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THE MAG CAMPAIGN FOR FAIRNESS AND TRANSPARENCY IN MOTOR
INSURANCE
Dear Fellow Motorcyclists,
You may by now know that my article on insurance published in the February/March edition of StreetBiker has been
picked up and supported by MCN. The ammunition for the campaign has been accumulated through riders’ responses to MAG's UK Theft and Insurance surveys, with co-operation
from NABD, the National Association for Bikers with a Disability.
A big thank-you goes to those of you who responded to our surveys. These have provided much of the basic
information that we needed to put a realistic campaign together.
If we now act together, promptly, we can bring about a massive change for the better in bike insurance. We
MUST strike while the iron is hot. Our argument is simple. We demand transparency. Specifically, we want:
1. Disclosure by insurance companies of the estimated profit
margin on each individual motor insurance policy at the time the quotation is given, in manner that conveys a fair and understandable picture to the would-be policyholder.
2. Disclosure of commissions by motor insurance brokers at the time a quotation is given.
3. Insurers to be compelled by law to publicly disclose premium income and claim
expenses showing separately expenses for:
• Third-party personal injury claims
• Third-party property damage claims
• Own vehicle damage claims
• Theft claims
• Amounts paid in legal fees and related expenses, court costs etc.
• Insurers internal administration costs
4. Insurers to be compelled by law to offer Third Party Only
cover, theft cover, and own-bike damage cover as separate items.
Motor insurance is compulsory. If you don’t buy it then you can’t drive. If you do drive
without insurance you can be fined, have your license endorsed, be banned from driving or even imprisoned. Given the element of compulsion the Government has a duty to its
citizens to regulate the profits of insurers. The most efficient means of regulation is a regime of enforced transparency, policed by government regulation, so you the consumer
can make an informed choice when you buy a policy.
PLAY YOUR PART – ACTION WE NEED BY YOU!
• Write to your MP. DO IT TODAY!
• To find your MP check the House of Commons Website on http://www.parliament.uk ……………………
• Wrap a letter of your own around the points above and ask him/her to support our campaign.
• Ask your MP to demand government-sponsored legislation for better regulation
of motor insurance along the lines described above.
Standard letters get ignored. Every letter needs to be personal for maximum impact. However, to give you an idea, a copy
follows of a letter I am sending to my own MP. All biker-MPs are being asked to support our campaign and MAG lobbyists will be campaigning at every level.
To succeed
though we need the support of tens of thousands of ordinary motorcyclists. This then is a call to action. Play your part and together we can bring about a fair and transparent
insurance market. Please copy your letters to MAG, so we know which MPs have been contacted.
Neil F. Liversidge,
Draft example letter to MP
Dear
The Motorcycle Action Group – MAG – is campaigning for greater transparency in the motor insurance market in general, and in
motorcycle insurance in particular.
Insurers continually bleat about the problem of uninsured drivers and the cost to the Motor Insurers Bureau, which is of course passed
on to honest premium paying policyholders. Complaints by insurers about claims for vehicle theft, genuine or otherwise, are also a frequent occurrence. These complaints by
insurers are of course nothing more than an attempt to condition us into paying ever-higher premiums for motor insurance.
Very few forms of insurance are compulsory.
Premiums for those insurances that are compulsory - such as Employer’s Liability Insurance, and Professional Indemnity Insurance for financial advisers, have increased
massively in recent years. The net result has been the closure of businesses, the loss of jobs, a reduction in profits and higher costs passed on to the consumer.
When a
form of insurance is compulsory, normal market forces are to a degree suppressed and there must always
be the suspicion that consumers are at the mercy of a price-fixing cartel.
Independent Financial Advisers (IFAs) who sell non-compulsory life insurance are heavily regulated for the privilege.
Motor insurers and brokers, by comparison, are very lightly regulated.
IFAs are also compelled to disclose commission up front. Motor insurance brokers work under no such
regulation. Likewise motor insurers make no disclosure of charges levied or estimated profit on the policies they write.
For consumers to benefit from a competitive market,
motor insurance needs increased transparency. A first step would be to compel brokers to disclose commissions. Insurers should likewise be compelled to disclose the profit margin
they expect to make on each individual policy at the point of sale. Premium income and claim costs should also be disclosed and a detailed breakdown given of what those costs
relate to.
Specifically, insurers should publish information on the amount paid in claims that relates to third party personal injuries, how much to third-party property
damage and how much to own vehicle damage.
We should also be told how much is being paid out to personal injury lawyers in legal fees since ambulance chasing was made a
national institution with the near-abolition of legal aid for personal injury cases.
Were Third Party Only (TPO) cover to be made more affordable, it is of course possible
that the problem of uninsured drivers would greatly diminish, as the basic level of legal insurance would be more readily obtainable.
Research into motorcycle insurance
premiums suggests that in many cases there is little difference in cost between TPO cover and Third Party Fire & Theft (TPFT). Why is this? If insurers are to be believed then
theft is a major factor in motorcycle insurance premium increases. If that is true then TPO should be substantially cheaper. It should be, but generally it isn’t. Many
insurers apparently refuse point blank to quote for TPO.
Insurers should be compelled by law to offer TPO. Couple this to hard disclosure of profit margins and there is a
prospect that we might see more realistic TPO premiums in short order.
Were it possible to buy different cover components as separate items, consumers would then be able to
shop around for the cheapest TPO policy and to buy additional cover for theft cover or own-bike damage cover elsewhere if they required it and could find it cheaper. It should be
possible, but it isn’t.
The financial services industry has already shown that disclosure of commission and charges can be done. It is also perfectly possible to buy
Life Assurance from one company, Critical Illness Cover from another, Income Protection Insurance from a third and Unemployment Cover from a fourth. Similarly it has always been
possible to buy buildings cover from one insurer and contents from another. The sophistication of modern computerised quotation systems can easily cope with disclosure of profit
margins.
Currently the Government in effect says, “We will make you buy this product. If you don’t buy it then you can’t drive. If you do drive without
buying this product then we will fine you, endorse your license, ban you from
driving or even send you to prison. But we will in no way regulate the profits of those selling
the product we are compelling you to buy.”
This is a patently unsafe and unfair arrangement. In the interests of a free and fair market in motor insurance it is high
time it was changed.
To summarise therefore, MAG demands legislation to bring about:
1. Disclosure by insurance companies of the estimated profit margin on each
individual motor insurance policy at the time the quotation is given, in manner that conveys a fair and understandable picture to the would-be policyholder.
2. Disclosure of commissions by motor insurance brokers at the time a quotation is given.
3. Disclosure of premium income and claim expenses, showing separately expenses for:
• Third-party personal injury claims
• Third-party property damage claims
• Own vehicle damage claims
• Theft claims
• Amounts paid in legal fees and related expenses, court costs etc.
• Insurers internal administration costs
4. Compulsory offering of Third Party Only cover, theft
cover, and own-vehicle damage cover as separate items by motor insurers
I would be grateful if you would please bring this to the attention of the appropriate Minister. If
you would like to put down an Early Day Motion, that would be very much appreciated. Likewise I ask you to please support any EDMs put down by other MPs to the same effect.
Yours sincerely,
Your Name
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