Public liability insurance: Business essential or nanny state gone mad?

Many business owners make the mistake of not properly understanding public liability insurance before launching their small business. This leaves them at risk of paying exorbitant fees for damages in future.

Public liability insurance is suitable for both small businesses and bigger corporations. The concept appears confusing on the surface but with proper research into available policies, it is easier to see how the range of options available can protect your business from disaster. It must not be confused with employers’ liability insurance.

Is Public Liability Insurance compulsory?

Public liability insurance is not compulsory by law. However, is essential if your business will be interacting with the general public in its day to day operations. Do customers visit your office or work premises? Do you send deliveries to your customers? Are you operating a home based business with meetings holding in your home? Public liability insurance is essential for your business.

What does public liability insurance cover?

Public liability insurance covers a wide range of scenarios. Generally however, you can expect cover if anyone is injured by your business or when third party property is damaged during the course of your business. The damage doesn’t always have to be massive. Even a minor scratch could set your small business back by tens of thousands of pounds as long as the affected party agrees it is enough to seek redress in court. Public liability insurance will not only provide you cover for against the fines but will also take care of your legal fees.

To get an effective public liability insurance policy, you need to provide a comprehensive description of your business processes to the insurer. This goes beyond documentation purposes as it will help the company determine the policy best suited to your business. The two main policy types, such as this one offer cover for up to £1 million and up to £5 million respectively. Businesses in the public sector are most likely going to be offered the latter by insurers.

It is important to avoid assumption that there is no need for public liability insurance because you run a small business and it is not a legal requirement. Simple scenarios such as liquid spill over a visitor’s computer or a poorly lit doorway leading to a visitor’s fall and injury could leave you in danger of paying thousands in fines without public liability insurance.

Fraudulent insurance claims rise to over £110 million in 2013 – Aviva

More than GBP110m worth of fraudulent insurance claims were detected by UK insurance company Aviva during 2013, it revealed on Wednesday.

Aviva said its claims fraud detection data for 2013 shows that there was a 19% increase in insurance fraud, compared with 2012. The company reportedly discovers over 45 fraudulent claims each day, which are said to be worth more than a total of GBP300,000.

Insurance fraud varies from genuine claims to injuries that are exaggerated, or entirely fictitious claims and accidents. The fraud is often carried out by third parties, people who are not insured with Aviva but who are making a claim against an Aviva customer, for example injuries incurred as a result of an accident.

Motor injury fraud is said to be most common type of fraud in the UK and represents 54% of Aviva’s total detected claims fraud costs. Over half of these claims come from organised ‘cash for crash’ claims. One in seven personal injury claims are linked to suspected ‘cash for crash’ claims and the total annual cost to insurers for cash for crash is estimated at GBP392m annually, according to the Insurance Fraud Bureau (IFB). Aviva added that organised insurance fraudsters are often linked to wider gang-related criminal activities

Aviva has a team of 25 staff dedicated to detecting and prosecuting organised fraud, which is currently investigating 5,500 suspicious injury claims linked to known fraud rings, an increase of 20% since 2012. It has successfully prosecuted insurance fraudsters who made organised and bogus whiplash claims, who were given sentences of between 4 and 7 years. These organised frauds included more than 200 claims that had a potential value of over GBP5m. The company also shares information with other insurers, the IFB and the Insurance Fraud Enforcement Department (IFED) in order to bring about prosecutions.

Research conducted by Aviva shows that there is concern among consumers regarding the scale of insurance fraud, with 90% finding it unacceptable and 64% wanting insurance companies to take further measures to tackle fraud.

However, many people reportedly turn a blind eye to fraud. Aviva’s research showed that 66% of people would not report insurance fraud to the police if it was carried out by someone they knew. This was a 53% increase compared to a 2008 survey by Aviva. The impact of fraud appears to have been underestimated, as just 10% of consumers realise that everyone is affected by higher premiums, as well as more road accidents that are caused by fraudsters seeking injury compensation.

The research also revealed that 23% of people knew someone who had exaggerated a genuine claim, while 17% knew someone who had faked a whiplash injury in order to get compensation. More than one in eight people said they would consider exaggerating a claim, an increase of 35% when compared to Aviva’s survey 5 years ago.

