Acquitted "insurance fraudster" gets poetic justice

Fri, 30 Dec 2011 20:26:00 GMT

An American man accused of insurance fraud has been acquitted by a panel of judges, one of whom decided to write his ruling in rhyme.

Although the defendant was convicted of depositing a false check from an insurance company, a conviction of a separate charge of insurance fraud was overturned on appeal. That led Justice J Michael Eakin of the Pennsylvania Supreme Court to issue a six page ruling written entirely in rhyming verse.

It concluded:

"Sentenced on the other crimes, he surely won't go free,
but we find he can't be guilty of this final felony.
Convictions for the forgery and theft are approbated.
The sentence for insurance fraud, however, is vacated.
The case must be remanded for resentencing, we find,
so the trial judge may impose the result he originally had in mind."

("Approbated" means the original verdict is officially sanctioned by the Supreme Court.)

The full ruling is available at

Europe looks to boost insurance safeguards

Fri, 2 Dec 2011 20:01:00 GMT

European countries are considering introducing a standard guarantee scheme that applies in all EU member countries. But the logistics of how it would work, and the benefits for consumers, are still to be determined.

The EU already operates a system by which insurers from one country have the right to sell cover in all member countries. However, in countries making up a third of the population there is no guarantee scheme to protect customers against insurers going bust, while in the remaining countries the schemes vary widely.

There's also inconsistencies about which schemes operate. In some countries the policy comes under the scheme in the country where the customer lives, while in others the policy comes under the scheme in the country where the insurer is based.

The European Commission is currently working on a scheme that means all countries must have a scheme offering at least a minimum level of protection. However, the current proposal is that customers would only automatically be protected if they dealt with an insurer in their own country. If they took out a policy with a foreign firm, any protection would be dependent on the rules of the foreign country concerned.

There's also debate on exactly what

Advertising regulator halts "sexist" insurance ad

Fri, 7 Oct 2011 18:29:00 GMT

A specialist insurer has been criticised by the Advertising Standard Authority for running sexist advertising.

Aaduki specialise in insurance for photographers and video operators. It ran an ad in Amateur Photographer magazine featuring a woman wearing only briefs, holding a camera over each breast. The ad carried the slogan "Confused and don't know where to look?"

Following a complaint from a reader, the ASA investigated the issue. In its defence, Aaduki argued the ad was intended to be suggestive, Carry-On style humour. It noted that scantily-clad women were regularly seen in photographic magazines and likened it to tabloid newspaper images. The company also pointed out that scantily-clad men were a regular feature in its displays at conventions and exhibitions, and that it had previously used men in similar ads without problems.

The ASA upheld the complaint, saying the ad was "likely to be seen to degrade women by linking their physical attributes to that of the cameras." In reaching its decision, it emphasized the point that the image in the ad had nothing to do with the service on offer. The ruling means the advertisement cannot be used

2011 proving costly for insurers

Fri, 23 Sep 2011 19:34:00 GMT

Lloyds of London has declared 2011 the worst start to a year in the history of insurance.

The organisation runs a market for reinsurance, in which insurers take out protection against having to make unusually high levels of payout. Lloyds lost £697 million in the first half of 2011. It blamed this on an "unprecedented level of natural catastrophes" around the world including floods, tornadoes and earthquakes. The costs to insurers in that six months is already higher than all but two full calendar years in the past.

This has led to suggestions that insurers as a whole are underpricing risk. That could mean attempts to increase revenues, which could have a knock-on effect on consumer premiums. Although Britain has not been directly affected by the disasters, its possible international firms may want to spread the pain among customers worldwide. However, competition among UK companies may mean prices for most types of policy stay

Mobile insurance customers could be wasting their money

Sun, 31 Jul 2011 18:16:00 GMT

A mobile phone network claims as many as half of people who take out mobile phone cover could be wasting their money.

Giffgaff surveyed 2,000 customers and found the majority did not realise their phone was covered by a home insurance policy. As a result, it estimated that 5.7 million people who have policies could be wasting a total of £600 million a year.

