Thursday, 17 November 2016

The Whiplash reforms proposed by the government on 17/11/16 are sponsored by the insurance industry and will struggle to pass on the alleged £40 savings per year on motor insurance costs.

Free Motor Legal urges people to be cautious in their support of the reforms being tabled by the government as these are sponsored by the UK insurance industry, supported by their trade body The Association of British Insurers (ABI).

The reforms on the face of it appear a welcome and popular way of bashing the premium increases down we have all been seeing over the last 18 months. But there are so many reasons motor premiums have increased and whiplash is far from being the route of all evil.

Our previous blog revealed the REAL REASONS YOUR MOTOR PREMIUMS HAVE BEEN INCREASING 

Nothing has changed since then and there remains concerns that the promises of savings will not be passed on. An independent financial ratings agency Fitch has already said that they doubt insurers will pass on the alleged savings 

Already the promises of £50 savings from October 2016 on the ABI website http://linkis.com/www.abi.org.uk/News/3e93L have now dwindles by 20% a month later and we are now all promised £40 off our premiums http://linkis.com/www.gov.uk/governmen/uwMWH






Thursday, 22 September 2016


The REAL Reasons your motor insurance has been going up, a summary by Lee Jones of Free Motor Legal.

All is not what it seems......

1-         Insurance Premium Tax (IPT) increased in November 2015 – Previously this tax was set at 6%, but George Osborne hiked it to 9.5% with effect from November 2015 – this saw premiums increase. But matters are not finished! A further hike to 10% is to coming into effect on 1st October 2016. So premiums can be expected to rise slightly more due to the actions of the treasury. The hike in IPT, which affects not only motor insurance, but also household insurance, pet insurance and legal expenses insurance, is expected to net the Treasury and additional £8.1 Billion by 2021.

2-             Solvency ii – a requirement from January 2016 for insurers to hold more capital reserves (money in the bank to meet claims and liabilities). So they can’t invest as much in stocks & shares or buy shopping malls etc. Believe it or not, motor insurers typically don’t make their core profits from underwriting profits (collecting more in premiums than they pay out in claims) although many have moved into this territory in recent years with Combined Operating Ratios (COR’s) as low as 85% (meaning for every £1 they collect in premiums, 85p is paid out in claims and operating overheads, leaving a 15% profit margin). Because they don’t have as much spare cash they can pump into investments, this has caused them to look elsewhere for increased profits – yep you guessed it – their customers; Crank up the premiums, crank up the profits! Funny how the increase in premiums has arisen at the same time insurers are able to report year on year improved profits….

3-         People wising up to the auto renewal fiasco. The insurance industry really is a strange old bird. How many industries or businesses do you know that actually kick a loyal customer in the shins by charging them more than a new customer? Yes, it’s a strange one, but a fact that customers who allow their insurance to auto-renew will generally be paying much more for the same policy than a new customer. Many consumer champions such as Martin Lewis & MoneySavingExpert.com have long advocated searching around for the best deal each year, rather than letting your existing policy renew automatically. Millions of people have enjoyed success with this approach and hit the price comparison sites to secure the best deal. The knock on effect of this is that the insurers are starting to see this pattern emerge and therefore the cheaper deals for new customers are starting to dry up as the bargain basement quote new punters get is usually allowing the insurer to at best break even or sometimes they cover the first year at a loss, hoping you will renew and they will make their money out of you in the future. Due to people becoming more savvy and shopping around, the insurers are offering new customer deals less and less. Overall this then pushes up the average premium figure. It is still worth shopping around though!

4-         Modern vehicles are becoming more expensive to repair, pushing up the cost of claims. Modern vehicles bristle with technology, such as sensors in bumpers, adaptive headlights, automatic parking systems etc. As more of us purchase newer vehicles via PCP plans, the more modern the “rolling stock” of Britain’s roads becomes and the more it costs to deal with repairs. Not a lot that can be done about this one. Insurers seldom make this point known though.

5-         We are in a “hard market” and there is “reduced capacity”  Insurers are required to hold a lot more of their money as liquid cash and / or very low risk investments to protect themselves from large catastrophes or crashes in the market. So any drop in value in the physical buildings they own i.e. shopping centres and their other investments mean they have to increase their cash reserves at the expense of their other investments. The result of the contraction in their investments and increase cash reserves means Insurers are unable to accept so many customers. As the Insurers become more picky with the customers they accept, they charge a higher premium for the customers they will accept. We had been in a soft market due to good investment returns which results in new Insurers entering the market which force the premiums down (a price war). When a recession or catastrophe hits, you enter a Hard Market and capacity reduces, Insurers pull out of the markets and premiums go up as there are fewer insurers competing with each other for the same customers. 

It works in a circle though, as the premiums go up in the hard market, it attracts new Insurers into the marketplace and investments tend to pick up. This completes the circle by forcing premiums down and you return to a Soft Market until the next trigger event. Recently a Gibraltar based insurer, Enterprise Insurance, went bust. So again, fewer insurers competing for the business and the remaining insurers can charge more or be picky about who they are willing to insure.

The not so REAL reasons your insurance has been going up:

Fraud– Let’s be straight, fraud does exist. Any fraud is unacceptable, and those caught and convicted face prison and deservedly so. Those caught/rumbled whilst not automatically facing prosecution (it is up to the insurer to decide whether to prosecute or not) will have their cards marked and won’t be able to get cheap insurance or will simply be declined.  
But the insurers over-play the fraud card and their figures are always a bit woolly and difficult to define in terms of what is pure “ fraud” being committed by say crash for cash gangs and what is “fraud” in terms of a policyholder perhaps failing to declare a conviction or a previous accident claim. They have also been known to include “suspected fraud” in their figures. So this supports a set of figures the insurers can claim show fraud is out of control and we are in the grip of a fraud pandemic, yet their year on year increases in profits seem to mirror the increase in people’s premiums and show that despite the alleged epidemic of fraudulent claims, the insurers are doing rather well.