Tom Gardiner, Head of Fraud at Aviva, commented:

“Our priority is to pay genuine claims quickly and fairly while offering a great service to our customers. Last year in the UK, for example, Aviva settled over 910,000 claims worth GBP2.65 billion. We identified fraud on less than 1.9% of claims we received.

“However, a combination of factors including the economic climate, social attitudes toward insurance fraud as a ‘victimless crime’, and a lack of effective deterrents are increasing the frequency of insurance fraud. The good news is that we are constantly improving our ability to prevent and detect fraud, helping to keep premiums down for innocent policyholders. The ABI estimates fraud adds GBP50 to the cost of insurance premiums.”

HSBC agrees to sell Macau-based general insurance operation to QBE

UK financial group HSBC Holdings Plc (LON:HSBA) on Thursday said it had agreed to dispose of its general insurance operations in Macau to QBE Insurance (International) Limited.

HSBC will carry out the divestment via its indirectly-held unit HSBC Insurance (Asia) Limited, it explained.

The value of the transaction was not disclosed, but the vendor said the Macau general insurance business had gross assets of HKD6.97m (USD898,000/EUR687,000) at 31 December 2012.

Subject to regulatory clearance, the sale is expected to wrap up in the first half of this year, the vendor said.

HSBC Holdings’unit Hongkong and Shanghai Banking Corporation Limited has also inked a non-exclusive accord with QBE to distribute its general insurance products to the bank’s customers in Macau for a commission.

HSBC sells Singapore insurance unit to AXA Life

UK financial major HSBC Holdings plc (LON:HSBA) said Wednesday that fully-controlled unit HSBC Insurance (Singapore) Pte Ltd had inked an accord to sell its group term life insurance and group medical insurance portfolios in Singapore to AXA Life Insurance Singapore Private Ltd for an undisclosed amount.

The deal, which has yet to be cleared by regulators, is seen to be wrapped up by the end of the year.

The sale of the portfolios, whose gross asset value amounted to SGD23.5m (USD19m/EUR14.8m) as at 31 December 2012, is a step ahead in the implementation of the group’s strategy, HSBC said.

AXA Life Insurance Singapore is part of French insurance and asset management group AXA SA (EPA:CS).

No substitute for age and experience, say car insurance companies

Car insurance companies now have only two criteria when it comes to offering their best premiums, age and experience.

With the ruling by the European Court of Justice that came into force on December 21 last year, women can no longer be offered discounted motor insurance premiums on the basis of their sex, despite the weight of statistical evidence tending to prove that on average they are less likely to make a claim than men. The net result of the sexual equality legislation is that women’s car insurance premiums have risen to come in line with men’s, and the only attributes that a driver can now brandish at their insurer in order to garner a healthy discount are a long, blemish-free driving history and the promise of a cautious and responsible nature, which is most likely to have come with age.

And the preferential treatment of older drivers is hardly surprising when looked at in terms of road accident statistics. In the UK only around 13 percent of driving licence holders are under the age of 25, and yet a third of drivers that are killed on the road come from that age group. Older motorists are only half as likely to have a crash as under 25’s, and when they are involved in accident, the cost is likely to be half of that incurred in a collision involving a younger driver.

Like any other prudent businesses, car insurance companies are looking to maximise their income and minimise their outgoings, and all of the indications are that leaning their client lists towards older and more experienced drivers will go a long way towards achieving that aim. This is good news for older drivers, particularly the over 50’s, as they have become THE target market for insurers, with many, like Staysure, offering considerable discounts to attract them into the fold.

The benefits of getting older are not always that obvious, but being the darling of car insurance companies is one to cling to.

ING sells Malaysian insurance unit to Hong Kong-based AIA

 Dutch financial group ING Groep NV (AMS:INGA) said on Thursday it would sell its insurance business in Malaysia to Hong Kong-based insurer AIA Group Ltd (HKG:1299) for some EUR1.3bn (USD1.7bn) in cash.

Under the terms of the agreement, AIA is taking over ING’s Malaysian life insurance operations, its employee benefits business and its 60% in venture ING Public Takaful Ehsan Berhad, the vendor said.

The move marks ING’s first major step towards disposing of its insurance and investment management businesses in Asia, reflecting progress in its restructuring efforts, CEO Jan Hommen commented. The combination of this ING business with AIA’s operations in Malaysia will create a top player in this market with a good position for further growth, Hommen added.