Of course, this does assume that people with separate mobile policies would definitely ditch them if they knew about the home insurance cover, which isn't necessarily the case. That's because dedicated mobile cover usually offers some additional protection, for example covering the cost of calls made by a thief as well as the handset itself. That makes it particularly important to study the terms and condition of both home and mobile policies.

The survey also found that 78 percent of people with mobile policies have not made a claim. That figure is not entirely useful as it doesn't say how long the people have had the policies.

Insurers and police form new anti-fraud division

Fri, 22 Jul 2011 18:52:00 GMT

The police and the insurance industry are to set up a special force dedicated to tackling insurance fraud.

The unit will be operated by the City of London Police, but funded by the insurance industry. Launching next year, it will involve 35 dedicated fraud detectives and support staff. Although based in the Economic Crime Directorate, a police department, the new unit will have access to wider London police resources.

The scheme will be funded for its first three years by the Association of British Insurers, but will be subject to an evaluation review after two years.

The public-private partnership is based on an existing model which tackled cheque, credit and debit card fraud. In both cases, the industry funds the operation and helps set the priorities, but the police remains operationally independent.

Meanwhile the ABI says it is setting up a national insurance fraud register of known offenders. Member companies will be able to check applicants against the register, avoiding the obvious limitations in simply asking whether or not they've previously committed

Care home changes may create new insurance product

Mon, 11 Jul 2011 13:47:00 GMT

Proposed changes to rules on the funding of care home places could lead to a new market for insurance against the cost of fees.

A government commission has drawn up plans by which most people will be responsible for the first £30,000 to £50,000 of any care home bills, after which the government will pick up the tab. Only those with few savings or assets will be exempted from the contribution.

While the commission report suggests people be encouraged to save for the fees, with a possibility that this could be built into pension saving, the report also anticipates insurers will step in to offer a care home costs plan.

Such policies would be particularly attractive to insurers as the potential payouts would inherently be limited to the cap on the contribution. However, the high risk of needing care could mean high premiums, with a Daily Telegraph source estimating that it could cost £17,000 to buy protection if the cap is the full £50,000.

The newspaper also notes there is talk of a variant on insurance which would not pay the full costs of care, but rather would pay out the difference between fees in council-run and private

Customer share of claims gets more excessive

Wed, 29 Jun 2011 10:26:00 GMT

Figures released this week suggest a widespread increase in the excess charged by insurers on policy claims.

Analysts Defaqto looked at a range of insurance products and compared current deals to those of 2008. At that time one in four motor policies charged more than £75 excess when replacing a windscreen, but now almost half of companies charge such rates. Similarly, whereas a third of home insurance policies had an excess of £100 or more in 2008, half do so today.

It's worth noting that its possible many companies may have been a little below these figures in 2008 and thus breached the barriers with only a small increase. Of course, that would suggest a large number of companies having similar terms, showing the importance of shopping around, and not simply comparing firms based on price.

Consumer experts have also warned that some insurers apply excesses in what appears an unfair way, finding loopholes that allow them to apply multiple excess charges to a claim for a single incident. The BBC said the most extreme example was a case where a woodpecker made multiple holes in a garden shed: the insurer tried, but failed, to argue that it could apply an excess

Regulators warn over price comparison sites

Sun, 12 Jun 2011 09:22:00 GMT

The Financial Services Authority has warned price comparison websites to take particular care when suggesting policies to customers and make sure they are not inadvertently sold policies that don't cover their needs.

According to a letter sent by the FSA to several major sites, the sheer complexity of individual policies means the burden should be on websites to make sure the customer is eligible, rather than leaving that task to the customer.

Among other concerns the FSA expressed was that some sites have begun giving star ratings to policies, or listing some as a "best buy." It noted this risked such sites crossing the line between providing information and giving advice, which entails much tighter regulation.

The authority also argued that sites which list results in ascending order of price need to take greater care to make clear that the cheapest policy available won't necessarily be the best fit for the customer's needs. In particular sites need to draw more attention to exclusions and excess levels in the cheaper

Banks surrender on Payment Protection Insurance

Fri, 13 May 2011 15:23:00 GMT

The British Bankers' Association has formally conceded defeat in its legal battles over compensation for people mis-sold payment protection insurance.

