UKTC Archive

Terrorism+Insurance

Subject: Terrorism+Insurance
From: David Lloyd-Jones
Date: Dec 23 2002 16:58:12
Following a recent thread within which somebody was sounding off about the 
uniform rise in insurance rates which the insurers seem to be universally 
justifying by the rising costs of claims including terrorism, I have had a 
conversation with Simon Brain within which we explored the whole issue and 
which he thought should be bounced off UKTC.

As I think I said in that thread, my insurers justified my 28% rise due to 
acts of terrorism and other trends in insurance claims. The previous year in 
the UK that might have been flood damage, next year, who knows. 

In stark contrast to this, a few lines later the letter informed me that I 
was not covered for acts of terrorism! How ironic.

Can anybody explain why this should be considered fair and reasonable? Do we 
have any insurers on the forum?

The insurance companies collect premiums they they project to cover their 
risks and provide them with profits and we pay those premiums covering those 
risks, for that year. 

Now that may be a simplistic view but in reality it's a bet, some years sh*t 
happens and they make a loss or little money but other years you don't hear 
them moaning, no, not when the profits are "acceptable", whatever that may 
mean. 

And where are those profits of yesteryear what happened to them, are they not 
available to tide over the short term crisis. Its seems not, it seems profits 
accumulating year by year in normal times are ring fenced and, well whatever 
else they are for, they are not to cover payouts, no no no no. 

Imagine that in arboriculture terms. I know (insert clients name here), I 
quoted £400 and we done the job all lovely like, but the bill's gone up 
overnight to £500, it was a bad week last week you see and we gots to get our 
profits from somewhere....

We in the real world all know that that just wouldn't work. Not unless all 
arborists were to work entirely too closely together in an unhealthy 
monopolistic kind of way. In short we wouldn't be allowed. 

Oh my goodness guess what..........apparently the rules covering how people 
do reasonable, open and competitive business everywhere else don't apply to 
insurance companies. 

Something to do with limited numbers of ridiculously large underwriting 
companies who all know each other but do business through a myriad of 
recognisable insurance companies and brokers (all drawing from and peeing in, 
the same pot). Talk about spreading your bets, their's are spread so much, if 
they cough we all get a cold!

One further comment on their chosen strategy for recovering their losses. And 
please think about that in that way for a moment, they are recovering THEIR 
losses for last year, a year in which they projected and collected premiums, 
from us! 

Anyway, they could have done it another way... . They could have increased 
the premiums of the insurance policies that include Terrorism cover placing 
the costs of that cover on those who use the service! 

Or they could have increased the policy excesses, thereby making the people 
who actually have claims make up their shortfall in profits. 

Either or some degree of both of these options would be more acceptable to me 
and to refer to my conversation with Simon, to him also. 

What about you?

I understand that my 28% increase is relatively low but there seems to be 
something decidedly unhealthy about this whole situation. Therefore there 
should be some interest in this subject. Something for us (still working) 
consultants and contractors to bounce around over the holidays perhaps?

Merry Christmas to UKTC, insurance companies and of course those touched by 
terrorism (it's cause or effect), I do not wish to be interpreted as being 
unsympathetic to their individual tragedies.

David Lloyd-Jones
 <:::><:::><:::><:::><:::><:::><:::><:::><:::>
                 CHESHIRE 
        ARBORICULTURE
        9 Lowland Way, Knutsford
      Cheshire, England, WA16 9AG.
         phone/fax   01565 XXXXXX
           www.craftwoods.co.uk
            www.arbornauts.com
      Inc  Cheshire Tree Surgeons 
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