What rising premiums mean for the insured in 2012 (apart from higher costs)
Like other businesses insurance companies are suffering the same loss of investment income and investment opportunity.
This statement is a generalisation and, of course there are exceptions but in simple terms, without the same investment returns premiums have to go up throughout the industry.
3 ways in which insurance companies will offset rising premiums:
Giving less cover for the same premium is not as effective as increasing premiums but it is a strategy employed by some insurance companies. Policyholders should ask their brokers specifically to check that this does not apply to their policy at their next renewal.
Increasing the self-insured excess
Increasing the amount the insured pays before the policy pays saves the insurer some money; not a lot (unless the increase is three-fold or more - and that is very rare) but it all helps. Policyholders should NOT be tempted to voluntarily agree to a higher level of self-insured excess to reduce their premium without first checking with their broker or insurance adviser. Usually it is not financially worth it.
Not paying out claims
This is the most serious and most traumatic for the insured but it saves the insurer the most money.Some insurers are now actively seeking to find any technical reason not to pay a claim. Brokers throughout the UK are experiencing this to a greater or lesser extent according to which insurers they deal with but they are often powerless do anything about it.
The most usual reasons for denying cover are:
- Breach of Condition requiring immediate notification of loss or claim
- Failure to disclose material information or fact, concerning the risk
- Mis-statement in the proposal form see Case Study
- An exclusion in the policy
- There are also several other reasons that can be given, of a more technical nature, but they are less common.
Be aware this year and seek specialist advice for all insurance cover.