A recent High Court verdict upheld the strategy of city watchdog the Financial Services Authority in demanding that banks actively contact those who might be eligible for compensation, using today's standards rather than those that applied at the time the policy was taken out.

The BBA, which had called that policy unjust, had until this week to appeal against that verdict, but has now announced it will not do so, saying it took the decision "in the interest of providing certainty for [its] customers."

The decision followed an announcement by Lloyd's Banking Group that it had accepted the court verdict and had set aside £3.2 billion to pay claims. This week Barclays followed that position, setting up its own £1 billion fund. Independent commentators say those sums are in line with an estimated £7 billion to £9 billion bill for the entire industry.

Campaigners welcomed the news and said it was now time for banks to begin processing claims without any further delays. Some banks had argued they were unable to do this while the legal action remained active,

Sony to offer free identity theft insurance

Sun, 8 May 2011 21:36:00 GMT

Video games giant Sony is to purchase an identity theft insurance policy for all users of its online gaming service PlayStation Network.

The offer follows a hugely embarrassing data breach in which personal details of up to 75 million customers were stolen by hackers. The company has been unable to rule out the possibility that credit card numbers were also stolen, but has reassured customers that those numbers were stored in an encrypted format, making it unlikely they'll be used in this way.

In the US, the insurance policy in question is offered by identity protection firm AllClear ID Plus and covers up to $1 million per user in costs, both in money stolen by identity thieves and in related legal costs. Users will not automatically be enrolled in the policy but will instead be sent a special code that gets them a 100% discount.

Sony says it will offer a similar policy as compensation to customers around the world. It's currently negotiating with insurers in each country to set up such a deal.

PPI ruling could unlock past claims

Fri, 22 Apr 2011 10:48:00 GMT

British banks have lost a court battle that could have a major impact on compensation claims for payment protection insurance misselling.

The High Court ruling means the Financial Services Authority will be allowed to demand that banks write to every customer who has bought PPI, an insurance policy sold alongside loans, to inform them that they have the right to complain if they suspect misselling.

The legal argument from the banks was that this was unfair as it effectively meant applying current tough laws against misselling to old cases where the policy was sold under looser rules.

However, the mailout itself isn't the most significant outcome of the case. Instead the conclusion of the legal battle should mean banks can no longer keep existing claims on hold by arguing that the situation was still legally uncertain.

The banks still have the right to appeal this specific court ruling within the next 21 days. However, it appears that regardless of what happens with the case, the FSA now has the power to demand existing claims are processed, with the threat of hefty fines or even a suspension of the bank's insurance

Co-operative insurance gets more ethical

Fri, 18 Feb 2011 14:25:00 GMT

The Co-operative says it is becoming the first ever "ethical" insurer. It's part of a wider plan to boost the ethical standing of the group.

The actual operations of the insurance policies won't change. Instead the move affects the underlying assets of the company: a total of £18 billion worth of investments, of which £1 billion specifically funds its insurance activities.

As part of the changes it will now no longer invest this money in businesses involved in range of activities such as the fur trade, tobacco production, extracting fossil fuels and selling weapons to countries with oppressive governments. The company says it was already sold off £80 million of existing assets in such businesses.

The asset changes are part of a wider plan that will include increasing sales of Fairtrade products and acting in a more environmentally responsible way. According to the Co-operative it has remained the most ethical major retailer, but is concerned that the gap between it and rival has been perceived as

PPI complaints increase, but responses hit the brakes

Fri, 11 Feb 2011 20:21:00 GMT

The number of complaints about mis-selling of payment protection insurance is still on the rise. But regulators say they firms are holding up their work in resolving the complaints.

PPI is an insurance scheme taken out alongside a credit agreement such as a credit card or mortgage, designed to cover the risk of the borrower losing their job. While the principle of the insurance itself is sound, there have been widespread complaints of firms either pressuring people into buying such policies at high premium rates, or misleading customers about the extent of the protection offered and the limitations of a policy.

