The Parliamentary Ombudsman has today issued a damning indictment of the U.K.'s proposed £400 million payout to Equitable Life suffers, many of whom lost their life savings during the company's near collapse back in 2000. The £400 million compensation scheme, yet to be rubberstamped by the government, equates to just £266 per policyholder despite the fact that a recent report suggested losses for policyholders were between £4 billion and £4.8 billion. So is their new hope for Equitable Life suffers?
The Association of British Insurers has issued a damning report on the UK insurance arena with confirmation that over 2300 fraudulent insurance claims are being discovered each and every week. It is estimated that these claims account for over £800 million a year which is then passed on to UK consumers who are left yet again to foot the bill. So why are insurance fraud claims rising?
It is difficult to appreciate how it has taken the UK government 10 years to come anywhere near answering compensation claims for the Equitable Life debacle back in 2000. Equitable Life was literally on the verge of collapse due to a number of retirement guarantees offered to customers which came back to bring the company to its knees. The company lost a high-profile court case which effectively forced the breakup Equitable Life and a nightmare scenario for many customers.
UK insurance fraud hit £840 million last year in the UK which was a 14% increase on the figure for 2008. While it is no surprise to see insurance fraud increase during recessionary periods, the amount of money involved is enormous and has surprised many experts. So what impact will it have upon the UK insurance market?
The Asset Protection Agency, the agency in charge of the UK government's asset protection scheme, is confident that UK taxpayers could walk away with a profit from the scheme of anywhere between £5 billion and £6 billion. This is the scheme utilise by Lloyds bank and Royal Bank of Scotland which effectively insures their toxic assets and "puts a lid" on any potential liabilities in the future. In many ways the two banks were forced to become involved in the scheme even though their initial cover was reduced as the banking arena and the UK economy improved at the time.
A growing number of "crash for cash" scams in the UK and car insurance fraud have directly influenced the ever-growing rise in UK car insurance premiums which increased by 12% between January and June of 2010. This is the unseen cost of car insurance fraud and unfortunately it is something which law-abiding customers are being forced to cover. At a time when UK finances are literally being stretched to the limit this is the last thing that UK car owners wanted to see!
When you consider that over 70% of UK homes have at least one bike on the premises perhaps it is time to look at insuring your bike against theft?
While the cost of insurance appears to increase year on year and has for many people reached a level where they are now struggling to finance their insurance, there are simple ways you can reduce your insurance costs.
The Financial Services Authority (FSA) has launched an investigation into the with profits insurance sector amid concerns that communications with policyholders and the performance of these funds may not be as good as it should be. After completing a review of 17 companies, which control 80% of the assets held in the UK with profits fund sector, the FSA has launched investigations into two individual companies who have so far as yet remained unnamed.
There is a growing debate within the financial sector with regards to ID theft insurance and whether it is required and whether it gives value for money. Currently many credit cards companies and banks will offer ID theft insurance as part of an overall financial package but you need to be aware of the small print and exactly what you're covered for.
