FCA demand a mainstream Motor Insurer examines all Total losses last five years

[Dustydog]

As a result of a number of complaints to the Financial Ombudsman Service regarding valuations on Constriuctive total losses a non broker Insurer is having to recalculate all amounts paid.
I recall Audio Rob had issues with the level of pay out? It is expected the Insurer concerned where appropriate will have to pay up the shortfall plus “interest”.

 

[audiorob]

Pity the company in the report was not the one I was insured with! Would be nice to get a couple of grand bonus payment after all this time! The FOS allowed the payment I received because it was midway in the span of trade guides although at the time of the accident used prices were on a high!

 

[Raywood]

Not sure why this is but I suspect having the engineers valuation they have offered less and then negotiated up if the customer complained.

 

[Buckman]

Our current vehicle which is 5 years old is insured for the price that we paid for it last year and the premium reflects this. If the insurance company is happy to take the premium, then they should pay out that amount that it is insured for and not their market value a year later.

The insurance companies seem to take a general market value as per a book and do not take into account things like the vehicle that has a full dealership service history, has had the paintwork treated etc all of which increases its value in the marketplace.

 

[audiorob]

Sadly as I found to my cost the sum I received in no way matched the second hand prices at the time of the accident, and two appeals through the Ombudsman were not supported as they were happy to accept that the pay-out was middling for the trade guides. Prices have eased a bit since then but you are right Buckman as our car was pristine and very low mileage with full service history.

 

[Dustydog]

Sadly as I found to my cost the sum I received in no way matched the second hand prices at the time of the accident, and two appeals through the Ombudsman were not supported as they were happy to accept that the pay-out was middling for the trade guides. Prices have eased a bit since then but you are right Buckman as our car was pristine and very low mileage with full service history.

It was the FOS that referred this subject to the FCA because of the high frequency of same subject complaints like yours. The Insurer currently under scrutiny is being used as a test case. If they are found wanting then I expect the FCA will ask the FOS to reopen all other cases including Audiorobs.
I don’t. Know the timescale but this is one worth watching.

Buckman, you are lucky,.Other than cherished older vehicles very few insurers will offer an agreed value basis.
Ironically since C19, car market values have increased . Those on a market value basis have done well😉

 

[Buckman]

It was the FOS that referred this subject to the FCA because of the high frequency of same subject complaints like yours. The Insurer currently under scrutiny is being used as a test case. If they are found wanting then I expect the FCA will ask the FOS to reopen all other cases including Audiorobs.
I don’t. Know the timescale but this is one worth watching.

Buckman, you are lucky,.Other than cherished older vehicles very few insurers will offer an agreed value basis.
Ironically since C19, car market values have increased . Those on a market value basis have done well😉

On our previous Jeep although it was a 2012 and we had owned it for 3 years, in 2022 it was insured for market value however the market value increased by nearly £4k so I reinsured it paying a bit extra. This was accepted by the insurance company.

Our current Jeep was valued at nearly £5k more than we paid for it which is probably why the insurer was happy to accept the value rather than the one offered by the comparison site.

Checking today on Autotrader the price is actually a bit above what we paid last year in August for similar cars.

 

[otherclive]

On our previous Jeep although it was a 2012 and we had owned it for 3 years, in 2022 it was insured for market value however the market value increased by nearly £4k so I reinsured it paying a bit extra. This was accepted by the insurance company.

Our current Jeep was valued at nearly £5k more than we paid for it which is probably why the insurer was happy to accept the value rather than the one offered by the comparison site.

Checking today on Autotrader the price is actually a bit above what we paid last year in August for similar cars.

Which insurer do you use?

 

[Raywood]

Our current vehicle which is 5 years old is insured for the price that we paid for it last year and the premium reflects this. If the insurance company is happy to take the premium, then they should pay out that amount that it is insured for and not their market value a year later.

The insurance companies seem to take a general market value as per a book and do not take into account things like the vehicle that has a full dealership service history, has had the paintwork treated etc all of which increases its value in the marketplace.

Unfortunately this is not possible as where the insured level is too high it would encourage fraud. At the same time the insurer is required to deal fairly with the customer which means a fair offer.