Such mis-selling is now consistently the most complained about topic at the Financial Ombudsman Service, which recorded 24,995 such complaints in the last three months of 2010, a new record.

However, the British Bankers Association is currently bringing a judicial review into how the FOS and its parent organization should handle such complaints. According to the FOS that's led to some major lenders refusing to respond to complaints until the case is

Loan PPI ban date scheduled

Mon, 25 Oct 2010 20:35:00 GMT

The timetable for a ban on payment protection insurance being sold alongside loans has been set, with the measures likely taking effect on April 2012.

The Competition Commission says it will carry out a 30 day consultation later this year and expects to issue a formal order early in 2011. Under the planned timetable, from October 2011 all companies would have to supply details of their policies to organizations such as the Financial Services Authority to allow for price comparison tables. This date would also bring the introduction of rules to make advertising and marketing of policies clearer and easier to understand.

Then, from April 2012, it would no longer be allowable to sell policies at the same time as issuing the relevant loan. Instead there'd be a cooling off period to allow the borrower to consider whether to take out a policy and who to get it from.

There would also be a complete ban on policies where the customer paid with a single premium. Officials believe that system allows too little room for customers to change their minds later on, or ditch PPI if their circumstances

Banks banned from selling payment protection insurance with loans

Sun, 17 Oct 2010 18:28:00 GMT

The Competition Commission has confirmed a total ban on banks selling payment protection insurance to customers at the same time as issuing a loan.

The insurance policies are designed to cover the cost of loan repayments if a borrower becomes unable to repay through specific reasons such as ill health or unemployment. They have previously been controversial because of alleged mis-selling, for example lenders falsely telling borrowers the policy was mandatory.

Under the new rules, a lender must wait until seven days after confirming the loan before it can offer payment protection insurance. The idea is to reduce pressure on the customer at the point of sale and to give them more opportunity to decide whether they need the insurance and, if so, to shop around among other providers.

The rules had been on hold pending a challenge by Barclays which has now failed. Although the change will definitely go ahead, the Competition Commission has yet to decide when it will take effect, though that's likely to be at least one year away.

Although banks have criticised the changes, saying it may deter borrowers from taking out cover they really needed, the commission says any inconvenience to customers is a price worth

EU insurance discrimination ruling described as 'madness'

Sat, 2 Oct 2010 15:01:00 GMT

A senior figure in the European legal system has ruled that insurance companies should not be allowed to discriminate solely on the grounds of gender. It's been described by one British member of the European Parliament as "simply madness."

The ruling came from Juliane Kokott, the advocate general to the European Court of Justice, the highest court in the European court system. It's an advisory ruling, meaning judges in the court are expected to take it into account but don't legally have to abide by it. In practice, judges usually follow such rulings.

Kokott's ruling relates to a current exemption to European law on sexual discrimination that allows insurers to charge different rates to men and women based on proven statistics about their likelihood to make a claim. This is often used by insurers charging women less for car insurance because they statistically have fewer crashes, or less for life insurance because they statistically live longer (and thus pay premiums for longer.)

According to Kotter's interpretation of the law, an exemption should only be allowed where there is a specific and relevant biological difference between the genders, rather than just statistical patterns of

US insurer offers divorce insurance

Mon, 27 Sep 2010 19:05:00 GMT

An American insurer is now offering insurance against getting divorced. The "WedLock" policy is designed to cover costs such as legal fees and other costs of splitting up.

The policy works in a slightly unusual way: policyholders buy "units" of insurance, each of which costs $15.99 (a little over £10) a month and entitles them to $1,250 (£800) as and when they present a valid divorce document. The maximum policy size is 200 units, totalling $250,000 in cover.

Couples thinking of making a quick buck will be out of luck: the policy doesn't pay out unless the marriage has lasted at least four years. After that, the payout per unit rises $250 for each full year.

