Written evidence from swiftcover.com (CMI
32)
1. ABOUT SWIFTCOVER.COM
Employing over 1,000 people, www.swiftcover.com started
trading in June 2005 and was born out of a desire to revolutionise
the general insurance market. In addition to car insurance, swiftcover.com
offers insurance products for home, travel as well as pet cover
and is Britain's only insurance company without call centres.
This allows cost savings which are passed directly on to the customer,
keeping premiums low.
In 2007, AXA UK acquired swiftcover.com. It is now
a wholly owned subsidiary of AXA Insurance UK PLC which forms
part of AXA Group.
In 2008, swiftcover.com achieved over half a million
live policies and, in May 2009, it sold its one millionth policy.
It is considered to be one of the fastest-growing insurers in
the UK.
2. OVERVIEW
Following on from the initial consultation in November
2010, swiftcover.com is submitting its findings to foster lower
premiums for UK motorists.
Before doing so, recognition of the key areas raised
by the Committee is important. These include:
- ¾ Uninsured
drivers.
- ¾ Insurance
fraud.
- ¾ Claims
management firms/personal injury claims.
- ¾ Legal
costs.
swiftcover.com recognises and supports the important
action needed to address these fundamental issues and welcomes
change for the benefit of UK motorists and insurers. However,
there are other key areas which need consideration. These include:
- ¾ Vehicle
recovery fees.
- ¾ Further
areas of insurance fraud.
- ¾ Further
areas of claims management firms.
- ¾ Insurance
policy verification practices.
3. SWIFTCOVER.COM
EXPANDS ON
EXISTING ISSUES
Building on the insurance fraud issues raised by
other parties, swiftcover.com has highlighted some of its own
programmes which are currently in practice to help lower premiums.
swiftcover.com is tackling insurance fraud:
- ¾ swiftcover.com
operates a dedicated department to investigate all suspected fraud
and all reported car thefts.
- ¾ The
team has been in place for two years.
- ¾ It
has allowed the business to save at least £4 million this
year by rejecting fraudulent claims during this period.
- ¾ By
adopting this tactic as well as other anti-fraud measures, swiftcover.com
will save all of its policyholders an average of £10 per
policy next year.
However, more support and co-operation across the
industry in such strategies would be welcome. swiftcover.com believes
that other insurers should be as proactive and invest accordingly
in fighting potentially fraudulent claims. The insurer also believes
that stricter action is needed by the courts in bringing these
fraudulent claimants to justice rather than simply writing off
the claim and allowing the fraudster to go free and potentially
re-offend.
Credit hire
The detrimental rise of personal injury claims and
the growth of claims management firms in the car insurance industry
is well documented. However, swiftcover.com is also proactive
in challenging the exorbitant fees being billed by companies known
as credit hire companies.
swiftcover.com also operates a number of other initiatives
in order to allow the company to maintain its low premium offer.
This has become more and more challenging each year.
4. OTHER AREAS
FOR DISCUSSION
4.1 Recovery fees
Between August and September 2010, swiftcover.com
began researching the fees collected by local police forces for
collection of vehicles which have been deemed unfit to drive following
an accident or breakdown.
Typically, when a car has been classified in this
way, the regional police force will arrange for a local recovery
firm to collect the vehicle. For doing so, the police will collect
a "commission" fee.
When the insurer - swiftcover.com or another - is
told about the collection, it has to arrange a further collection
of the vehicle from a recovery centre, owned by a third party.
This incurs additional, unnecessary costs to the insurer and therefore
policyholders which can be avoided.
The results were startling with huge disparity across
the UK. Of the nine police forces approached through the Freedom
of Information Act, seven revealed their fee structure to us.
Two declined on grounds that it would "damage their third
party relationships". The results are as follows:
| Police Force |
Referral Fee | | Referrals in 2009
| Referrals in 2008 |
| West Midlands Police | £25
| | 24,891 | 28.952
|
| Northumbria Police | £21
| | 10,220 | 9,763
|
| Thames Valley | £6 |
| 15,716 | 19,641
|
| Lothian & Borders Police | £6
| | Information not held |
Information not held |
| South Wales Police | £5
| | 10,067 | 11,951
|
| Greater Manchester Police | Decline
| [9]
| 32,855 | 37,884 |
| Merseyside Police | Declined
| [10]
| 1,263 | 1,529 |
| Metropolitan Police | No charge
| [11]
| N/A | N/A |
| Strathclyde Police | No charge
| [12]
| N/A | N/A |
It is evident that a simple recommendation on best practice is
needed. We, through our public relations programme, have worked
hard to highlight the issue to the public; however, the police
forces need to adopt a new way of working. There will be significant
savings to the industry by requesting the owner of the vehicle
to notify their insurer of the need for collection instead of
third party involvement - understanding that some smaller insurers
may not be able to offer this kind of service.
