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.
AIG Puts 90-Day Delay On UK Money Withdrawal
As U.S. Insurance giant AIG managed to stay afloat with last minute bailout funds, their UK customers are being told they must wait at least 90 days before they can withdraw their money.
AIG is trying to reassure their customers not to panic as investors have already begun to withdraw their investments, according to This is London. The fledgling insurer is contacting policyholders to iterate their UK business division is not being affected while at the same time they make withdrawals difficult.
The American Investment Group is the largest insurer in the world and its UK business underwrites 12 million car and home insurance policies. However, due to recent market volatility the move to prevent customers from withdrawing their money is “in the interests of all policyholders invested in these funds”.
Lehman Collapse Ripples Across Pond To UK
As with most U.S. financial troubles in the past 12 months, the Lehman Brothers collapes too has spread to the UK with thousands of jobs already lost.
Some of Britains biggest companies were shaken as worry spread across the capital’s financial district. Volatile trading ensued as the market headed for a 2nd day of losses during what was coined as “Meltdown Monday”.
Britain’s banking sector was hit hard and the share prices of HBOS closed at 17% down, according to Australian online news site The Age.
Lehman Brothers made over 4,500 redundant at their Canary Wharf office this past Monday.
Barclays Bank, on the other hand, is in talks with Lehman to discuss the possibility of buying certain assets, as long as they appeared attractive enough to Barclays shareholders.
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AIG Bailed Out By The Fed
The once formidable U.S. insurance giant AIG was rescued by a massive $85 billion emergency fund for nearly an 80% equity stake, says the Daily Mail.
AIG’s near collapse comes at the heels of Lehman Brothers demise as the credit crunch continues its toll on major finance related companies. Unfortunately for Lehman, U.S. authorities denied bailing out the investment bank forcing it to file for bankruptcy.
Amidst fears that if AIG toppled it would drag the economy down with it regulators were prompted to step in and help keep the company afloat, but not without a heavy cost. The Daily Mail reports, “AIG will pay interest at a steep 8.5 per cent above the three-month London Interbank Offered Rate, making the current rate equal to about 11.4 per cent.”
The massive bail out is unprecedented by the U.S. government and shortly after news broke of the financial aid package, U.S. stocks rose along with the dollar and oil prices. AIG will have to consider selling assets quickly in order to pay back the high interest bail out loan.
Technorati Tags: aig, emergency, fund, lehman brothers, bankruptcy, u.s., government
Payment Protection Insurance Still Controversial
Despite heavy fines levied against lenders in the recent past, the Financial Ombudsman Service continues to receive hundreds of complaints per week over the highly questionable insurance, says the Times Online.
PPI is typically sold as a form of protection on financial products such as personal loans, mortgages, and credit cards in the event the borrower is unable to make regular repayments due to illness or unemployment. This particular insurance product is a high earner for most lenders however, critics say it is overpriced and “riddled with exclusions” thereby making it difficult for many to even make a claim.
One of the most common complaints is the borrower not realising they were sold Payment Protection Insurance along with their loan or credit card. Some say they were not properly explained the cost of the insurance and were unaware they could take out a PPI policy with a provider other than their lender.
The Ombudsman is now calling on the FSA for further investigation and asking the watchdog group to share some of the burden to resolve issues. This will in turn help alleviate the onus on the Ombudsman office which is handling individual complaints on a daily basis.
Technorati Tags: payment, protection, insurance, ppi, misselling, complaints, fsa, ombudsman
Wallstreet Shaken As Lehman Collapses
The collapse of Lehman Brothers lead to a Dow Jones fall of 500 points - the worst one-day loss in over 6 years, reported the Times Online. With Lehman crumbling into bankruptcy, AIG’s prospects looked dim were it not for a $20bn bailout.
Following the Dow’s plunge S & P’s 500 Index also fell by 58.74 points. AIG was one of the hardest hit financial companies with a 60.8% drop while Bank of America took less damage with a 21% decrease. Meanwhile, in London the FTSE 100 finished at 3.9% down as the UK’s largest mortgage lender Halifax Bank of Scotland’s shares dipped 17.5% to 232.75p.
Speaking of shares, the once formidable US Insurance giant AIG failed to release updates about its financial future in a timely manner leading to a dramatic decrease in share values to $5.99, a drop of 50%. Financial rescue came by way of the New York Governor David Paterson who signed an agreement to free $20bn from the balance sheets of New York authorities.
Earlier Monday morning Lehman Brothers filed for Chapter 11 bankruptcy protection from creditors while across the pond the Bank of England and the European Central Bank injected some £30bn into financial markets to quell any potential panic.
