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Thomas Hickey

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Marina Yannakoudakis, a conservative Member of the European Parliament, has opposed the European Court of Justice (ECJ) decision to make it illegal to use gender as a factor in the price of insurance.

Ms Yannakoudakis said that a report by the European Parliament’s Women’s Rights Committee in response to the ruling did not go far enough in questioning the decision, and addressed the “social consequences of the decision rather than making any rational recommendations”.

Yannakoudakis, the spokesman on women’s rights, said that gender based statistics were valid in underwriting insurance.

“Women statistically represent a lower risk than men. As the price of premiums is calculated on the basis of risk, insurers should be allowed to take this into account,” she said.

“The report fails to question the validity of the ECJ’s ruling. It focuses on how to deal with the ‘social consequences’ of the decision rather than making any rational recommendations. We need a common-sense interpretation of EU rules on equality or we need to revise them.

Yannakoudakis finished by saying she would be submitting amendments to the report to “ensure that women don’t pay the price for equality with higher insurance premiums.”

Yannakoudakis is by no means the first politician to oppose the ruling. Earlier this year, David Cameron also expressed his disapproval of the ECJ ruling. When asked about the issue, Mr Cameron remarked, “that shows that some of the loony left is still alive and well in our country… Frankly, insurance premiums ought to reflect risk”

Last week the HM Treasury also expressed it’s disdain of the law, saying it was “disappointed” with the ruling and that it would increase the prices of insurance for “vulnerable groups who can least afford it, such as the elderly.”

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Standard Life has appointed company veteran Jason Tunbridge to the Head of Platform Distribution role.

Mr Tunbridge will replace Chris Divito who is moving to Standard Life International to work on overseas projects. Both positions will take effect on January 3, 2012.

Mr Tunbridge began with Standard Life 22 years ago in 1989. In that time he has had a number of senior roles including Head of Distribution South, Regional Manager, National Account Manager as well as being a founding member of the Sales Investment Team.

“2012 presents significant opportunities in the run up to the Retail Distribution Review and Jason has the skills and experience to build on the growth Chris and the team have achieved,” said Jeff Regazzoni, Head of Retail Distribution at Standard Life.

Mr Tunbridge added, “I am looking forward to leading Standard Life’s platforms business in 2012, which is shaping up to be a defining year for the industry.”

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Despite less than half of small business’ having a sufficient capital safety net, only a quarter can name a risk facing their business, a new AXA report has revealed.

In their 2011 International Small Business Report, AXA looked into the issues currently affecting small business in ten different countries. The two main issues they outlined were the need for small and medium sized enterprises (SME’s) to extend their focus from finance needs to business risks, and the need for more business continuity planning and cash flow management.

One of the most shocking findings from the study was the lack of risk awareness – when asked to mention the key risks facing their business, a quarter of respondents couldn’t name any. This figure peaked in Poland, with 62% of respondents not being able to name a risk, followed by 40% in Spain and 32% in France. Ireland was the most risk aware country, with 94% of SME’s being able to identify risks facing their business.

The report also looked at the saved capital of SME’s, and whether it would be sufficient in the case of an unforeseen event stopping business. Over half of the people interviewed had less than two months of revenue reserved for working capital, a quarter had less then a month, and 17% didn’t know how much capital they had.

While the report found that many SME’s can not afford an unforeseen event stopping productivity for more than a couple of months, it also found a relatively low penetration rate for business insurances.

“Much can still be done to ensure that these businesses are placed on a firmer financial footing enabling them to grow and contribute to the wider economy,” said Oliver Mariée, Group Chief Marketing and Distribution Officer at AXA.

“This is part of our ambition to become a long term partner by providing them with the right advice and good planning to ensure that the benefits of insurance are better understood by them”

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An American insurer operating in the UK has been fined more than GBP5 million by the FSA and Ireland’s Central Bank.

