BIBA 2014 Manifesto

Tracking trends

The cost of living is high on the political agenda, so in order to track the cost of insurance and produce insight into the wider role our sector plays in the health of the UK’s economy, a new BIBA-Acturis Insurance Price Index has been developed.

This will track trends and movements from more than £4bn worth of insurance premium. It will be important for the sector to identify where insurance premium trends are occurring and how BIBA can then work with the government and industry, and brokers can work with their customers, to tackle any issues so we can deliver a fair deal for customers.

The index includes three ‘shopping baskets’ to represent insurance buyers: a consumer basket including a motor and home policy; a small and medium-sized enterprises (SME) basket made up of a package policy and a commercial vehicle; and a larger commercial basket made up of a commercial combined, fleet and combined liability policies.

This will give commentators a helpful insight into the UK’s insurance market.
The research has shown that the average premiums for an SME insurance shopping basket have increased by 11.5% since 2010.

This reflects the increasing premiums for commercial vehicle insurance, which rose nearly 18% in 2011, then increased by 3.7% in 2012, and reduced by 2.3% in 2013 to bring commercial vehicle policies around 19% higher than 2010 levels.

The consumer shopping basket has a 2% reduction in average premiums compared with 2012. Overall, the average premium is 7% higher than 2010 but started to reduce in 2013 following peaks in 2011 and 2012.

Changes in the consumer shopping basket reflect increases in motor premiums during recent years but show that industry initiatives are having a positive impact on premiums.

For example, the industry’s commitment to reduce uninsured driving has enabled police seizures and other enforcement measures to bring about a near 50% reduction since 2005.

The third basket within the index shows average premiums for the larger commercial shopping basket have been mostly flat since 2010, with a slight increase of around 1% over the three-year period.

Pastures new

The manifesto also covers a number of new areas – including the BIBA-led claims working group. This involves the Association of British Insurers, the Chartered Institute of Loss Adjusters, insurers, brokers and many others, including AXA, which are helping to identify common reasons why claims are repudiated in the UK market and how such losses can be avoided through risk‑reduction action.

This will significantly enhance brokers’ ability to help their clients reduce risk, and avoid damaging uninsured losses and professional indemnity claims against brokers.

BIBA is also calling for the government to look at reviewing appropriate information for customers. Brokers are required to give enormous amounts of information to customers, but the more they get, the less inclined they are to read it.

Similarly to when an individual receives a prescription from a doctor, there should be more focused and simplified disclosure, cutting out unnecessary red tape and ensuring customers more clearly understand the key facts and significant exclusions on their policy that apply to them.

This is BIBA’s biggest and most ambitious manifesto to date, and brokers can be assured we will do everything we can to deliver for members in 2014.  

Graeme Trudgill is executive director at BIBA