The process for the sale of the rest of ING’s Asian insurance and investment management businesses is ongoing, the group said, adding it expected the disposal of its Malaysian insurance activities to result in a net gain of around EUR780m.

Completion is expected to take place in the first quarter of 2012, subject to securing regulatory clearances.

ING is among the major life insurers in Malaysia with a portfolio including life, general, employee benefits and Takaful, serving over 1.6m customers. The company has around 1,200 employees and 9,200 tied agents in the country.

Present in Malaysia since 1948, AIA’s footprint covers 15 countries in Asia Pacific, leading many of these markets.

UK insurance group Aviva puts its US business on the block

UK insurance major Aviva Plc (LON:AV) is gearing for a sale of its US business after receiving several unsolicited approaches from trade buyers and private equity groups, the Sunday Telegraph reported without specifying its sources.

According to the UK newspaper, Aviva’s finance chief Pat Regan has spent quite a while in Des Moines, Iowa – the city where Aviva USA’s headquarters are located – to make preparations for the sale and launch the process. An investment bank is yet to be formally appointed but Aviva’s executives are believed to have settled on Goldman Sachs Group Inc (NYSE:GS) as manager of the sale.

Aviva agreed to pay GBP1.8bn (USD2.8bn/EUR2.3bn) in mid-2006 for what was then called AmerUs, combining it with its existing US business to create Aviva USA. The sale of the business is expected to leave the UK company with a loss of GBP800m on its initial investment since the division is now estimated to be worth GBP1bn, the Sunday Telegraph said.

Following shareholder pressure, Andrew Moss stepped down as chief executive of Aviva in May, leaving newly appointed executive chairman John McFarlane to fill the gap on a temporary basis.

Earlier in July, McFarlane presented his plan for a strategic overhaul of the company, saying that 16 out of 58 businesses have been designated non-core and will either be sold or shut down. However, Aviva could not be drawn into commenting at the time on whether its US division was one of those businesses.

The company has already pulled out of Hungary, Romania, the Czech Republic and Australia and is set to exit Taiwan as well, selling its 49% stake in its local joint venture.

The Sunday Telegraph was unable to extract a comment from an Aviva spokesman with regard to the US divestment.

UK insurance firm Aviva sells more Delta Lloyd shares due to strong demand

British insurer Aviva Plc (LON:AV), a 41.3%-owner of Delta Lloyd NV (AMS:DL), will sell 37m shares of the Dutch insurance firm, more than initially planned, due to favourable demand from investors, Delta Lloyd said.

Aviva, which originally wanted to sell 25m Delta Lloyd shares, representing 14% of its ordinary share capital and 14% of the votes, to institutional investors, raised that volume to 21% of the Dutch group’s share capital and 20% of its voting rights.

The Delta Lloyd stock will be sold through an accelerated book-building with the price to be decided by that process, the Dutch insurer said.

Aviva, which after this disposal will be left with 34m Delta Lloyd ordinary shares accounting for nearly 20% of the target’s capital and 19% of its votes, has pledged to keep its remaining interested in the Dutch insurance group for 180 days following the completion of this deal.

Delta Lloyd, providing life insurance and general insurance, as well as asset management and banking products and services, is focused on markets in the Netherlands and Belgium. In the Netherlands it is present under the brand names Delta Lloyd, OHRA and ABN AMRO Insurance, while in Belgium it operates as Delta Lloyd. The group has 5,401 permanent employees.

British Aviva has more than 43m customers for its long-term insurance and savings, general and health insurance and fund management products and services. Its divisions cover markets in the UK, Europe, North America and Asia Pacific.

The decline of the family saloon

How ‘Fiesta Dad’ and ‘MPV Mum’ have changed Britain’s driveways since the 1980s.
The demise of the family saloon, once the bastion of Britain’s family cars, has been driven by the rise of small-car dad and MPV mum, according to research released today by the UK’s largest insurer Aviva.

In the 1980s the stereotypical two-car family had a large saloon, like a Ford Cortina or Vauxhall Cavalier, and a small ‘runaround’ second car such as a Fiesta or a Datsun Cherry on the driveway1. The women in the family almost always drove the smaller car.

Fast-forward to today and the shape and size of the cars on our driveways and who is driving them have changed significantly.

Aviva asked 2,500 UK adults about their family car history stretching back 30 years and found that, while more families than ever own a second car2, there has been a significant shift towards a more equal size and value split between the cars driven by mum and dad in Britain’s multi-car households.