The Combined Insurance Company of America (CICO), was fined GBP2.8 million pounds by the FSA and EUR3.35 million (GBP2.82 million) by the Central Bank of Ireland for “putting its customers at risk of being treated unfairly”. It is the biggest fine the Central Bank of Ireland has ever given.

The CICA sold accident and sickness insurance products through brokers in the UK. After the FSA requested that the CICA undertake a skilled persons report to examine CICA’s governance and controls framework, the company completely ceased writing business in October 2010.

The FSA found that the CICA was in breach of two FSA principles by “failing to manage effectively its sales processes, claims handling and complaints handling to ensure the fair treatment of its customers”.

Tracey McDermott, acting director of enforcement and financial crime, said “CICA’s widespread failures reflect a culture which did not recognise the importance of treating customers fairly. This created a significant risk that customers would not get a fair deal.”

CICA settled early with the fine and managed to get a 30% discount. Without the early settlement they would have received a GBP4 million fine, and risk an increased Irish fine.

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The infamous inside-out Lloyds building at One Lime Street, London, has been awarded Grade 1 listing status by English Heritage.

The announcement was made by Heritage Minister John Penrose today, crediting the building’s “architectural innovation, historic interest and celebrated design”. At just 25 years old, the building is the youngest ever to receive the title.

Grade 1 listings are extremely rare, with just 2.5% of the 375,000 buildings listed by English Heritage classed as Grade 1.

“Lloyd’s was ahead of its time when it approved the building of One Lime Street,” says Richard Ward, Chief Executive of Lloyd’s. “It’s a world famous building that has gone on to embody the world famous Lloyd’s brand.”

“The building is still modern, innovative and unique – it has really stood the test of time just like the market that sits within it. The listing decision will protect it against unsuitable alteration or development whilst retaining its flexibility to adapt with the market’s needs,” Mr. Ward said.

The building is most famous for having all of its services – from it’s lifts to it’s lavatories – on the outside. This inside-out design allows for maximum internal space and allows the building to be remodelled at will.

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Emergency workers say they are amazed no one was killed after months of rain fell in just two days causing damaging flooding in New Zealand.

Two months worth of rain fell on Thursday and Friday causing mudslides and flooding to Nelson in the top of the South Island. Over 160 homes have been evacuated in the area.

The mudslides washed away roads and houses causing over 250 claims to the New Zealand Earthquake Commision (EQC).

The disaster comes while the insurance industry is still trying to recover from the Christchurch Earthquake which had repair bills of around NZ2 billion.

The EQC reported that damage caused by mudslides would be covered by them, but water damage by flooding was a matter for private insurance companies.

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When filling out an insurance form one of the first questions asked is usually whether you are male or female. It is one of the first factors that insurers take into account when estimating the price of most policies.

However of this Wednesday next year, it will be illegal for insurance companies to use gender as a factor when calculating the price of insurance. Without this tool, we can expect to see some changes to insurance prices. News Insurances had a look at the three areas which will see the biggest changes.

Life insurance

Because of the different life expectancies of men and women, gender is used as a factor when determining the price of life insurance. Women generally live longer than men and have lower mortality rates, so they pay an average £5 a month less than men. Come December 21 next year, men will be slightly better off and women slightly worse off when this price gap closes.

Annuity rates

Because men don’t live as long as women, their annuity pay out period is expected to be shorter. As a result of this, they are generally payed more annuity per year than women. Ultimately both sexes are expected to receive the same amount but men receive it in a shorter period of time.

With the changes, males will receive an average of 1% less annuity and female annuity payment will rise by an average of 5%. The treasury, in their response to the ruling, said, “although women will enjoy an up-front uplift in rates…in the medium term, the adverse selection impacts are likely to bring down annuity rates for both sexes”

Car Insurances

Car insurance is the big one, with prices for young people expected to change dramatically.

Young men are the highest risk category of drivers because statistically they have the most, and the most expensive, accidents. Currently they pay just over £5,000 per year in premium compared to just under £3,000 for young women. This price gap is justified by the price difference for claims which young men and women make. On average, a young male will make a claim of around £1,700 compared to the average claim of £800 made by women.

