the commitments I set out on stage at our conference back in May and starting to reshape some of our internal processes and practices.

I am delighted to have delivered on the commitment of greater visibility and of making the association the best it can be at listening to members and their concerns by touring the regions this autumn. Thanks to all those who took the time to come along and share with us both their issues and their enthusiasm for BIBA.

These sessions are invaluable to us, giving us the chance not only to set out for members all the activities we engage in to enhance the understanding and visibility of the insurance broking profession, but also to hear first hand about the range of issues on our members’ agenda.

I am also very pleased with the largely supportive responses we received to our segmentation and governance consultation, part of our strategic review. These have led to a proposed revised set of Articles of Association, which were the subject of an Extraordinary General Meeting on 28 October and will allow BIBA to better represent the interests of members.

ISSUE 4 / 2013 www.biba.org.uk 06

BIBA has rejected criticisms from the Law Society that brokers do not offer value for money in the Solicitors’ PI market with a strong rebuttal.

Publicising the launch of their own PI scheme, the body had issued supposed concerns about the levels of broker commission and the quality of advice offered, however BIBA CEO Steve White responded robustly.

Standing up for brokers, White said: “We believe the ability to obtain advice from an insurance broker on how to present your risk to an insurer, good risk management and support during a claim – which are more

frequent for smaller law practices – is important. We note that the Law Society’s new scheme does not offer this as a service.

“Following the work we have previously undertaken with [Des Hutton, Law Society CEO], we were particularly disappointed with the Law Society’s comments, as well as their ill-thought through ‘Don’t Get Mugged by an Insurer’ campaign.

“We think the Law Society’s efforts would be better placed helping their members to avoid claims in the first place by providing advice and guidance on risk management.”

Law and order

BIBA to focus on customers at 2014 conference

BIBA has announced that the theme of the 2014 conference will be Customer, customer, customer.

BIBA CEO Steve White said: “If you look across the insurance industry and government, there is a strong focus on the customer, whether that is a consumer, business or broker.

“It is right that with this focus, we explore this very relevant topic at our conference through our keynote speakers and seminars.

“Successful businesses have the customer at the heart of everything they do and by focusing on the needs and interests of the customer, whoever that may be, we can support our

members in becoming more successful in what they do.”BIBA Conference Organiser Lindsay Campbell added: “Last

year, we welcomed 5,299 through the doors, 3,198 of which were brokers, which made it our highest ever attended conference and exhibition. The BIBA conference is the only event which attracts that number of brokers, making it the only place to do business on such a large scale.”

Entry to both the conference and exhibition will continue to be FREE to all employees of BIBA member firms and all brokers are welcome to attend the exhibition at no cost.

news

Gearing up for GrowthBIBA has submitted a plan for growth to HM Treasury following a once-in-a-lifetime opportunity for ‘blue-sky thinking’ ideas. Treasury approached BIBA asking for suggestions on how they can help members to grow their businesses and in-turn – the economy.

The submission was based on feedback from the various BIBA committees and the many suggestions included reducing barriers to trade in other countries, establishing a competitive regulatory system, more business investment and targeted tax-breaks.

BIBA CEO Steve White said and Executive Director Graeme Trudgill have also since met the Director General of HM Treasury, who went through the submission line-by-line, ensuring that the ideas and suggestions BIBA was asked for, have reached the decision makers in one of Government’s most important departments.

Steve White said: “As a trade association, one of our most important remits is to represent members’ interests to those that matter in Government.

“The request for ideas shows that we are directly plugged in to the highest levels of Government and that our opinion is greatly valued.”

BIBA is heading north of the border later this month as it hosts its 2013 Scottish conference on 20 November at Inchrya Hotel and Spa near Stirling.

The event is Steve White’s first Scottish conference since he became Chief Executive and comes before the independence referendum which will take place in 2014. Steve also shares the bill with Deputy Chairman Brendan McManus, Executive Director Graeme Trudgill and Former Chief Economist at HSBC Dennis Turner.

Further sessions at the conference include professional indemnity, under-insurance, schemes and claims, as well as an exhibition hall featuring insurers, scheme providers and suppliers who provide an opportunity to network and do business with.

This is the first year that the event has taken place at the impressive surroundings of Inchrya Hotel and Spa which recently underwent a multi-million pound renovation and delegates can also expect to make use of the luxurious spa facilities on site.

l For further information about the conference, visit campaignpartners.co.uk/bibascotland

Scot the lot

Chairman wins top-gongBIBA Chairman, Andy Homer, has won the Lifetime Achievement award at the Insurance Age UK Broker Awards in London.

Homer, who has held the CEO position at Commercial Union UK (now Aviva), AXA Insurance UK, Folgate Insurance UK and Towergate Partnership Ltd, the Presidency of the Chartered Insurance Institute (CII) and Chairmanship of both BIBA and the Motor Insurers’ Bureau, was recognised for a career which has been both long and illustrious.

Speaking after the awards, Andy Homer said: “It is nice to get this recognition on behalf of all of the people that volunteer their time to organisations like BIBA and the CII and I’m delighted to receive this award.”

the broker ISSUE 4 / 2013 07

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Business division of: Ecclesiastical Insurance Offi ce plc. Registered Offi ce: Beaufort House, Brunswick Road, Gloucester GL1 1JZ. Registered No. 24869 England All content © Ecclesiastical Insurance Offi ce plc 2013 Member of: Association of British Insurers, Financial Ombudsman Service. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Recognition: Andy Homer (centre) with host stephen K Amos (left) and Alistair Body, nIG (right)

ISSUE4 / 2013 www.biba.org.uk 08


media

action!

The Sunday Times offered help to consumers with five steps you can take to ensure your insurance claim is a success. BIBA gave advice to The Sunday Times which they printed, including the suggestion to use an insurance broker to ensure that your policy is watertight when you take it out, again using BIBA’s Find-a-Broker service at biba.co.uk The Sunday Times, 15 September 2013

press watch

If you run a business from home, check your insurance or you could be in trouble, reported The Mail on Sunday. Many insurers may consider working from home a material fact which could affect the risk at which they offered cover in the first place. BIBA Executive Director, Graeme Trudgill, suggested using a specialist broker through BIBA’s Find-a-Broker service, especially if you have valuable stock or equipment.The Mail on Sunday, 1 September 2013

Financial paper City AM investigated ways that customers could cut the cost of their motor premiums. The paper referenced research completed by BIBA which showed using telematics-based policies can reduce the cost of motor cover by 25% on average. The research also highlighted how using a broker can access telematics products.City AM, 28 August 2013

Video has come a long way since the days of the clunky VHS.

Alongside video itself is the seemingly endless human desire to network and share. YouTube today boasts that it has one billion unique visitors a month. Surely some of them must be interested in insurance?

At the same time it’s somewhat bewildering that generally business has been fairly slow to understand video or indeed use it.

The good news is that things are changing and some businesses are increasingly using video to complement their existing communication activity and, what’s more, getting results.