The death of the saloon
High spec smaller family cars, such as the Volkswagen Golf, the Mini and the Peugeot 207, driven equally by men and women, now dominate the top 10 most popular cars, replacing traditional family saloons like the Vauxhall Vectra, Volkswagen Passat and Ford Mondeo. The traditional family saloon no longer features anywhere in the top 10 list of most popular car models with UK drivers.
The rise of ‘Fiesta dad’ and ‘MPV mum’
As the size and shape of Britain’s family cars have changed so have the people driving them. In the 1980s, large saloons like the Ford Cortina and the Vauxhall Cavalier were popular with men but driven by very few women, who drove mainly small cars such as Fiestas, Minis, and the Sunny and Cherry made by Datsun/Nissan.

Since 2010 the big car/small car gender divide had changed completely. Two thirds of Fiesta drivers are now men. Women are increasingly opting for large, modern alternatives, and are more likely than men to drive big SUV and 4×4 hybrids such as the Citroen Picasso and the Toyota RAV4.

The evolution of the family car
In the 1980s Britain’s family cars looked very similar, with just four big and small car combinations dominating our driveways. Vauxhall and Ford were the most popular saloons of choice. The four pairings most commonly seen in streets across Britain were: the Vauxhall Cavalier/Mini Rover; the Vauxhall Cavalier/Ford Fiesta; the Ford Cortina/Mini Rover and the Ford Escort/Vauxhall Nova4.

In 2011 the picture is more complicated because of the huge rise in the number of different models available. Our driveways may have become more diverse but the type of car parked on them tells a common story. As motoring costs increase and with greater demand for fuel efficiency, families are increasingly opting for two small cars or a small car and an MPV hybrid. The most common car type combinations in 2011 were Small Family Cars (VW Golf, Ford Focus, Vauxhall Astra) with Mini/Compact cars (Ford Fiesta, Renault Clio, Vauxhall Corsa) and SUVs/4x4s/MPV (Nissan Qashqai, Citreon Picasso, Ford Galaxy) with Mini/Compact cars (Ford Fiesta, Renault Clio, Vauxhall Corsa)5.

Commenting on the research, Heather Smith, director of car insurance at Aviva, said: “Thirty years ago the big saloon and the small ‘runaround’ sitting side by side outside Britain’s family homes was a ubiquitous sight. Now you’re more likely to see two VW Golfs or newer SUV/4×4 hybrids like the Nissan Qashqai and the Suzuki Grand Vitara sharing driveway space.

“As families’ lives become more busy and complex, with two working parents and children to be dropped off at school, it appears multi-tasking mums need a vehicle fit for both work and family life while cost and fuel efficiency are increasingly important to dad”.

Insurers propose driving ban for under-25s

The Association of British Insurers (ABI) has stated that drivers under the age of 25 should hold their license for two years before being able to drive between the hours of 11pm and 4am, however allowing certain exemptions such as work.


The ABI have also said in their proposed changes that young drivers shouldn’t drink any alcohol before taking to the wheel.


Added changes include a minimum learning period of a year before being able to take their driving test, and scrapping intensive driving courses.


The ABI believe these new changes will lower the amount of young drivers involved in serious injuries on the road and death from road accidents.


Drivers under the age of 25 are twice as likely to fail a breathalyser test and when driving late at night and early in the morning are more at risk.


Statistics show that one in four people killed or seriously injured in a road accident is a young driver or one of their passengers. However only 12 per cent of all driving license holders are under 25.


Nick Starling, ABI’s director of general insurance and health said: “Our proposals are not designed to drive young drivers off the road, but to ensure that they become safer drivers”.


“We must act to reduce the tragic loss of young lives on our roads”.


AA insurance have welcomes ABI plans to tackle the number of injuries and deaths on the roads, however disagree with a ban on night time driving or a zero-tolerance alcohol limit.


Simon Douglas, director of AA insurance said: “While we welcome the debate, the suggested night driving ban up to age 25 is just not practical”.


The AA instead said it would be better to reduce the drink-drive limit for everyone.


The insurance company have agreed with the ABI that telematic or ‘black box’ insurance can also help to place responsibility for driving within the law. Technology is used to measure driving performance including speed, braking and cornering.


In the New Year the AA is expected to launch telematics insurance, which will be aimed at new drivers.


Article by Charlotte Greenhalgh