After the changes are implemented, young women will be paying around 24% more for their policies to make up for a drop of around 10% for men.

While these are the three main changes to policy pricing it is not an exhaustive list. Essentially any policy which involves people will be effected and we will have to wait until December next year to see exactly how.

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Does it feel like this years Christmas shopping is a bit harder to cope with financially than last years? Well thats because it is, with most Brits having less money to spend on Christmas than last year.

Spending power among Brits dropped to it’s lowest level in November for this year, due to a combination of weak income growth and increases in the price of essentials, a Lloyds report has shown.

“This fall in real incomes more than likely reflects a deterioration in the labour market, with public sector job cuts and uncertainty over the wider economy affecting companies’ hiring plans,” said Patrick Foley, chief economist at Lloyds TSB.

“Although we are starting to see inflation falling back, the price rises of recent months, particularly in gas and electricity, are still feeding through to increased outgoings. Although we expect to see the squeeze from inflation abate in the New Year, the weak outlook for employment suggests consumers will continue to face difficult times for the next few months.”

Income growth slowed to around 1.9% in the year to November while money spent on essentials rose by 3.9%. What this means for the average Brit is that we have GBP20 less spending money each month.

The news comes despite findings that people in the UK are cutting back on essentials in order to save money.

Unsurprising, the study also found that we are resorting to desperate measures to get through the expensive Christmas period. While almost two fifths say they will be cutting back on gifts this year, a quarter say they will dip into their savings and a third say they will use credit cards to fund the festive season.

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One in ten people in the UK say they have considered defrauding their insurer to ease the financial pressure of Christmas, a study from AXA insurance has revealed.

The study revealed a disproportionate rise in the amount of fire and theft claims for December, which raised concerns with AXA’s fraud department.

“We know from experience that the level of fire and theft claims rises disproportionately to other claim types so it’s safe to assume that in the run up to Christmas there is a huge leap in fraudulent claims as people try to find a way to finance their spending.” said Steve Gaywood, head of counter fraud at AXA car insurance.

The company said that fire claims in particular see the biggest spike with 40% more claims in December, followed by theft which last year peaked at 23% above the annual average.

The company says the findings suggest some people become more dishonest leading up to Christmas.

Mr Gaywood finished by saying, “Christmas is expensive and it is sad to see the desperate measures people will go to for a bit of extra cash but insurance fraud is really not the answer.

“As an industry we are investing millions in detection so the likelihood of getting caught is rising rapidly. And at the end of the day it is not only a criminal offence but increases the premiums of all honest insurance customers.”

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Today is the most dangerous day of the year on UK roads, with an average of 29% more claims relating to car accidents happening on this day, the Co-Operative reports.

For three consecutive years claims increased by 129% on December 17 compared wth a typical day of the year, the insurer reports. They have aptly named December 17 ‘Danger Day’.

“Our data shows that people are more likely to be involved in a car crash on 17 December than any other day of the year,” says Grant Mitchell, Head of motor insurance at The Co-operative.

“This is probably down to a combination of the ‘pre-Christmas rush’ when everyone is dashing to the supermarket or to buy last minute gifts along with the fact that people also feel tired and sluggish from the Christmas party season, which makes it harder to concentrate on the road.

“Of course, when these factors are combined with busy roads, bad weather and the fact that the days are at their shortest, accidents can and do happen.”

The data shows that more accidents happen in the week leading up to Christmas than in any other week of the year, with car crash claims up by 94% between December 17 and 25.

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Weather forecasters are warning of freezing temperatures, icy roads and snow over the weekend and into next week. While this may sound like a nightmare for most people, it is a dream come true for those planning on visiting the snow these holidays.

If you plan on hitting the slopes this Christmas, make sure you cover yourself with the right insurance. Broken bones at the snow are common and they can hurt your wallet more than the accident itself. But it doesn’t have to be this painful.