Although the policy is hardly romantic, some divorce lawyers in the US have suggested it might be an efficient way of funding a pre-nuptial agreement. Others noted it could help those who find themselves in a situation where they want to split up but can't afford to do

John Lewis brings insurance extras to the high street

Fri, 17 Sep 2010 17:58:00 GMT

John Lewis is to begin selling a range of insurance policies under its own brand. But those hoping to exploit the firm's "Never knowingly undersold" slogan may be disappointed.

The company has previously sold insurance, alongside products such as event booking and travel, through a separate firm known as Greenbee. That's now closing, but the insurance will continue under the John Lewis name. (Existing Greenbee policies remain unaffected.) The actual cover will be provided by firms including ACA, Fortis, Friends Provident and Sterling.

The retailer has already made clear that it won't be offering the cheapest premiums by any means. That might not seem to gel with it's well known slogan, but that's because many people forget the full promise is "Never kowingly undersold on quality, price or service."

It appears the price guarantee won't come into play as the company will argue that rival policies aren't comparable. To make sure that's the case, it plans to add additional extras to the policies. For example, the home cover includes garden contents, while motorists are protected against the cost of taking a cab when they don't have time to wait for a courtesy car, or the horrendous expense that ensues after putting

iPhone users urged to take out mobile insurance

Sat, 11 Sep 2010 12:17:00 GMT

One in five iPhone users have made an insurance claim in the last year according to one company offering cover. Mobile phone inurer Protect Your Bubble also reports that 45% of those claims were for accidental damage.

The company doesn't reveal the source of those statistics. It may well be that one in five iPhone users that have taken out insurance have made a claim, rather than it being one in five of all users.

While cracked screens, water damage and lost handsets are the main reasons for claims, the company says it has paid out on claims including an iPhone dropped off the side of a boat (presumably accidentally) and even one dropped into a pint of beer.

Meanwhile Aviva has noted that while student possessions may come under a parents' home insurance policy if they are stolen from student accommodation, they usually won't be covered for loss or damage when out and about. That's most likely to be an issue with expensive pocket-sized equipment such as phones.

People considering taking out specialist phone cover should check their home insurance policies carefully first. Home cover may protect against loss or damage, though it won't necessarily cover associated costs such as calls

Sportsman's hair insured for $1 million

Sun, 5 Sep 2010 18:19:00 GMT

An American football player is reported to have had his hair insured for $1 million. The policy is said to have been taken out by Procter and Gamble to cover his continued appearance in adverts for a shampoo brand.

Troy Polamalu of the Pittsburgh Steelers, who is of Samoan descent, has a mass of three-foot long curly hair which could perhaps be described as resembling a Tina Turner wig placed on a baby. He says he hasn't cut the hair since 2002.

It's not known exactly what the criteria is for a payout, which raises the possibility the policy is as much about publicity as genuine protection. The premium is likely to work out cheaper than paying for the equivalent amount of advertising.

However, there are legitimate risks of the hair being damaged. Because most players have hair short enough to be cased entirely inside a helmet worn during games, there are no specific rules against pulling hair. In 2006, one player used exactly such a tactic to prevent Polamalu

Bicycle theft remains prevalent

Sun, 29 Aug 2010 15:47:00 GMT

One in five cyclists have had their bike stolen in the past five years, while 8% have had at least three bikes stolen.

It may not be a matter of luck, however. Insurers Aviva note that 13% of bike owners leave the bike unattended and unlocked for short periods, for example when running an errand, while 17% put their bike out of sight but still leave it unlocked.

To promote their bike insurance, the company left five bikes around London in locations where they had received the most claims in the capital. One bike that had been left unlocked was pinched in just 20 minutes, while another locked to a parking meter survived four hours before being stolen.

Unfortunately for the firm's publicity, two of the bikes were left alone by thieves, including one that was left unlocked outside Euston Station for two days.

The real message is two-fold though. Whether or not you take out cover, locking a bike to a fixed object makes a major difference to security (and may be a must for insurance to be valid). And if you are considering cover, it's worth comparing the premiums with the replacement costs and then weighing up the likelihood of

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