With the cost of a decent handheld camera being around £200 and advances in internet bandwidths, smartphones and tablets, the format is both affordable and inordinately usable.

But can video deliver for an insurance broking business? The answer is an unequivocal ‘yes’. Listed in the panel opposite are four big reasons why.

If further evidence were needed you only need look at the increasing popularity of my business, www.youTalk-insurance.com; a multimedia website that shares video and useful and interesting content on behalf of leading insurers for brokers.

My advice is get shooting video and start sharing. It’s a great way of placing some clear daylight between you and your competitors.

In recent years, the rising cost of motor insurance has been a concern to many people, not least Government who invited BIBA to be part of the Downing Street summit on the cost of motor cover.

So when the AA published research findings that the cost had fallen at a record rate, BBC Breakfast invited

BIBA Executive Director Graeme Trudgill on to the programme to talk about why prices had risen so much and why prices were now falling.

Graeme said: “The industry has been working very closely with Government to reduce the costs that meant insurance

has gone up over the past few years. New laws have been made and now we’re starting to see some of those discounts come through to policyholders.

“Brokers can often find you the right cover by tailoring the policy to your needs which can also save you money.”

Paul HandleigH, Managing Director of youTalk Insurance, explains how using multimedia like video can help you to build your brand, and your business

l Viewers engage with images. They are powerful and add personality to your business. You can tell a story, you can show and explain. That means you can differentiate – what could be better?

l It’s incredibly efficient. You can tell a compliant and consistent story over and over again to lots of customers who can share it; and the good news is you don’t even need to be there.

l It sells. People watch and use video. They click more often and buy more. That’s because they understand what they are buying because you’ve taken time to explain it. What a great way of reaching that much talked about ‘thought leader’ position with your clients and prospects.

l Video can work wonders for your websites’ Search Engine Optimisation, helping customers to find you more easily.

why you should consider using video

Lights... camera...

cost of motor cover falls

BIBA recently welcomed Angela Rippon and Holiday Hit Squad into its offices to interview Executive Director Graeme Trudgill on the topic of travel insurance.

Graeme spoke positively about the benefits of travel insurance and using a broker to arrange cover, explain common exclusions on policies and give a narrative on why claims may sometimes be turned down by insurers. He also explained that the vast amount of travel policies are bought and used without

incident, with only 0.01 per cent of the sales becoming complaints.

While Angela was in the BIBA offices, we took the opportunity to speak to her about the value of having insurance, as well as her thoughts on BIBA’s Holiday Travel Scheme, underwritten by Tokio Marine.

Angela said: “On the programmes that I work on, Holiday Hit Squad and Rip Off Britain, we see all of the horror stories that come as a result of insurance that has gone wrong, but

with every horror story, it underlines how important it is to have insurance when you go on holiday.

“I thought that the little booklet [from the BIBA Holiday Travel Scheme] was one of the most sensible things I’ve seen to come out of the insurance industry for a very long time. It’s a wonderful example of plain-speaking English and you can see, on the first two pages, what you’re covered for.

“I think it would be nice if all insurance companies could put something like that out so people could have a very clear indication of what they are covered for, what they’re not covered for and what they should do in the unfortunate circumstance of them having to make a claim.”

BIBA will feature in four episodes of the new series of Holiday Hit Squad, to be aired in January 2014.


media

Travelling RightGetting the media to understand the value of insurance and pass this message on to their readers, listeners or viewers is vital. andy tHornley reports on how BIBA has been doing this recently and how it has been paying dividends


Carrying the load

Commercial vehicle policies in the UK usually include cover for liability for injury or damage to third parties when unloading or loading a motor vehicle.

However, there is normally then an exclusion for ‘injury or damage caused or arising beyond the limits of any carriageway or thoroughfare in connection with the loading or unloading of the vehicle by anyone other than the driver or attendant of the vehicle’.

Meanwhile, for the driver and the attendant there is cover for the unloading and loading beyond the carriageway.

The reason for this extension of cover was possibly necessitated by the Road Traffic Act, which require compulsory third party liability insurance arising out of the use of a motor vehicle (Section 143 of the Road Traffic Act 1988).

The Act refers to cover being effective while in use ‘on a road or other public place’. Another reason for its inclusion could be the limitation in property owners’ liability policies excluding any ‘work away’.

Defining usage‘Use’ includes the leaving of a vehicle on the road even though it is incapable at the time of being mechanically propelled1. We are unaware of any cases involving claims arising from loading or unloading so it is unclear whether such activity would constitute ‘use’ of a motor vehicle. The word implies an element of controlling, managing or operating at the relevant time and certainly does not include ‘use’ as a passenger2.

A more recent case featured a dispute between insurers as to whether a claim should be dealt with under a motor policy or an employers’ liability policy3. The injured person was working from a hoist on the back of a vehicle when he was injured.

The point in question was whether he was being ‘carried in or upon the vehicle’ which was stationary at the time. It was held he was not being carried at the time and the employers’ liability policy paid.

From this it appears that normal loading and unloading of a vehicle

Technical news

Understanding insurance issues around loading and unloading is vital for brokers placing commercial vehicle risks, explains PeTer Franklin

1Elliott v Grey [1960] 1 Q.B. 367.2Brown v Roberts [1965] 1Q.B.3Axa Insurance plc v Norwich Union insurance Ltd [2007] EWHC 1046 (Comm).


Technical news

Peter Franklin is Managing Director of Franklin Consultancy, an expert witness and member of BIBA’s Liability Committee

would not be caught under the compulsory Road Traffic Act insurance requirements, although where a mechanical device fitted to the vehicle to assist in such an operation is used then it could be argued that this would constitute ‘use’ of the vehicle and would be subject to compulsory insurance.

Such a device could be a hydraulic tail lift or a crane fitted to the vehicle. If this is the case then is the wording sufficient following the addition of ‘or other public place’ as per the Motor Vehicles (Compulsory Insurance) Regulations 2000? But is ‘carriageway or thoroughfare’ sufficient to include ‘other place’ or should the policy wording be brought into line with the legislation?

Some insurers are considering removing this extension of cover but brokers must be careful, especially where the vehicle has special equipment for loading and unloading, and ensure the public liability policy provides adequate cover.

What is an attendant?We have not seen any definition in a policy as to who qualifies as an ‘attendant’ but this would seem to include a driver’s mate. The policies use the singular for ‘attendant’ so the position is perhaps unclear if there are a number of ‘attendants’ say for a delivery of a large item of plant.

Further questions could be raised as to when the loading or unloading starts or finishes. For the driver and attendant cover applies beyond the ‘carriageway or thoroughfare” so consider the following scenarios:

1. The driver parks outside the store on a busy road. He unloads his goods and leaves them just inside the premises while he moves his vehicle. He returns five minutes later to complete the delivery, picks up the goods from inside the premises to take them further but on the way causes serious injury to a visitor. Is this a motor or a public liability claim? Would it be any

different if he had left the goods for 30 minutes while he had a coffee or two hours for lunch?