According to comparethemarket.com, a weeks insurance skiing in Europe for a single male in his 20’s varies from GBP11 to GBP50. If you were to break a bone at the snow you would have to cover initial hospital costs and rehabilitation costs, you would be out of pocket for the lift passes and ski-hire that went unused, and you may even miss out on income because you are unfit to work when you return, so GBP11 for a week isn’t a lot when you add up how much you could lose with an injury.

For a family of four it is even cheaper to be covered, with comparethemarket.com quoting a range of GBP22.09 and GBP112.22, or 5.50 to 28 per person.

So if you are thinking that it’s not worth taking out insurance for your ski trip or that you can’t afford it, think again. Taking the chance could save you 11 pounds, but it may just cost you thousands.

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Fitch ratings have announced that Insurance Australia Group’s (IAG) insurer financial strength rating will be unaffected by today’s announcement to buy AMI Insurance Ltd. for NZ380 million dollars. The companies rating remains at AA- with a positive outlook.

In the statement from the ratings company, they said the deal will strengthen IAG’s competitive position in New Zealand.

“The acquisition is in line with IAG’s long-term strategy to grow profitably in its domestic markets and it is expected to generate supportive earnings,” the company said in a statement.

“We acknowledge that IAG will not assume AMI’s existing liabilities resulting from the Canterbury earthquakes, but will benefit from AMI’s existing reinsurance cover for future catastrophe events”

IAG made the announcement to buy AMI this morning. AMI had been struggling in recent months and needed to be bailed out by the New Zealand government after the earthquakes in February provoked nearly NZ2 billion dollars in claims.

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Just days after they were reportedly considering buying into an asian insurer, Insurance Australia Group (AIG) have agreed to buy New Zealand’s AMI Insurance Ltd. for NZ380 million (GBP192 million).

AMI was in dire financial straits and had to be bailed out by the government this year after an earthquake prompted almost NZ2 billion (GBP982 million) dollars worth of claims.

In the deal, AIG will not be liable for any past of future claims relating to the earthquake. Any earthquake related claims will now be dealt with by a new state-owned company.

The deal will make AIG the biggest general insurer in New Zealand and will add almost 30 per cent to its New Zealand premium income and yield $30 million a year of net synergies within the first two years, the company said.

The deal had an obvious effect on Australian stock exchange, prompting the end to three days of losses.

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The Association of British Insurers (ABI) has questioned whether publishing all findings from the Financial Ombudsman Services’ (FOS) is the best way to achieve transparency, in its response to the FOS consultation on the Issue.

The ABI says that, while it supports greater transparency, it questions whether total publication is the most effective approach to achieve this.

Maggie Craig, Director of Financial Conduct Regulation at the ABI, commented “Whilst the ABI supports transparency, it should be a means to an end, not an end in itself.

“Government legislation should encourage the Financial Ombudsman Service to work closely with consumer groups and the industry to select the most appropriate ombudsman cases for publication.”

The ABI went on to say that publishing all findings would be impractical and potentially misleading for consumers.

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Despite expensive recent natural disasters, Fitch has deemed Thailand’s insurance industry ‘stable’ and said that the impact of the floods is only short term. The announcement was made at this years Thailand Insurance Conference held in Bangkok.

While Thailand was the main focus of the conference, Asia’s wider insurance industry was discussed as well. The outlook for the life insurance and non-life insurance sectors in China, Malaysia, Indonesia and Japan were all said to be stable, reflecting the strong economic climate in Asia at the moment.

Fitch did, however, warn the Asian market of a number of challenges to be faced including natural disasters and government regulations.

On the topic of the recent floods, Narumol Charnchanavivat, Director of Thai Banks/Insurance said the impact of life insurance claims has generally been limited, but it has been much more severe for general insurers.

Fitch finished by saying Asian insurers are in a good position to cope with tough market conditions because of their strong capital and assets.