 

[Buckman]

Which insurer do you use?

On the previous Jeep John Lewis underwritten by Covea plc and currently Axa. Covea would not insure the current vehicle due to its value althouhg I have well over 25 years NC?

 

[Buckman]

Unfortunately this is not possible as where the insured level is too high it would encourage fraud. At the same time the insurer is required to deal fairly with the customer which means a fair offer.

However if the motor vehicle is valued at about £10k and you insure the vehicle for £12k, many insurance companies are happy to charge you the premium. However when it comes to paying out on a claim, they baulk and offer you reimbursement at a lower level than even the market rate at the time of the claim although the vehicle is still valued at £10k and you had it insured for £12k.

A friend had this issue and was offered nearly £4k less than the market value of the vehicle. He then took it to FOS and the one letter from FOS and the insurance cough up the full amount. Why should people have to go to these lengths to obtain what they had paid for?

 

[Dustydog]

However if the motor vehicle is valued at about £10k and you insure the vehicle for £12k, many insurance companies are happy to charge you the premium. However when it comes to paying out on a claim, they baulk and offer you reimbursement at a lower level than even the market rate at the time of the claim although the vehicle is still valued at £10k and you had it insured for £12k.

A friend had this issue and was offered nearly £4k less than the market value of the vehicle. He then took it to FOS and the one letter from FOS and the insurance cough up the full amount. Why should people have to go to these lengths to obtain what they had paid for?

Where available fixed market value policies invariably cost more. But say we all took out such a policy, doubled the value ,then yes , I see Ray’s point on fraud.

Buckman‘s last paragraph is the main reason why the FCA have taken such a drastic step. Like his friend , hundreds of complaints have been made to the FOS.. Clearly some Insurers attitude to Total loss valuations has left a lot to be desired.
Demanding an Insurer re evaluates five years claims is certainly unusual. I suspect other Insurers are currently looking at themselves internally on the same subject.
Watch the press for updates. Maybe not too late for Audiorob and Buckman’s friend🤞🤞

 

[Buckman]

Where available fixed market value policies invariably cost more. But say we all took out such a policy, doubled the value ,then yes , I see Ray’s point on fraud.

Buckman‘s last paragraph is the main reason why the FCA have taken such a drastic step. Like his friend , hundreds of complaints have been made to the FOS.. Clearly some Insurers attitude to Total loss valuations has left a lot to be desired.
Demanding an Insurer re evaluates five years claims is certainly unusual. I suspect other Insurers are currently looking at themselves internally on the same subject.
Watch the press for updates. Maybe not too late for Audiorob and Buckman’s friend🤞🤞

If a person went stupid I can see the point. In our case with current Jeep comparison site valued it at about £4k less last year in Aug. If we had accepted that valuation and the vehicle had been written off, we woudl be well and truly out of pocket. Currently our vehicle has a lower mileage than those on Autotrader and also has a full dealership service history so if it would have been undervalued if we made a claim.

Sadly my friend's experience was a couple of years ago and he has sadly passed on. He was not at fault either as he was stationery when other driver ploughed into his car.

This rip off policy by insurance companies is not confined to the UK as when we had a car which was a Mini stolen in SA, what they offered us was a joke, but we had no choice then. It was never recovered.

A few years later I had my marked sign written company car stolen from a car park outside the pub, agin the payout was a joke. The company car was only about 3 years old. It was recovered upside down in a ditch and written off.

 

[otherclive]

When our Saab 9000 was written off the insurance offered a pitifully low valuation, which I rejected. I then trawled the internet to see what dealerships were asking for similar cars. I then sent a letter plus the results of the internet trawl to Norwich Union explaining that I was not prepared to accept their offer and would go to the FOS if we could not get agreement. They responded with a 50% increase which put it much closer to dealership asking prices less any negotiated reduction on purchase. So on that basis we settled.

insurers always seem to be trying it on. Our home renewal just came in and it’s less than last year. But a new condition says we’ve lived in the house fir five years or more and the previous house fir five years or more. Yet last year I only had to be a UK resident for 3 years or more. So I rang and explained that we have only been here for four years. Net result a £25 increase in premium. I’ve said that is unreasonable so they are now checking back to April 2019/phone call records to see how the transfer between the two houses was handled. All for £25!