2. Same circumstances as in 1 but having initially unloaded the goods he goes to fetch a sack truck to assist the completion of the unloading. Is this a motor or public liability claim?

3. A firm of furniture removers using two vehicles and three ‘attendants’ unloads furniture into a new house. The drivers/attendants unload each other’s vehicles. The house owner is injured in the course of the unloading. Is this a motor claim?

There could be a variety of reasons why the unloading is not completed in one smooth operation but when is the operation deemed to finish – when the goods are put down at the delivery address, when the goods are signed for, or when they reach a final resting place?

A final example of problems that can occur: several years ago there was a claim where a haulage firm delivered the wrong chemical in a tanker, this was pumped into a storage tank that was partly full resulting in a contaminated tank and

contents and a claim for £200,000.

The claim was submitted to the public liability insurers who

rejected it saying their policy did not cover mechanically operated vehicles subject to

the RTA. It was pointed out that it was a product liability claim as liability arose out of

goods supplied. The claim was promptly paid.

There could be a variety of reasons why the unloading is not completed in one smooth operation but when is the operation deemed to finish, when the goods are put down at the delivery address, when the goods are signed for, or when they reach a final resting place?


Would the former CEO of the Financial Services Authority have been prepared to speak at a BIBA conference? Would the former Head of Department for insurance broker supervision have been prepared to speak at an insurance trade press conference on regulation? I wonder.

With certainty I can say that Martin Wheatley, CEO of the FCA, did speak at the BIBA conference 2013 (giving a speech entitled “Meeting the growth challenge”) and Simon Green, Head of Department General Insurance and Protection, did speak at an Insurance Age conference (under the banner of “What does the future of insurance broking look like?”). Both speeches evidenced a willingness to engage with the industry, to a level I do not believe we saw from their predecessors. Both speeches also announced the launch of thematic reviews.

This could be described as a juxtaposition between a higher level of engagement and a higher level of scrutiny. Make no mistake, if the higher level of scrutiny uncovers serious failings, the people at the FCA to whom the firm will be talking, will not be the supervisory team, but the Enforcement Division.

The FCA seems better than its predecessor at posting a clear message after a review in which it discovered failings. That message, without formally being recorded

regulaTion news

The door is open is the welcome mat out?

David Sparkes is BIBA’s Compliance & Training Manager

While it may be the same legal entity, it is fair to say that the Financial Conduct Authority (FCA) is doing a lot to distance itself from its previous incarnation. DaviD sParkes explains

Reviews underway currently include:

Add-ons A market study looking at the effectiveness of competition for add-ons.

Auto Renewal The FCA has finished its fieldwork on automatic renewals of home and motor insurance, so look out for a report on the findings in the next month or so.

Claims Review Whether claimants are being treated fairly during the settlement process with a particular focus on household and travel claims.

Complaints Handling To uncover good and bad practices from across the whole financial services sector to share with firms generally.

Conflicts of Interests Whether insurance intermediaries are being unduly influenced by remuneration structures outside of standard commission earnings.

Dual Pricing Questioning whether firms are abusing customer inertia through charging them more at renewal than the firm charges new customers.

FCA themAtiC reviews And mArket studies whiCh touCh on generAl insurAnCe

as such, is “you have a year to get your house in order before we come looking at this again”. If the same faults are found the second time round, firms can expect engagement from the FCA’s Enforcement team.

Returning to the speeches I mentioned above, it is worth picking out an important statement from each. At the BIBA conference, Martin Wheatley said:

“My own ambition is simple. I want regulation to support this success. I want the FCA to act not just in the interests of your clients – the man in the street or the FTSE 100 firm – but in the interests of BIBA and its members.”

In his speech, Simon Green made the statement:

“Insurance brokers are fundamental to a healthy, competitive and diverse insurance sector. We want to help maintain and grow the market’s reputation through effective, forward-looking and proportionate conduct regulation. Again, put simply, a good business, supported by good regulation.”

Neither point could be achieved fully by working on us, without working with us. For the regulator to keep its door open, we have to be prepared to engage. BIBA continues to do this for its members. So far, the welcome mat has been out!

Savingsavailable for honesty

-£15

-£14

-£13

-£12-£11

-£10-£9-£8-£7-£6-£5

-£4

-£3

-£2

-£1 £46,000,000

Full

None

Penaltypoints

NCD

12

0

Driving historyaccuracy in %

100

0

50

75

25

COST OVER NEXT 5 YEARS


The insurance industry has shown it acts compliantly with data and it will not be held or used for other purposes

The Insurance Industry Access to Driver Data (IIADD) initiative is due to launch in Q2 2014 and

expectations are high that it will bring more stability to the volatile motor market.

Benefits for customers include the estimated £15 saving per policy as well as more certainty that claims will be settled without problems arising and all this through simply providing a driving licence number.

Of course, it will not be such good news for those who have something to hide. A study showed as many as 23 per cent of motorists did not state their driving history accurately. Some of these include disqualified drivers or even those who do not hold full licences.

What is more, about one in 14 motorists mistakenly tells their insurer about motoring convictions that have expired, meaning they are paying too much for their insurance.

Key role for MIBIIADD will mean brokers can run the checks at point of quote, mid-term adjustments and renewals. They can confirm the type of licence held, for how long and any driving offences. Currently checks are normally only run at the point of claim.

The project is being co-ordinated for the insurance industry by the ABI and the Motor Insurers’ Bureau (MIB), which will also manage the necessary new technology hub being built for the initiative.

Ashton West, who is Chief Executive of MIB, is also IIADD Project Executive. He explained: “There are obvious benefits in knowing information provided by a customer is accurate, but to date, insurers have needed to rely on disclosure from customers.

“The problem with this is that

insureA licence to

Allowing the insurance industry to make DVLA licence checks is poised to bring change on a revolutionary scale, including saving honest motorists £15 on their car cover and putting the brakes on fraud. rachel Gordon reports

details about penalties can be withheld, either deliberately or simply be given incorrectly but innocently.”

MIB was a logical choice to manage the IIADD project, since it already runs the Motor Insurance Database and works with the DVLA and insurers on Continuous Insurance Enforcement, the law introduced in June 2011. This created an offence if a vehicle is without a SORN and uninsured, and involves using technology to achieve this.

Ashton continued that IIADD also ties in with the need for insurers

Motor

to ensure information is accurate and to ask appropriate questions as a result of the Consumer Insurance Act. This means the onus is on insurers to ask for information, rather than rely on customer disclosure.

“IIADD will help insurers and brokers validate accurate licence information quickly. Notably, the Ombudsman is in favour of what we are doing. No one wants claims to be held up or voided because wrong information was given,” he said.

IIADD has taken time to come to fruition, with talks beginning in 2010 and there have been the usual obstacles to overcome along the way, as in any project of this scale.