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Two days after New China Life’s (NCL) horror debut on the Hong Kong exchange, the company has rebounded with a strong first day in Shanghai.

In stark contrast to Wednesday’s debut, NCL surged 14 per cent from its initial public offering to close at around 26.44 yuan (GBP2.68). It’s second day in Hong Kong was much better than the first as well, finishing 2.7 per cent up on HK$26.40 (GBP2.18).

The increases were helped along by the first day of gains in Singapore after three consecutive days of losses.

New China Life raised around GBP1.3 billion after listing on both the Honk Kong and Singapore stock exchanges last week.

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2011 will have the highest catastrophe-related economic losses in history, costing 30,000 lives and USD350 billion for the world economy, Swiss Re has estimated.

The re insurer estimated that the total losses from the disaster cost the insurance industry alone around USD108 billion, more than double the 2010 figure of USB48 billion.

The year ranked in as the second costliest on record for natural disasters.

“2011 would have been the costliest year ever for the insurance industry if Japan had been more fully insured,” said Swiss Re, referring to the earthquake which sparked a tsumani and the Fukushima nuclear disaster in March.

“On top of people losing their loved ones, societies are faced with enormous financial losses that have to be borne by either corporations, relief organisations or governments and, ultimately, taxpayers,” said Kurt Karl, Swiss Res chief economist.

The most expensive year for insurers was 2005, the year when hurricane Katrina hit the United States which, along with other disasters, cost the industry $123 billion.

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While the figure has reduced over the past five years, private motor insurance premiums were on average 11 per cent higher in Northern Ireland than in the rest of the UK last year, an Office of Fair Trading (OFT) study has revealed.

In rural areas, Northern Irelanders were being charged between 30 and 70 per cent more than people in similar areas in the rest of Great Britain.

The OFT found three potential reasons for the price difference. Firstly, consumers in Northern Ireland statistically don’t shop around for the best deal as much as people in the rest of the UK. Only 54 per cent said they shop around before buying insurance, compared to 73 per cent in Great Britain. This has lowered competition in the area resulting in higher prices.

Secondly, insurers in the region say the higher price could be because claims are generally higher in Northern Ireland. The higher claims are the result of “differences in the levels of compensation [resulting in] higher personal injury settlements,” the OFT said.

The third and final explination offerend was road safety. Statistically, Northern Ireland has more accidents per capita and per vehicle than the rest of the UK which has an obvious impact on insurance costs.

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Fitch Ratings has downgraded the insurer financial strength ratings of three subsidiaries of Generali Deutschland. The ratings changes are:

Advocard Rechtsschutzversicherung downgraded to A- from A+.

Dialog Lebensversicherungs downgraded to A- from A+.

Envivas Krankenversicherung downgraded to BBB+ from A-.

All ratings have a negative outlook.

The news comes just days after Italian parent company Assicurazioni Generali had its IFS rating lowered from AA- to A-. The downgrade of the three subsidiaries means that they are now at their “stand alone rating”, which means their ratings no longer benefit from being a part of the Assicurazioni Generali group.

Fitch said that, of the three subsidiaries, Advocard is the most important to Generali because of its “position as the only legal expense insurer in the group”

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Swinton’s director pay was boosted more than 1,000 per cent in 2009, according to Insurance Times.

In 2008 directors took home GBP1.5 million but in 2009 that changed to GBP16.3 million – more than ten times the previous year. Then in 2010 directors pay, including emoluments and pensions, went back down to GBP1.7 million, the website reported.

The news comes a day after Swinton’s French parent company, Covea, sacked entire board for “putting their short term interests ahead of the long term interests of the company”.

A spokesman said the 2009 years pay rise was not linked to yesterdays decision.

In 2008, the year of the pay rise, Swinton Group Limited’s post-tax profits were GBP28.9 million. They dipped the following year to GBP21.8 million but recovered in 2010 to GBP27.1 million, Insurance Times said.

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