The BoE produced £5bn in short-term funding as a protective measure in case banks were too cautious to lend to each other following the wake of the Lehman Brothers’ collapse.
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Investors Warned Not To Invest In AIG
A recommendation by Goldman Sachs to avoid investing in AIG (American International Group) came on the heels of an 8% share drop yesterday according to Reuters UK.
Analyst Thomas Cholnoky said, “the intricacies of AIG’s business are so complex that management may not even know the extent of the company’s ultimate exposures, let alone losses”. He goes on to warn investors of AIG’s uncertain future even if lowered share prices seem appealing.
Cholnoky is predicting between $9 billion and $20 billion in losses as a result of “credit default swaps”. This could result in a major shift in the risk quality of AIG’s assets.
The analyst stated AIG’s stocks were ‘neutral’ and with the issue of losses, the group’s investment portfolio could be just as worrying as their losses of financial products.
Technorati Tags: aig, goldman sachs, uk, investors, risk, assets, warning
Churchill Insurance Ad Misleading? Ohhhh, yes!
Most UK residents are familiar with the Churchill Insurance bulldog answering “Ohhh, yes” to questions such as “making a claim without the need of filling in any forms?”.
Also known as the Challenge Churchill TV campaign, the arguably lovable bulldog could be silenced after a viewer did exactly that, challenge Churchill Insurance on the issue of formless claims.
A viewer of the TV ad complained to the ASA (Advertising Standards Authority) because they felt the advert was misleading since they were sent out a form after making an insurance claim. The company did apologise and admitted that about 20% of claim cases did require a form or statement to fill in.
Churchill Insurance does try to sort claims by telephone whenever possible and stated it would not make this claim in future commercials.
The ASA was not impressed saying, “We noted that a significant number of claimants would be asked to complete a form, and we considered that, because the ad stated that claimants could make a claim without having to fill out any forms, the ad was misleading.”
The TV ad containing the “no forms” claim has now been banned.
Technorati Tags: churchill insurance, challenge, tv, ad, campain, uk, asa, banned
Muslim Car Insurance Policies Align With Islamic Law
For the first time Muslim drivers are offered car insurance policies that adhere to the teachings of the Koran, according to the Daily Mail.
Unlike the majority of non-Islamic insurers, Salaam Halal Insurance complies with Islamic law by avoiding investments associated with gambling, alcohol, pork, etc.
While still offering the same kind of cover as traditional insurers, Salaam Halal invests its funds into sharia-compliant ventures and reinvests profits back into the fund.
Peter Staddon of the British Insurance Brokers’ Association reveals a positive response to the policies and pricing of Salaam Halal.
Mr Staddon goes on to say, “It’s exciting to see a completely new product on the market.
“And I think there will be many people - Muslim and non-Muslim - who will want to switch to a company that does not invest in weapons, alcohol or gambling.”
In addition to providing sharia-compliant cover, what separates Halal Insurance from its British counterparts is the risk is shared amongst its policyholders. When a claim is made, the money is derived from a “pooled sum” and surplus cash is offered back to customers by way of a discount in the following year’s premium, which may include no-claims discounts.
Although the Muslim community remains its target market, Salaam Halal welcomes other customers from varying religious backgrounds.
Technorati Tags: muslim, islamic, car insurance, sharia, compliant, salaam, halal
Tips On Cutting Costs Of Car Insurance
Let’s face it, the credit crunch seems to be getting worse and there’s no real sign of improvement any time soon. It’s like we’re on a forced diet, only it’s to tighten our economic waistline for a fitter, healthier financial future.
Below you’ll find listed, in no particular order, ways that should help you reduce your monthly car insurance bill.
- Park your car on your property as it’s cheaper than off-street parking
- Consider purchasing a steering wheel lock or car alarm
- If your car is quite old, consider only insuring for 3rd party fire and theft
- Always compare car insurance deals online. The internet could save you money.
- Look for deals that offer 10 to 20% discounts online
- Found a better quote than your current insurer? Why not use it to bargain for a better deal? Nothing ventured, nothing gained
- Avoid speeding and other traffic convictions. Think longterm and don’t risk your life or a higher premium
- Try not to claim for several years, the more the better. Ask your insurer about their no-claims discounts
- Consider paying a higher excess IF your insurer will drop the cost of your policy as a result
There are many ways you can lower your car insurance. In an uncertain economy, along with rising inflation, food costs, fuel bills, and petrol, now is the time to exercise restraint and prudence when spending.
Today’s motor insurance companies are fighting for your business and by comparing deals and taking a few precautions, you’re sure to find an affordable premium that is as good as, if not better than, your current deal.
Technorati Tags: tips, cutting, costs, insurance, premium, policy, car, motor