“After gaining permission from the DfT and DVLA, there needed to be agreement between all the stakeholders, including government representatives from the DfT and DVLA, insurers, price comparison

Savingsavailable for honesty

-£15

-£14

-£13

-£12-£11

-£10-£9-£8-£7-£6-£5

-£4

-£3

-£2

-£1 £46,000,000

Full

None

Penaltypoints

NCD

12

0

Driving historyaccuracy in %

100

0

50

75

25

COST OVER NEXT 5 YEARS


IIADD KEY FACTSl An average saving of £15 per policy for honest motoristsl 23 per cent of motorists currently do not state their driving history accuratelyl One in 14 motorists does not realise penalties have expiredl IIADD will launch in Q2 2014l Cost of IIADD is £46 million to cover next five yearsl IIADD could deal with as many as 10 to 12 billion checks a year

Motor

sites, software houses, Polaris, the ICO, leasing companies and BIBA,” he said.

InvestInG for the futureThere was also the issue of costs. The insurance industry has met these and they total some £46 million, which will cover five years of operating. Even so, it is viewed as a wise investment as investment will be recouped in terms of more accurate underwriting and reduced fraud.

The technology is crucial. MIB is creating the hub and ‘pipeline’ to the DVLA, which needs to ensure its systems are available and robust. Within a year, IIADD could deal with as many as 10 to 12 billion checks, whether from insurers, price comparison sites or brokers. Testing of the new technology will start in February prior to launch.

The DVLA is also building a customer portal that drivers can use to check their details including any convictions. Each driver can only access their own data and not anyone else’s named on the policy. It is cutting edge stuff and the technology to facilitate IIADD is one of 25 UK-wide projects that the government’s Digital Cabinet Offices describes as “exemplar”.

In terms of data protection, Ashton said: “The insurance industry has shown it acts compliantly with data

and it will not be held or used for other purposes.” The Information Commissioner’s Office has been briefed on IIADD and now has no objections. “Data will not be held for longer than is necessary, it will then be deleted and systems will be secure.”

As for the launch, Ashton emphasised there is not going to be a ‘big bang’ – it is up to individual insurers to decide when they want to make use of IIADDs, although since it will be of benefit, it seems most will.

It is also important to remember that customers are not compelled to provide their driving licence number details – although not doing so may lead to an insurer not quoting or offering a higher premium as they may suspect fraud.

But there will still be drivers not covered by IIADD. As Ashton explained: “The DVLA only holds licence details on those drivers from the UK, but not including Northern Ireland. In addition, there are foreign nationals who again are not listed.”

There are plans to migrate Northern Irish driver data to IIADD in the future, and it may even be possible in years to come to set up overseas licence data sharing arrangements, but for the time being, these drivers will fall outside the scope of IIADD.

In addition to providing access

Brokers may well need to answer customers’ queries about IIADD. Certainly, there will be more information to assist you in this, including on the BIBA website. Overall though, the guidance should be that customers should provide their licence number on request to ensure they benefit from accurate underwriting which ultimately will deliver fairer premiums at around a £15 saving.

Brokers should also watch out for a new name – as IIADD is only a working title. As Ashton explained: “We need better branding and a name that people will be able to understand, since IIADD does not trip off the tongue. So, we have agencies working on the project and we’ll be announcing a new identity in the coming months.”

TEllIng Your CuSTomErS

to DVLA driver data, the project is planning to provide the industry with an NCD validation facility as part of the package.

educatInG consuMersConsumer education is clearly important so that drivers can understand the reasons behind IIADD and its role in combatting fraud. They will also need to be aware that their data is safe.

One issue to be aware of is that if a driver wants others covered on their policy, they will need the permission of these drivers too when it comes to providing the licence numbers for those parties.

BIBA members will certainly have a part in informing customers and will be partnering with the ABI and MIB on an education campaign.

Longer term, Ashton said IIADD is expected to lead to further advances. “It is about achieving a joined up approach, with pre-population being the long term goal. There are also plans to make CUE (Claims and Underwriting Exchange) data available at the point of quote.

Ashton points out it could be extremely useful having claims data available upfront. “When claims go through a repairer system the customer may well not be clear on exact details so access to the full claim history is important for everyone.”

So, IIADD could well be a vital stepping stone for the future, and looking ahead simply to its launch, there are going to be plenty of short-term positive repercussions for motor insurers and customers. ashton West

traInInG


Click for knowledgeBroker ASSESS is now widely viewed as the industry standard when it comes to online training for all sizes of broking firms.

The system is provided jointly by BIBA and the CII and as Compliance and Training Manager, David Sparkes, said: “Whether it is young newcomers or broking veterans who need to be up to date, Broker ASSESS fits the bill for both personal and commercial lines firms.

“Of course, there are times when face-to-face training is highly effective and motivating, but it does not provide the complete solution and can also be costly.”

There are many benefits to providing quality online training. It can be fitted in at convenient times and importantly, it provides a clear audit trail which satisfies the regulator and assists managers, along with CPD points. There are no bulky textbooks or unexpected costs – Broker ASSESS is available for around £100–£135 a year depending on licence numbers, or roughly £11 per month.

David continued: “Broker ASSESS is regularly updated and reflects any relevant legal or regulatory changes. With a new regulator and changes in the law such as the Consumer Insurance (Disclosure and Representations) Act, which changes disclosure requirements, training is more crucial than ever.”

Broker ASSESS is one of the comprehensive and cost effective ways to ensure employees are competent, as KIrsty WInGrove explains

See how much you know by answering these sample questions:

A commercial property is insured for £100,000 but the true value at risk is £200,000. If a fire causes £80,000 of damage, how much would the insurer pay?

Select answer from the following:

option 1 Nothing / option 2 £40,000 / option 3 £64,000 / option 4 £100,000

At common law, when can the insurer take over the insured’s legal rights under the principle of subrogation?


option 1 – As soon as a claim is intimatedoption 2 – As soon as a claim settlement has been agreedoption 3 – Once a claim has been paidoption 4 – Once a writ has been served on the insured

In which of these circumstances is a motor insurer likely to avoid a policy ab initio?


option 1 – If a driver discloses a minor speeding conviction during the life of the policyoption 2 – If the insured discloses to the insurers that the vehicle has had a rear

spoiler fittedoption 3 – If the vehicle’s mileage has been innocently misrepresented by the proposer

due to a faulty mileometer option 4 – If the car has been insured for private use to get a lower premium, but it is

later discovered by insurers to have been used as a minicab the firm charges new customers

TEST YourSElF wITh BroKEr ASSESS

Q1

Q2

Q3Kirsty Wingrove is BIBA’s Head of Membership

AnSwErS: Q1:Option 2 – in this situation, the principle of average means that the insurer would pay £40,000. Q2: Option 3 – the insurer has a common law right to take over the insured’s legal rights under the principle of subrogation only when the claim settlement has been paid to the insured. Q3: Option 4 – the insured in these circumstances has deliberately concealed a significant act from the insurers, which would probably lead to the insurers cancelling cover back to inception.