 

[Raywood]

Having dealt with the claims the main problem is with the cheaper options where the insurers have cut prices to the bone and to live with that they have to be difficult on claims. Basically the company will have an engineer value the vehicle usually based on a Glasses Guide figure but to cut costs some will offer below this and see what they can get away with. The answer is not wholly avoid the very cheap but it is a start as in most cases you get what you pay for and cheap means cheap is the most likely to e troublesome.
I am surprised at the comment on Norwich Union although that name as not been used for many years, so that must be a very old claim.

 

[ProfJohnL]

Running an insurance company is a business, and good business practice is to keep costs as low as possible, and sell as high as possible, and keep liabilities as small as possible. It's therefore improbable an insurer will immediately offer more than they can get away with to settle a claim.

 

[Buckman]

Having dealt with the claims the main problem is with the cheaper options where the insurers have cut prices to the bone and to live with that they have to be difficult on claims. Basically the company will have an engineer value the vehicle usually based on a Glasses Guide figure but to cut costs some will offer below this and see what they can get away with. The answer is not wholly avoid the very cheap but it is a start as in most cases you get what you pay for and cheap means cheap is the most likely to e troublesome.
I am surprised at the comment on Norwich Union although that name as not been used for many years, so that must be a very old claim.

Many insurance companies do not realise that the Glasses Guide is just that and only a guideline and not set in stone. If your car is written off, you should be claiming for the value of replacing that vehicle with a very similar vehicle bought from a trader or off a website like Autotrader i.e. condition, service history, mileage, age etc.

 

[otherclive]

Having dealt with the claims the main problem is with the cheaper options where the insurers have cut prices to the bone and to live with that they have to be difficult on claims. Basically the company will have an engineer value the vehicle usually based on a Glasses Guide figure but to cut costs some will offer below this and see what they can get away with. The answer is not wholly avoid the very cheap but it is a start as in most cases you get what you pay for and cheap means cheap is the most likely to e troublesome.
I am surprised at the comment on Norwich Union although that name as not been used for many years, so that must be a very old claim.

The claim on the Saab write off was circa 2006. So under valuing isn’t a new practice. ☹️

 

[Dustydog]

Having dealt with the claims the main problem is with the cheaper options where the insurers have cut prices to the bone and to live with that they have to be difficult on claims. Basically the company will have an engineer value the vehicle usually based on a Glasses Guide figure but to cut costs some will offer below this and see what they can get away with. The answer is not wholly avoid the very cheap but it is a start as in most cases you get what you pay for and cheap means cheap is the most likely to e troublesome.
I am surprised at the comment on Norwich Union although that name as not been used for many years, so that must be a very old claim.

Ray,
Spot on, must be very old.When did you last see a Saab 9000?😁
My old CU office in Central London is now a high value block of penthouse flats.

CGU was created by the merger of General Accident and Commercial Union in February 1998. CGU then merged with Norwich Union in May 2000 to form CGNU, which changed its name to Aviva in 2002.

 

[Dustydog]

Running an insurance company is a business, and good business practice is to keep costs as low as possible, and sell as high as possible, and keep liabilities as small as possible. It's therefore improbable an insurer will immediately offer more than they can get away with to settle a claim.

Very true Prof and frankly not cricket. Don’t forget Insurance Companies are FCA regulated . Hence why the FCA have taken the current action against the Insurer subject of this thread.
The final answer will mean only one thing. We the punter will face higher premiums🤬

 

[otherclive]

Ray,
Spot on, must be very old.When did you last see a Saab 9000?😁
My old CU office in Central London is now a high value block of penthouse flats.

CGU was created by the merger of General Accident and Commercial Union in February 1998. CGU then merged with Norwich Union in May 2000 to form CGNU, which changed its name to Aviva in 2002.

The Norwich Union brand name was phased out from 2008 over two years.

 

[Dustydog]

The Norwich Union brand name was phased out from 2008 over two years.

Branding is of course different to stock market listings. Interestingly in very recent years General Accident name has been resurrected in regard to their Telemetrics motor insurance . NU has also had a come back. My old lot remains dormant in the UK