Fortis Could Be Eurozone’s First Major Credit Crunch Victim
Financial group Fortis looks to be headed toward the same fate as many US and UK insurance and banking giants in the past two weeks. The Belgian-Dutch banking and insurance business may be sold to ABN AMRO Dutch banking subsidiary.
The Belgian government will guarantee all retail deposits says a leading minister. Belgian law stipulates only the first 20,000 euros, around £16,000, in bank accounts are insured. Insurance policies here in the UK should be covered by the Financial Services Compensation Scheme.
According to the FSCS, if a life insurance company went bust, the FSCS can “try to arrange continuity of insurance for eligible policyholders by seeking to transfer ongoing policies to another insurance firm”. Policyholders would be protected with a compensation scheme offering 100% protection on the first £2000 and 90% of the remaining value (in a liquidation) of a claim or policy.
The fate of Fortis’s future will soon be known. Last week its shares nearly collapsed falling by as much as one-fifth however back in July Fortis alarmed markets by declaring it had a share issue and cancelled its dividend.
Nearly half of Belgium bank with the group.
Car Sharing – Are You Annoying?
Carrying on from our other article on car sharing, the question is asked, “are you annoying” when it comes to sharing a car ride to work, to the pub, or wherever you may go when car sharing.
For the most part, people sharing a ride is an effective way to save money on petrol, lower emissions, keep the miles down on your car, and so on. However, some behaviours are turning drivers off due to a lack of basic etiquette from passengers.
An example would be lateness. The AA says 72% of people say this is the most annoying thing a car sharer could do. Imagine being late because you were nice enough to pick someone up who wasn’t ready. You figure you are already at their home so may as well wait a few extra minutes only to realise by the time you get to work, you in fact are the one that is late. Up to 61% of those polled by the AA said annoying behaviour would be a major reason people would stop car sharing.
Below you’ll find a list of the most annoying habits of passengers who car share:
- Lateness – 72%
- Criticising driving – 42%
- Putting feet on the dashboard or seat – 39%
- Speaking loudly on your mobile – 35%
- Eating in the car – 29%
So, are you annoying? Would you put up with this behaviour and would this stop you from continuing to car share? Have you any nightmare experiences of car sharing? Let us know
High Petrol Prices Ignites Car Sharing Trend
Recent research by the AA Insurance says Britons are heading becoming a car sharing nation due to the high cost of petrol prices.
Figures show almost half the population that was surveyed are considering car sharing yet only about 11%, or 1 in 10, admitted to actually sharing the drive.
As petrol prices continue to add pressure on the family budget, more and more people are seriously considering splitting the costs by car sharing. The AA says of the 5.5 million Brits that already do car share do it mainly to save money. About one third say they car share for environmental reasons such as reducing carbon emissions.
The AA car insurance group strongly believes in car sharing as a viable way to reduce pollution, save on petrol, and lower congestion on our nation’s roads. It is suggested that drivers should check insurance policies as some car insurers may not cover you in cases where you might car share to go to business meetings. You may need to upgrade to ‘occasional business use’ if that is the case. Also, be respectful of others, particularly when sharing with people you may not know very well.
AA Reports Latest Road Casualty Figures
A recent report by AA car insurance said that one third of fatal road accidents last year were caused by loss of vehicle control and temperament, asking drivers to pay more attention to the road.
For example, crashes among young drivers, in particular males, could mostly be attributed to driving speeds and behaviour behind the wheel. However, overall deaths on the road fell to its lowest levels since records began (1928) and the majority of causes were related to driver error.
The question arises, are these errors simple mistakes or deliberate risks taken by foolhardy drivers?
Another major factor in road deaths can be linked to drink and drugs whilst operating a vehicle. The AA reports deaths from driving over the legal alcohol limit dropped last year to 460, which was an 18 per cent improvement compared to 560 deaths in 2006.
Whilst government figures from drug induced road fatalities were relatively low at 64 in 2007 and 51 in 2006, outside evidence such as surveys and views from the police suggest driving under the influence of drugs is as big a problem as drink driving.
The AA president Edmund King had this to say,
“Drivers and indeed many police officers indicate to us that drug driving is a major problem but the severity of the problem is not reflected in the official figures. We must question whether the true extent of the drug/driving problem is being picked up. It is far easier for an accident to be attributed to drink as alcohol is easy to detect through smell and indeed breathalyser technology. We would welcome a fuller investigation into the true extent of drug driving.”
Washington Mutual Taken Over By JPMorgan
Washington Mutual collapses under the continued onslaught of economic pressures in the largest US bank failure in history.
JPMorgan Chase took over the failed savings and loan giant for a $1.9 billion deal announced by the US FDIC on Thursday. Washington Mutual, also known as WaMu, was the latest bank to fail due to heavy exposure to the US sub-prime mortgage crisis. Shares plummeted 85% this year leading to speculation of, and now reality to, financial ruin.
JPMorgan Chase acquired the assets, deposits as well as certain liabilities of the failed bank which had approximately $309 billion in assets. Earlier in March, JPMorgan had taken over Bear Stearns.
Purchasing WaMu was a strategically sound move for JPMorgan. Chairman Jamie Dimon said, “This deal makes excellent strategic sense for our company and our shareholders”.
Washington Mutual had approximately $188 billion in deposits turning JPMorgan Chase into the largest US depository institution with more than $900 billion in overall customer deposits.
