10 month policies

[CliveV]

Hi

We have just come accross the following situation with Elephant - a client was bemused to recieve renewal details after just 10 months not twelve.

On querying it we were told that was the "norm" and that the policyholder would be accruing a full 12 month NCB.

However, the cost is such that any advantage is more than wiped out by the lack of a full 12 months cover.

The guy is certain he was not told the true facts but on looking at the certificate and schedule of insurance it is quite clear that it is a 10 month policy.

So be warned - getting cover on the net is OK but check what you are getting and CHECK THE DOCUMENTATION when it arrives. The mistake here was this guy just filing the papers without looking at them.

 

[Guest]

Clive,

One has to wonder what 'scams' they will come up with next. However, a couple of points come to mind.

Is the Comapny you mention not just a broker, and so the actual insurance is registered with another Company? If so, the practice could become more widepread.

I also assume that the insurance is therefore basically being offered on a 'per month' basis, otherwise it seems difficult to shorten an annual policy into 10 months. If that is the case, then there could be a slight justification, although not for any misrepresentation of the facts. Could we see the advent of 6 month policies etc?? After all travel insurance is done on smaller time bases.

However, I do agree with your final comment. Check it out carefully.

 

[CliveV]

Good points SL - As far as I can ascertain the guy definitely thought he was buying a 12 month policy. This is born out by the fact that as far as I can see it is classified as an annually renewable general insurance contract.

The problem is that as all the data was web based there is no actual documentation on file.

As for Elephant being a broker - no they are not they are a division of Admiral Insurance.

I am not trying to justify my position as an IFA - (I do not deal with General Insurance in any case) but this is a classic case of Caveat Emptor - "Buyer beware" - as cover was arranged by the individual via the www. I am sure the fact that it was a 10 month policy was in the small print somewhere but it was not made clear to the guy.

An Independent broker has to ensure that any such departure from the "norm" is made this clear and documented. As such Caveat Emptor does not apply as you are essentially employing the broker to act on your behalf.

As I always say - I do NOT like Insurance Companies in general and people should realise that if they go for the cheapest/least financially strong company, then they better make darn sure they never have an accident!

 

[Guest]

My use of the word 'broker' was probably not really appropriate. What I meant was that the Company does not actually supply the insurance themselves, merely aquire it from another Comapny. For instance the CC offer Equity Red Star etc. Admiral also state on their website that the insurance they offer is underwritten by other Companies, so I assume a similar thing.

Anyway, don't want to offer any criticism of the very valid points you are making.

 

[CliveV]

AH Hah!

Time for the Anorak to go on - but seriously - I feel most people to not know who or what they are dealing with when buying insurance or taking financial advice of any sort.

There are now three types of adviser, Single Tied, Multi Tied and Independent.

A single Tied agent would be the equivalent to the man from the Pru, and now the multi tied agent can be an agent for more than one company but does not provide independent advice from the whole of the market.

An IFA does do this and can advice on any existing plans that you have. This is a crucial difference in that an IFA can help you with an existing plan but a Multi-tied agent cannot unless the existing plan is with a company he has an agency with.

Organisations like the CC are not advisers of any sort, they are "Introducers" and use their customer lists and publications as a marketing outlet for one or more Insurance Companies. In return they get a "slice" of the profit.

PCV allows *&* to distribute leaflets in its magazine and these leaflets carry a specific PCV tel number or ref so that the responses can be allocated and the correct monetary amount paid across to PCV.

Not one of PCV's finer moments or actions in my view.

 

[Guest]

Clive,

Sorry to take so long to respond, was away buying another tow car, the old one (it was 15 years old) was 'appropriated' by my son as his fell apart. What are parents there for???

I appreciate your points and accept the validity of them. However, I have personal bad experiences of IFA's from way back in the 80's when mis-selling was not then an issue. I lost over

 

[AlexN]

E & L is an advertiser in Practical Caravan and as such is charged a set advertising rate for each insert campaign. The majority of clients using inserts to promote their business code those inserts to enable them to establish which magazine is generating each response. Practical Caravan does not in this instance act as an introducer, nor does it earn any revenue from response generated. We make every effort to ensure that our advertisers claims are accurate, but we do not endorse their products or services. The relationship between the magazine and E & L is simply one of advertiser/media owner.

Alex Newby, Practical Caravan Editor

 

[Guest]

What Alex has said is correct, however, PC Magazine, like any organisation can refuse to offer facilties to any external organisation it feels is acting detrimentally to its business as a whole. Stating that you do not 'endorse the product advertised' is technically correct, but morally wrong if you are aware, or are made aware, that the organisation concerned is not representing itself, or the interests of your total audience accurately. Better to lose one advertiser than many subscribers methinks.

 

[CliveV]

Hi Scotch Lad

Sorry to here of the monetary loss you suffered. The problem back in the 80's was that their was no effective Regulation. The Financial Services Act came into force in 1978 and took years to be truly effective.

And even then you had the Banks and the Building Soc.'s managing to convince the then Government that buying a house was not "really" a financial transaction and so believe it or not Mortgage Advice only became regulated a year or two ago!

How could anyone consider getting a mortgage WAS NOT Financial Advice? It is only the biggest financial decision most of us make in our lifetimes. The result? - The highest sales of "Endowment" type mortgages in world and the fact that the Banks and the Building Soc's had tied agents whose commission earnings were huge had nothing to do with it of course!

Another debacle was the then Conservative Government "Tacking the Chains of your Occupational Pension" - Remember the Government TV adverts with the chains falling off this poor guys shoulders?

Of course the new legislation had some advantages in that it stopped a pension scheme "Freezing" (No growth) a members benefits if he left the company - but it did open up a free for all of pension transfers.

Companies were closing left right and centre, the Minors and other workers were being laid off in their thousands. Result - "Allied Crowbar" and "Shabby Life" to name the worst offenders went out and offered these poor guys jobs! The aim was to transfer out benefits into personal pensions now that the Government had changed the rules to allow it.

Both of these companies had huge turnover of "advisers" because as soon as these poor guys ran out of old colleagues to see they were fired.

Believe if or not, the turnover of sales staff at Allied Crowbar was SO HIGH, in the mid 1980's that one of the guys that I worked with calculated that if it continued unabated, by the year 2000 every person in the UK of working age would have worked for them at least once!

Your scepticism is healthy - do not loose it. However, the regulator is far better now than then - but even so - it still enabled The Equitable Life to pull the wool over its eyes!

It took the Law Lords to bang heads together and say "No! - you cannot do this to your policyholders" before the FSA really took notice.

My advice (but I am biased because this is how we work and both we and our clients like it) is to choose an IFA that charges a fee. It means that you as the client get an invoice for my time just like an accountant or architect, but it means that unlike the "Tied Agent" adviser in your bank, Estate Agent or whatever, my remuneration is not based on a product sale.

Some clients did not like it when we converted a few years ago. One of them even told me that he "would never pay for Financial Advice" - He does of course - he just has no idea how much or of the plan was chosen because of absolute suitability or the rate of commission paid!

 

[Guest]

Hi Clive,

Has you rugby match finished then? Who won?