BIBA is supporting Small Business Saturday, a new event aimed at putting the UK’s independent firms in the spotlight. Graeme TrudGill reports

BIBA is getting behind a new annual initiative to highlight the importance of the UK’s five million

small businesses.Small Business Saturday is based

around a campaign and a named day – 7 December – which will encourage consumers to support local businesses and show examples of successful SMEs. Notably, the UK’s small businesses provide almost two thirds of private sector employment and almost half of private sector turnover and 85 per cent of BIBA’s members have 10 staff or fewer.

The campaign is being championed by Chuka Umunna MP, the Shadow Secretary of State for Business Innovation and Skills and also has the support of the Prime Minister.

Small Business Saturday was launched in the US in 2010 and takes place on the Saturday after Thanksgiving, a public holiday on the fourth Thursday of November. Like 7 December, this is traditionally one of the busiest days for shopping.

It has proved a big success in the US and last year some $5.5 billion was spent at small businesses on Small Business Saturday itself.

In the UK, the campaign has already attracted the support of business organisations including the Federation of Small Businesses, British Chamber of Commerce, as well as corporates including American Express, O2, Aldermore Bank, Make It Cheaper and entrepreneur James Caan of Dragon’s Den fame.

Meanwhile, O2 will assist in promoting Small Business Saturday through its social media platforms to ensure its 23 million customers – both consumers and small business

Smes

Local heroesl Consider a promotion which

could be featured on O2’s priority moments app, which directs O2’s 23 million customers to local deals on their high street.

l Perhaps hold a free ‘advice’ surgery where local people can ask questions and get help with insurance issues.

l If you’re based on a high street, give people a reason to come in your shop. Swapping free coffee and muffins in return for email addresses and renewal dates can be popular and relatively cost efficient.

l For more ideas or to see what other businesses are doing, visit the Small Business Saturday Facebook page.

Ways you could get involved

Graeme Trudgill is BIBA’s Executive Director

owners – are kept updated on how they can become involved with the initiative.

As Mr Umunna said: “We must do more to celebrate the contribution local, small, independent businesses make to our economy and encourage people to buy from them.

“Small businesses are the lifeblood of our economy, play a hugely important role in our communities and add to the unique character of each locality.”

According to Mike Cherry, National Policy Chairman, Federation of Small Businesses: “Small Business Saturday is a good way to get the message to customers that using these high street retailers will benefit the local economy. Indeed without their help these important drivers and suppliers of goods and services in our daily lives may just disappear.”

Events will be planned throughout the UK in the run-up to and on Small Business Saturday UK, including a nationwide bus tour, and small businesses will be

encouraged to get involved and create special events themselves to mark the day.

At BIBA, we also believe Small Business Saturday will help raise the profile of many of BIBA’s SME members, who do so much in their local communities.

We are recommending that brokers get involved – there will be opportunities to boost awareness and some may want to consider offering customers a promotion, for example.

There should also be opportunities for networking and brokers may find there is scope to work closely with other firms in their region.

Members can find out more by visiting the Facebook page at www.facebook.com/SmallBusinessSaturdayUK and follow @SmallBizSatUK on Twitter. Downloadable posters will also be made available.

Graeme Trudgill, Chuka umunna and CeO Steve White

Brokers are clearly trying to contain costsin difficult trading conditions, but in doingso, may not be paying enough attentionto maintaining adequate protection fortoday’s litigious environment.

Historically, insurance brokersconsidered themselves as low risk andunlikely to ever experience the emotionaland financial pain of a large PI claimbeing made against them. They oftenonly purchased the minimum level ofcover dictated by their regulator. Sadlybrokers are no longer in the low riskcategory and need to be more realisticabout the level of cover they buy.

In better times, insurers may havesympathetically paid claims when doubtexisted in respect of policy interpretationor compliance with policy warranties. Atthe bottom of the underwriting cycle,when insurers’ margins are squeezedand shareholders increase theirdemands for an adequate return on theircapital, ex-gratia settlements and asympathetic approach has becomemore of a rarity. All too often,dissatisfied clients, with an uninsuredfinancial loss, will take the opportunity toseek redress from their broker.

At the 2013 BIBA Conference, arespected PI broker reminded us allabout the current rating levels forbrokers PI. Rates are typically 50% ormore below those applicable 10 yearsago, following sustained soft marketconditions. He expressed hisdisappointment that many brokers had

not reinvested those premium savings ingreater risk management within theirbusiness; nor had they sought topurchase higher limits of indemnity toreflect rising claims costs. Our ownanalysis supports this picture, withnearly half the brokers requestingquotes for cover at £2m or less andremarkably, a third still seeking to buycover at the regulatory minimum.

FCA minimum indemnity limits followEuropean Directives and create a ‘lowbar’ for the full spectrum of regulatedintermediaries. Brokers are left with theonerous task of deciding what level ofprotection is adequate and affordable fortheir own firm. All brokers need toconsider their exposure and regularlyreview the level of PI cover they maintain.

Here are some of the importantconsiderations brokers should bear inmind when considering an appropriatelevel of PI protection:

• The make-up of the client base andthe ratio between Consumer andCommercial (and the exposures thatexist especially for larger or morecomplex corporate clients e.g. withlarge property sums insured).

• The hidden costs associated withcertain types of loss, e.g. lifetimecare costs in respect of an injuredperson or the economic andconsequential losses that acommercial client could suffer if aloss is not properly indemnified.

• The aggregation of multiple claimsunder one limit of indemnity wherethey have arisen from one originatingsource, e.g. a failure in your systemsthat leads to systemic problems.

• The inclusion of claimants costs(which can be substantial) within thelimit of indemnity, and not inaddition to it.

• Any exposure to overseasjurisdictions where court awardscould be higher than in the UK.

• The magnitude of a PI claim against abroker often bears little or norelationship to the amount ofbrokerage received. Therefore, apractice’s turnover should not be usedas the sole determinant in selectingthe level of cover that they purchase.

In summary, the professional liability thatbrokers incur has increased as has thesize of claims made against them.Broker’s PI has never been as costeffective as it is today. There is growingacceptance within the legal and expertcommunity that limits of £5m or moreshould be maintained to adequatelyprotect. We strongly recommend that allbrokers review their limits and alwayserr on the side of caution. After all, yourPI is your ultimate safety net, the lastline of defence – why compromise it!

To discuss your PI cover, please contactAlan Drury on 0151 600 2222 or [email protected]: www.griffithsandarmour.com

As we review the insurance buying characteristics of insurance brokers, it is concerning to see that manystill hold modest levels of Professional Indemnity (PI) insurance cover. There is clear inconsistency whenthey regularly advise their own clients to increase liability limits to £5m or more, as claims and courtawards continue to spiral well ahead of the rate of inflation.

‘Historically, insurance brokers considered themselves as ‘low risk’and unlikely to ever experience the emotional and financial pain of a large PI claim being made against them’…

‘Sadly brokers are no longer in the low risk category and need to bemore realistic about the level of cover they buy.’