Chairman of the FDIC Stella Blair assured Washington Mutual customers their interests would be protected by saying, “For all depositors and other customers of Washington Mutual Bank, this is simply a combination of two banks”.
In addition to JPMorgan Chase, other bidders for takeover of WaMu included Citigroup, Wells Fargo, Spain’s Banco Santander, HSBC of Britain, and TD Dominion of Canada.
FSA Fines Hastings Direct For Error
Hastings Direct, one of the UK’s largest car insurance companies, was fined a massive £735,000 after cancelling 4,550 policies when the insurer discovered the customers had been under-priced, according to the Telegraph.co.uk.
Last summer, between July and September, several customers were inadvertently offered lower premiums due to a software error. In some cases, customers saved as much as £539. The financial watchdog’s main concern with the insurer was they left many people uninsured while they were forced to find new car insurance cover at short notice.
The FSA said the company’s actions were based more on its own financial loss than the possible ‘detrimental effect on customers’. Some customers may have had to pay higher than usual premiums since they were obliged to declare their last insurer, in this case Hastings Direct, cancelled their policy.
Hastings could have been faced with an even larger bill of over £1 million, had they not agreed to settle the case early on in the investigation. The motor insurance company didn’t feel their cancellation clause to be unfair in itself but did concede to the FSA’s argument that their handling of customers could have been dealt in a more favourable way.
Technorati Tags: hastings direct, car, insurance, fined, fsa, customers, cancelled
Fronting Non-Insured Drivers Could Cost Companies
According to a report by Norwich Union, managing directors and company owners are finding their insurance policies invalidated due to “fronting”. An example of fronting is when a businesses uses their policy to insure people not directly associated with the company, such as a teenage child.
A technical manager at Norwich Union, Mike Smith, said: “From the claims we have come across, we have seen some devastating consequences as a result of fronting.
“The person being insured is usually a family member, often a 17 or 18-year-old son or daughter who has found it difficult or too expensive to take out their own insurance.”
With the credit crunch hitting everyone from consumers to businesses, bosses think they are saving themselves, or their children, costly insurance premiums. However, if caught out, the company’s policy will be invalidated leaving the business to pay for any damages.
Fronting has increased among the commercial vehicles sector and it is recommended to be upfront with your broker and insurer about who will be driving company vehicles.
Norwich Union says this is not just a financial concern but many times young drivers are given vehicles that are “totally unsuited to the young driver’s experience”.
Technorati Tags: fronting, norwhich union, company, business, insurance policy, young, drivers
Summer School Holidays See Home Insurance Claims Rise
Insurance claims usually go up when the little ones are on their summer holidays. Families are making claims for more than £500 as a result of accidental damage related to children getting into mischief, says the Guardian.co.uk
Typical claims include drinks being spilt on furniture and carpets, damage to electrical equipment and other personal belongings, as well as 20% more broken windows from tennis and football games. Many homeowners claimed on their home insurance only to find they are not covered for ‘accidental damage cover’.
Since accidental damage cover is not mandatory with home insurance policies, you’ll want to double-check policy if you are unsure whether you are covered or not. Some policies may have a standard version of accidental cover but the cheaper policies most likely do not and you will have to add this on as an extension to your current cover.
The British Insurance Brokers Association (BIBA) says adding accidental damage cover to building insurance will cost around £20 - £30 extra per year or up to £50 per annum if added to home contents insurance.
If you’re an accident prone family, it may be worth the extra expense. If anything, for a bit of peace in mind when the accidents do eventually happen.
Technorati Tags: insurance, claims, summer, home, policies
American Insurer AIG Says UK Division Steady
AIG, the troubled US insurance giant that only last week was saved from collapse by the Federal Reserve, says UK operations are “back to usual”, according to BusinessInsurance.com.
AIG UK Ltd has broadened its PrivateEdge D&O product including special programmes for private companies, partnerships, not-for-profit organisations, an other groups. AIG is eager to put last weeks near disaster behind them as the US government stepped in with an $85 billion bailout loan to help the struggling insurer keep afloat and avoid bankruptcy.
Chief executive officer of AIG UK, Lex Baugh, said, “Our brokers are keen for us to extend this cover, given the growing number of issues faced by private companies, and we are very pleased at how many of them are supporting this launch,
“Our ability to trade is absolutely undiminished by recent events and AIG U.K. is still generating significant positive cashflow,” said Mr. Baugh.
Despite AIG’s intention to sell many of its assets to repay the high interest loan from the Fed, AIG UK reassured staff that their UK division was “as strong as ever” and were care assets of the company.
Technorati Tags: federal reserve, aig, uk, bankruptcy
Tax Burden Pushing Away Major Insurers
The UK’s corporate tax regime is causing several large insurance companies to consider moving outside the country, according to the Daily Mail.
Two of the more recognised brands, the Prudential and RSA Insurance are among the many making the exodus to lower-taxed countries such as Germany and Ireland. HSBC is also considering a move.
British companies earning money in foreign markets are unhappy with the treasury’s current scheme that involves taxation of both business in Britain and business abroad. These firms are claiming they are being taxed twice.
Moving away from Britain may save companies money, however, there may be administration issues making practicing business abroad more challenging. With so many businesses on the move, they hope to influence Darling’s administration through more lenient taxation on foreign earnings.