4.2 Fraud
4.2.1 Low-impact claims
Small injury claims caused by low-impact accidents have been a
growing trend due to the growth in the claims management sector
as well as the everyday financial pressures of life. It is important
to highlight the effects of the regionalisation of successful
claims and, therefore, the need for a polarised approach.
This problem is nationwide but is more evident in specific regions.
Many insurers know better than to dispute a small injury claim
simply because it would be uneconomical and a waste of resource,
even when it is clear that the injuries claimed are simply impossible.
This has had a significant impact on premiums both nationally
but more specifically, on those regions seen as "soft touches".
Lawyers of claimants intentionally bring cases to specific courts,
because they know that they are more likely to get a favourable
result.
swiftcover.com would welcome debate on this area and would be
willing to set out an action plan to tackle the issue if the Committee
wishes it to.
4.2.2 Passenger numbers
The average number of passengers per accident per car has risen
from 1.1 persons to 1.7 persons in recent years. There may be
a number of factors for this such as an increase in younger drivers
transporting fellow youngsters; however, a rough rule of thumb,
whereby a typical claim per person runs at £5k, means the
additional "half a person" has added approximately £2.5k
to each claim, which has inevitably had an effect on premiums.
4.2.3 Verification practices
Currently, when an individual applies for car insurance, there
is no way of checking that vital information - such as holding
a driving licence - can be verified by an insurer unless that
person is involved in an accident. The DVLA hold this information
but are reluctant to give out licence info because of the Data
Protection Act.
This is a major hurdle for insurers and having this barrier in
place means that insurers are forced to treat every applicant
as a risk as there is no way to check driving history. Consequently,
premiums across the board have increased to accommodate that risk.
It means that those millions of honest drivers across the UK are
victims of those who apply fraudulently. swiftcover.com would
like the DVLA to work in partnership with them and other insurers
and to provide information on type of licence and the convictions
they have on record.
If a verification model was in place, all drivers would be evaluated
fairly which would allow "good/truthful" drivers to
be rewarded with lower premiums. Again, this is a simple issue
which can be rectified by introducing a free of charge, automated
checking process between insurers and applicants.
5. INSURANCE BOOKS
The rise in claims management firms is again well documented.
However an area swiftcover.com feels strongly about hasn't been
raised to date. The fundamental practice of these types of businesses
is somewhat questionable. The first task they face is to obtain
information of individuals who have been involved in an accident
in the past three years. They do this through a number of means
whether that's random text messages or e-mail to consumers, or
even through direct requests with insurers requesting data.
swiftcover.com has been approached by a number of these firms
and all such requests have been strongly rejected.
The practice of obtaining clients by claims management firms should
be questioned.
- ¾ The
tactic of approaching insurers should be made illegal.
- ¾ The
tactic of encouraging those involved in accidents to re-evaluate
their physical condition, in some cases years after the close
of an incident case, should be strongly discouraged or made illegal.
- ¾ At
the very least, once a claim has been concluded and closed, it
should not be allowed to be reopened due to a claims management
firm's request.
There needs to be a review of these types of companies
alongside strict practice guidelines. With so many claims now
being reopened, insurance companies have had to reopen their financial
yearbooks which has had a financial impact on the industry. Therefore
a rise in premiums is necessary to rectify this financial disparity.
6. CONCLUSION
There have been some fundamental issues raised by
the Committee but there are further issues which, if addressed,
would have a significant positive effect on car insurance premiums.
swiftcover.com has been and always will be active
in seeking ways in which to keep premiums low and the above outline
of issues, alongside suggestions to tackle such issues, should
have a positive effect on costs to the driver.
We look forward to your feedback. We would welcome
further involvement with helping to reduce premiums for the benefit
of UK motorists.
December 2010
9 West Midlands Police stated that not all of the referrals
for 2008 and 2009 attracted a referral fee. Back
10
Greater Manchester Police confirmed that it does receive referral
fees, but refused to disclose the amount, stating: "The most
persuasive reason for disclosure is accountability, which needs
to be compared to the strongest reason for maintaining the exemption,
which at this time is the damage to the Commercial Interest of
Third Parties. Merseyside Police also confirmed that it receives
referral fees but refused to disclose the amount for the same
reasons. Back
11
Neither Metropolitan Police nor Strathclyde Police receive referral
fees from recovery companies. However, the cost of recovery by
third party firms in these areas will still be passed on to insurance
companies. Back
12
Neither Metropolitan Police nor Strathclyde Police receive referral
fees from recovery companies. However, the cost of recovery by
third party firms in these areas will still be passed on to insurance
companies. Back
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