Modesty isn’t always the best policy

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Political view

Sajid Javid mpThe Financial Secretary to the Treasury (FST)


Political view

The government wants to create a financial services sector that helps the British economy and

serves consumers. And I, along with anyone else who attended the BIBA conference earlier this year, were left in no doubt that the UK’s insurance brokers have a lot to offer. Brokers play a crucial role, at the coalface of the sector, in driving innovation and negotiating the best deals for customers.

In my conference speech, I acknowledged that now is a challenging time to be a broker. However, I believe brokers have a fantastic opportunity to be part of the vanguard that restores the public’s trust in financial services, helping them to make informed financial decisions.

The insurance industry and government share the same objective. We both want growth and I am confident that we can achieve it together by focusing on customers and helping them reduce their costs.

In the months since the conference, we’ve seen significant evidence that cooperation between brokers and the government is starting to deliver tangible benefits. In motor insurance, we have seen nearly a 10 per cent drop in premium prices over the last year, driven by action to detect fraud and reduce spurious cases of whiplash. In travel insurance, the government and the insurance industry reached agreement so that customers struggling to get insurance would be directed to BIBA to help find a solution – resulting in over 90,000 additional consumers receiving advice on cover so far.

Brokers are also playing a key role in helping to develop the industry-wide claims initiative – giving consumers greater clarity on how their claims are processed. As the plan continues to develop, we should see a smoother claims-handling procedure and clear, jargon-free

Sajid Javid mp

Sajid javid MP, effectively the ‘Insurance Minister’, talks about what brokers can offer

guidance on why a claim might be rejected. This will help to empower customers and aid them in making informed choices. These simple changes will help consumers navigate the claims minefield and drive down the incidence of insurance fraud.

But it is not just specific consumer focused initiatives that relieve the pinch on hardworking people’s wallets. The surest remedy is economic growth. The UK economy is turning a corner but now is not the time to be complacent. I am a firm believer that the economy can only grow sustainably on the back of SMEs. That is why the government’s efforts to overhaul the way SMEs finance their operations and risk-taking for expansion are so important. It is not just about unlocking loans and credit facilities; it is about providing security to SMEs facing significant risks. There is a vital need for insurers to step up their policy cover to help these businesses plan for and mitigate these risks. Moreover, it appears to me that brokers are best placed to aid these businesses make informed decisions

about their risk; helping to unlock growth for all.

The challenge now is to identify ways in which insurers can improve the services they provide for consumers and businesses alike, ensuring that products meet real needs, help keep costs down, and promote growth. Brokers play a critical role in this challenge.

I want to thank BIBA members for their constructive engagement with the Government’s work on a growth action plan for the insurance sector, and we welcome a continuing dialogue with industry to drive growth across the sector. I look forward to sharing our findings with insurers and brokers in the very near future, and discussing how we can make this plan a reality. The government recognises the crucial role that the insurance industry plays, especially the UK brokerage sector. The government knows that Britain’s economy depends on hardworking firms like the brokers represented by BIBA, and we want to do everything possible to help them innovate, thrive, and prosper.

At the BIBA conference, the Financial Secretary to the Treasury spoke about his desire to see proportionate regulation... So just what is ‘proportionate’ regulation of financial services?

Among other points they have made on this topic, HM Treasury have stated that both the PRA and FCA “must ‘have regard’ to the principles of regulation, when discharging their general functions. These are the principles of efficiency, proportionality, consumer responsibility, senior management responsibility and openness. There is an additional requirement that the PRA and FCA carry out a cost-benefit analysis and full consultation before making changes to their rules; ensuring the regulatory burden is controlled and justified”.

proportionate regulation

Meet sajid javidSajid is a Conservative MP for Bromsgrove. He was formerly a senior Managing Director with Deutsche Bank AG, and head of the bank’s credit trading, principal finance, private equity and commodities businesses in Asia, as well as a Board Member of Deutsche Bank International Limited. He started his career with Chase Manhattan Bank in New York in 1992. He was a member of the Work and Pensions Select Committee until November 2010, when he was made Parliamentary Private Secretary (PPS) to the Minister of State for Further Education. In September 2011, Sajid was appointed by the Prime Minister as PPS to the Chancellor of the Exchequer, Rt Hon George Osborne, MP. In September 2012, Sajid was promoted by the Prime Minister to the position of Economic Secretary to the Treasury.

In October 2013, Sajid was again promoted by the Prime Minister to the position of Financial Secretary to the Treasury.

I believe brokers have a fantastic opportunity to be part of the vanguard that restores the public’s trust in financial services


Towergate Underwriting is a trading name of Towergate Underwriting Group Limited. Registered in England No 4043759 Authorised and regulated by the Financial Conduct Authority

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the Conservative conference, we met 13 parliamentarians including Sajid Javid, Financial Secretary to the Treasury.

bIbA MAnIfesto 2014 We are currently working on next year’s manifesto and welcome – indeed are encouraging – comments from members as to what we should include in this crucial document. Please email me at [email protected]

nuMber 10 DownIng streetWe had a recent meeting with Tim Luke, who is a Senior Business Advisor to Prime Minister David Cameron. We met him initially last October, it is important that Number 10 understands broker issues. This

The BIBA team has had a number of meetings to promote our manifesto and its important member issues recently.

PArty conferences BIBA attended both the Conservative and Labour party conferences, where we worked hard to ensure the members’ manifesto issues are considered by politicians. We also seek to build relationships with those already dealing with insurance issues or who are likely to be in these roles in the future. We discussed key issues and delivered the manifesto to the key Shadow players, including Ed Miliband MP, Harriet Harman MP, Ed Balls MP, Chris Leslie MP and Chuka Umunna MP. Similarly, at

was also an opportunity for Steve White to meet him in his capacity as Chief Executive. This was a productive meeting and areas we discussed included what brokers offer, the motor market and regulation.

An opportunity to visit Number 10 is always interesting and apart from seeing all the portraits of former prime ministers, which can be seen when walking up the staircase, Larry the cat, also tweeted us!

hM treAsury The government is focused on stimulating the economy and wanted input from BIBA and the insurance sector as to how brokers can contribute to this. We discussed many proposals for growth with the BIBA Committees and submitted 20 ideas to HM Treasury meeting with the Director General of HM Treasury’s Financial Services to discuss them.

We covered areas like apprenticeships, boosting the jobs market and tax issues. We emphasised the need to

Getting the

We’re focused and speaking to those who matter – Graeme trudGill runs through the activities on BIBA’s autumn agenda

BIBA attended both the Conservative and Labour party conferences, where we worked hard to ensure the manifesto issues are considered by politicians

message out

manifesto matters: steve White and Graeme trudgill flank labour leader ed miliband

making connections at the labour Conference: Graeme, ed Balls, steve and Harriet Harman

Conservative catch up: iain duncan smith with steve

representation


eliminate regulatory red tape and expand ways brokers can assist consumers, through increasing our signposting initiative.

This really is something to shout about, with enquiries from the public going from 2,000 at the start of the year to 6,800 each month. We are currently focused on older customers who are struggling to find suitable motor and travel cover and are convinced there is the potential to help many more.

euroPeAnother key meeting took place via the Eurostar to Brussels with the Deputy Head of Unit Insurance and Pensions – Directorate General Internal Market and Services in the EU Commission.

The Commission is dealing with the revisions of the Insurance Mediation Directive. This potentially could come into force in 2015 and is currently at a critical crossroads. It is vital for us to ensure brokers are subject to a level playing field. We are campaigning hard for the same disclosure requirements and also discussed scope – we do not want to see other sellers of insurance excluded from regulation.

European super-regulator EIOPA has produced a consultation paper on price comparison sites and we will be responding to this. BIBA fully supports our members who choose to trade via these, but believes the sites must be subject to appropriate supervision.

coMPetItIon coMMIssIonWe gave evidence to the Competition Commission’s review on motor insurance. We believe there are ways to achieve greater stability with claim costs, including through better control of claims management companies.

This was also a forthright exchange where we stated our opposition to Most Favoured Nation (MFN)clauses with comparison sites.

MFN clauses are used by price comparison sites to ensure that other distribution channels don’t sell the same policy at a cheaper price. We believe it is unfair that price comparison sites dictate what brokers charge and will seek to outlaw these clauses.

flooDIng Our work continues and we have been involved in government working groups as the Flood Re model and Water Bill legislation develops. Our full response to Defra is available on the BIBA website.

clAIMs revIew The FCA is currently conducting a thematic review of claims standards. We are keenly aware of issues raised by members in recent years and have raised these both directly with insurers and in the media.

We need workable solutions and to understand the reasons why claims are being either held up

or refuted. We are working directly with representatives from the ABI, CILA, insurers and brokers and expert witnesses to deliver these across personal and commercial lines.

We supported the recent Consumer Insurance Act, which will impact on personal lines in terms of removing disclosure requirements from customers and are now discussing with the Law Commission if a similar law could be passed for commercial cover.

rIots This is an issue our Property Committee has looked at recently and we recently met with Home Office officials to discuss the Riot Damages Act of 1886. This puts pressure on the police to control disorder, since the public and insurers can claim against them if they experience property damage losses as a result of a riot. The Act is currently being independently reviewed.

Graeme Trudgill is BIBA’s Executive Director

An opportunity to visit Number 10 is always interesting and apart from seeing all the portraits of former prime ministers, which can be seen when walking up the staircase, Larry the cat, also tweeted us!

no 10 here we come: steve and Graeme at downing street


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BIBA’s schemes and facilities provide you with a ready-made opportunity to enhance your offering says Steve FoulSham

equestrian insurance – specialists are essentialThere are niche markets and then there is the equestrian niche market…

Horse riders and owners have a particular way of talking about their endeavours and they want to deal with a broker who understands them. This is not a standard or predictable market.

South Essex Insurance Brokers (SEIB) has been offering equestrian insurance for 50 years and first implemented much of the cover accepted today as the industry standard. As appointed brokers to BIBA for equestrian insurance, other brokers now have access to this expertise and range of products.

Horse insurance is expensive and some owners are struggling to make ends meet. There are ways to control the cost but still provide cover for the serious conditions.

Meeting vets’ feesVeterinary fee insurance is the most sought after cover and a maximum of £5,000 per incident is usually expected. The excess is variable, ranging from around £165 to £500 and sometimes co-insurance can have its place.

Pre-existing conditions are

a continual problem and care with underwriting must always be a priority. This becomes clear when taking into account the

fact that an MRI scan, just to find out

a cause, can cost in excess of £1,000, before any treatment.

SChemeS

businessBring in the

adjusters who ride – a must in defending claims successfully.

To find out about equestrian insurance, contact SEIB on 0845 873 4915 or visit www.seib.co.uk/biba-members

protecting the uK’s landlords

BIBALet from Towergate Underwriting provides members with specialist insurance that helps ensure landlords are properly protected.

Landlords’ responsibilities are increasing and members should be aware of the following:

The Landlord and Tenant Act 1985Landlords are responsible for guaranteeing their property is well maintained and does not pose a risk to tenants, neighbours or the public. This is particularly important during the winter when burst pipes and roof damage caused by storms are common hazards.

Landlords also have a duty to make sure all gas and electrical devices within the property are checked and in good order. All furniture and furnishing such as carpets need to meet the standard level of fire resistancy in compliance with the Furniture and Furnishing Regulation 1988.

Buildings insurance will cover landlords for any structural damage, however they should also take out contents insurance whether providing a furnished or unfurnished property – this will protect damage to kitchen fittings, curtains and so on.

Landlords’ liability cover also protects against claims resulting from personal injury or death within the property.


Horseboxes go beyond motorHorsebox insurance is basically a motor contract, but when horses are involved it becomes less straightforward than just fully comprehensive or third party fire and theft.

Then there is also breakdown insurance to think about. SEIB recommend fully comprehensive insurance with preferably any driver, but not driver only. It is easy to take a horse to a competition and a minor accident prevents driving. Having another insured on the policy provides the solution.

Horsebox insurance is surprisingly competitive and takes into account the precious cargo, the care with which the vehicles are driven and the fact that most horseboxes are only used occasionally.

Breakdown insurance for a horsebox should be arranged to take care of the horses as well as the vehicle and passengers should a breakdown or accident occur – you cannot expect a standard recovery truck to remove a vehicle with horses.

In addition, standard breakdown cover will not provide the right cover when horses are carried.

Business solutionsEquestrian Combined Insurance covers such activities as riding schools, livery yards, competition and training yards, racing yards and many other activities. It is a policy that is difficult to place.

Riding schools that hire horses also have a compulsory requirement for public liability cover.

SEIB can tailor your clients’ needs for the cover they need, whether just the liability or if they need cover for commercial premises and a domestic dwelling.

We also provide a comprehensive risk management pack. Our claims service incorporates specialist loss

Steve Foulsham is BIBA’s Head of Technical Services

businessLandlords to check tenants’ status?The Queens Speech in May this year outlined plans to pass new legislation for landlords to become legally responsible for checking the immigration status of tenants. In the proposal, landlords must obtain documentation that they are only renting property to those legally allowed to live here.

Protection for non-payment of rent The number of tenants falling into arrears or avoiding rent is high. This can result in legal costs to the landlord and cause them to fall behind on their mortgage or associated bills. Towergate’s BIBALet cover can be tailored to include rent guarantee as an optional extra.

Choice of coverBIBALet offers a range of cover options, caters for a wide variety of tenant types and is suited to those who own individual properties or for those with a portfolio. Some key benefits available online include:

l Commission rates starting at 27.5 per cent

l Accidental damage automatically included

l £5 million property owners’ liabilityl Voluntary excess discountsl Personal underwriting manager for

account consolidationsl Optional cover includes: malicious

damage by tenant, theft by tenant, landlords’ legal expenses and rent guarantee

Some 80 per cent of BIBALet Quote and Buy cases are quoted without referral, and the remaining referral cases are turned around within the agreed 24-hour service level agreement.

For more information contact the BIBALet team at Towergate:

Telephone: 01206 780 814 Email: [email protected] Quote and buy online:

www.towergate.co.uk/bibalet

comprehensive cover for freelancersFreelance professionals currently represent the fastest growing sector of workers in the UK – there were more than 1.85 million of them operating here in 2012.

Despite representing a large proportion of the working population, freelancers often experience complexity in purchasing business insurance products that meet their precise needs, especially if they are working through their own limited company.

This is a significant issue because appropriate insurance is essential for anyone self-employed. In fact, professional indemnity, employers’ liability and public liability cover are often compulsory under a freelancer’s contract.

Brokers working on their behalf also frequently find this business hard to place. It can be uneconomical to quote for via traditional methods, and insurers are often unwilling to cover the vast array of freelance professions.

There are also complexities around balancing the risks a self-employed person faces, the industry they work in, and the terms and conditions they operate under.

This is why BIBA has teamed up with independent broker Kingsbridge

case studY

Get this party startedNightlife can mean valuable business for brokers and one that has found this to be true is Business Line Insurance Brokers, based in Potters Bar, Hertfordshire.The broker places risks across the UK using BIBA’s nightclubs scheme. This is provided by wholesaler Tasker & Partners and underwritten by International Insurance Company of Hannover.

James Graham, Account Executive with Business Line, explained why the scheme is a success: “We do a lot of leisure business but nightclubs can be difficult to place – the scheme allows us to cover many of those who approach us, providing they are properly licensed.”

The scheme covers three main areas – ClubPM, which is typically for larger clubs, Nightscene aimed at smaller bars and restaurants which stay open late and ClubEx, which is for gentlemens’ clubs.

“There are relatively few underwriters in this market, and this coupled with a relatively high number of slip and trip claims, can cause problems,” said James. He added that there have been a number of short-term

players that have entered the market, including insurers without strong ratings. “Tasker & Partners ensure rates are kept stable and this is what customers want.”

Business Line is also able to extend cover, through the scheme, to door staff, whether they are employed via an agency or directly employed by the club or bar, providing they are Security Industry Authority licensed.

“We feel there is room for growth here. Clients may well have questions about their cover and we always speak to everyone who buys cover from us – there is scope to add value through service. We’re also aware of a number of clients who have had claims and these have been handled well, which is reassuring for new clients. For those who choose to buy direct, there are not the same safeguards.”

Just in case anyone is wondering, James was asked whether Gentlemen’s clubs were viewed as high or low risk. “They tend to perform well on the whole, and there are relatively few claims, unlike mainstream clubs,” he sayid, “it seems not everyone who visits wants to own up to going!”

Professional Solutions to launch a combined professional indemnity-led scheme for freelancers, exclusive to BIBA members.

The scheme, which launched on 1 July, allows brokers access to a policy specifically designed for professional freelancers, contractors and sole traders across a wide range of industries.

Brokers can work in partnership with Kingsbridge to offer the policy or they can ‘white label’ it and sell it under their own brand.

James Ledingham, Head of Strategy and Operations at Kingsbridge, said: “We have more than 40 combined years’ experience in this field, which we have used to devise a tailored scheme at a competitive price. Our scheme covers more occupations than any other and is quick and easy to buy online, providing brokers with a straightforward solution to placing these risks.”

For more information, please visit www.kpsol.co.uk or contact James Ledingham on 01242 806 423 or email [email protected].

THe Broker ISSUE 4 / 2013 29


Claims can prove costly should a broker make a mistake, if there is inadequate E&O cover in place. Brian Boehmer details some of the most common claims against brokers and how to avoid them

In an increasingly litigious society, some insurers seek out technicalities within policy wordings to prevent payment. As a result, with ‘Reservation of Rights’ becoming more common, this can leave the broker’s Errors & Omissions (E&O) policy as their client’s last resort since they may look for someone to blame.

The broker is usually the first person in their sights as they know that they have an insurance policy in place. Mistakes can happen, but brokers and the organisations they represent need to be aware of the consequences of any error.

So, what can be done to avoid costly mistakes?

l regular communication: consistent dialogue with insureds and insurers will ensure you and your client know exactly what information is required

l Ask questions about your client’s business: you need to understand any requirements before you can

ProFeSSional inDemnitY

Protect , protectyourselfyour client

Brian Boehmer is a Partner at Lockton who are BIBA PI Initiative accredited brokers

recommend a suitable policy or cover and approach insurers

l Underline the necessity of duty of disclosure: get your client’s confirmation that they fully understand the potential ramification of not doing this, and keep this on file

l The devil is in the detail: although painstaking, it is sensible to go through policy wordings with the client to ensure they fully understand the coverage

l keep your notes: retain notes of all client communications (whether they be phone, face-to-face or email), and follow up for your records. Evidence and an audit trail could prove invaluable if your performance is questioned or a claim arises.

l When recommending insurer continuity, ensure your client knows of any changes that have occurred to the policy year-on-year and what this means to their business.

recent claims trendsLockton analysed claims data from 2011 and this shows there is a growing tendency of brokers’ E&O claims to stem from the refusal of insurers to pay a claim.

This is often a result of the insurer suggesting they did not receive

all necessary information on the broker’s client’s insurance policy, which the broker had recommended. These errors and omissions can be broadly broken down into two areas:

–Non-disclosure: a claim/cover is denied by insurers on the basis that they did not receive, or were not aware of, relevant information from the broker

–Misunderstanding by the broker about the level or type of cover required by the insured, resulting in cover that is not fit for purpose being placed.Problems often arise when the

broker has inadvertently omitted pertinent information or did not request it from the client. This could happen if a broker is inexperienced, overworked, or placing a line of coverage where they have minimal knowledge, in which case they simply do not know what information is required from the client.

Mistakes happen, so it is important you have the right E&O insurance before taking on work. As you would advise clients, check your policy wording and understand your level of cover. You need to choose – do you want an E&O insurance broker who treats you as another transaction, or someone who will give you advice?

Aside from the financial implications an E&O claim could have on your business, there are also intangible risks such as brand reputation and emotional wellbeing to be aware of. Not all policies are the same – and they are only pieces of paper until you need to make a claim.Problems often arise when the

broker has inadvertently omitted pertinent information or did not request it from the client

THe Broker ISSUE 4 / 2012 27

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Call 020 7397 4499 to find out more.

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Aqua Private Client is a trading name of Aqueduct Underwriting Limited, which is authorised and regulated by the Financial Conduct Authority in respect of general insurance business and is registered in England No. 7189728. Registered Office: One Whittington Avenue, London EC3V 1LE. Calls may be monitored and recorded for quality assurance purposes. 10/13 ref: 1574

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