 There is a criminal justice system there to deal with insurance fraudsters and innocent motorists and those injured on the roads should not expect to have their rights to claim removed due to the actions of a small and stupid minority.

 Whiplash – Again, there are stupid people who exaggerate the extent of their injuries or even being injured at all and there are nuisance calls made by scumbag accident management companies and marketing companies who encourage people to “have a go”. But this is the dregs end of an accident management industry which could do with a clean up by the new incoming regulator, the Financial Conduct Authority as well as a review of laws regarding telemarketing.

Let’s face it, any cold calling sucks, not just calls about personal injury, but also PPI, Charities, Boiler Suppliers and so on. It just needs to be banned and there needs to be an effective way of reporting the nuisance, such as pressing a certain number on your keypad when you receive the call, which then logs the call with your service provider or an independent monitor. This will stack up the evidence quickly and allow swift action to be taken against both the company AND the directors. This is all possible without the drastic steps the insurance industry have proposed to government and are about to go through the proposal stage.

The insurance industry want to extinguish whiplash claims by making them barred by law if the injury is “minor” (yet to be defined) and also preventing recovery of any costs on claims under £5000.00 in value. This would essentially prevent people from claiming for minor whiplash, but also box lawyers out of the system, leaving injured parties to fight insurance companies alone in the small claims court, or have to forfeit a good chunk of any compensation to pay lawyers under no win no fee arrangements. So the insurer pays out less, the injured party receives less.

Whilst this probably earns a round of applause from many people at this stage due to the constant drip-feeding of “we will lower your premiums if we get rid of these whiplash claims” in the media, independent ratings agency Fitch have just reported that their experts feel that insurers are unlikely to pass on any savings until at least 2018 if the reforms get passed through. Many organisations representing injured people feel the insurers are unlikely to ever pass on the savings and a recent article in the times accuses the insurers of failing to pass on savings from a previous round of reforms in 2013 resulting in substantial savings when lawyers fees were slashed by 60%. Since then, the number of claims being made has also declined. The substance behind the figures the insurance industry seek to rely on just don’t stack up.

What we say at Free Motor Legal is be careful what you wish for. Insurance companies are playing the public policy card i.e. what is good for them is good for Joe Public with promises of reduced insurance premiums, but the reality is that the insurance industry and their trade body, The Association of British Insurers, has for some time been misleading people why our premiums have increased (when have they revealed it is for reasons 1-5 above?). Can they really be trusted to deliver the savings they promise? 

The government has previously admitted nobody will police the insurance industry on whether the savings will be passed on or not. Past experience would urge extreme caution here.

The promise from the insurance industry is an average saving of £50.00 if reforms are introduced (presumably all the reforms).

Free Motor Legal offer a free alternative to paying for motor legal protection insurance. A separate add-on policy insurers often sell for an additional £30.00 per vehicle on cover. Yet Free Motor Legal can rival the services the insurers offer without charging their members any annual premium or membership fees. In fact, membership is free for life. With over 30 million motorists in the UK potentially paying up to £30 a year extra, that is £900 million in additional premiums the UK is paying for a service Free Motor Legal can provide for free, saving British motorists up to £900 million each year. Further details can be found at their website www.freemotorlegal.co.uk

Tuesday, 6 September 2016

The REAL Reasons your motor insurance has been going up

1-    Solvency ii – a requirement from January 2016 for insurers to hold more capital reserves (money in the bank to meet claims and liabilities). So they can’t invest as much in stocks & shares or buy shopping malls etc. Believe it or not, motor insurers typically don’t make their money from simple underwriting profits (collecting more in premiums than they pay out in claims) although many have moved into this territory in recent years with Combined Operating Ratios (COR’s) as low as 85% (meaning for every £1 they collect in premiums, 85p is paid out in claims). Because they don’t have as much spare cash they can pump into investments, this has caused them to look elsewhere for increased profits – yep you guessed it – their customers; Crank up the premiums, crank up the profits!

2-    People wising up to the loyalty sham/ auto renewal fiasco. The insurance industry really is a strange old bird. How many industries or businesses do you know that actually kick a loyal customer in the shins by charging them more than a new customer? Yes, it’s a strange one, but a fact that customers who allow their insurance to auto-renew will generally be paying much more for the same policy than a new customer. Many consumer champions such as Martin Lewis & MoneySavingExpert.com have long advocated searching around for the best deal each year, rather than letting your existing policy renew automatically. Millions of people have enjoyed success with this approach and hit the price comparison sites to secure the best deal. The knock on effect of this is that the insurers are starting to see this pattern emerge and therefore the cheaper deals for new customers are starting to dry up. Overall this then pushes up the average premium figure. It is still worth shopping around though!

3-    Modern vehicles are becoming more expensive to repair, pushing up the cost of claims. Modern vehicles bristle with technology, such as sensors in bumpers, adaptive headlights, automatic parking systems etc. As more of us purchase newer vehicles via PCP plans, the more modern the “rolling stock” of Britain’s roads becomes and the more it costs to deal with repairs. Not a lot that can be done about this one.

4-    We are in a “hard market” As insurers are required to hold a lot more of their money as liquid cash and / or very low risk investments to protect themselves from large catastrophes and / or crashes in the market. So the drop in value in the physical buildings they own i.e. shopping centres and their other investments mean they have to increase their cash reserves at the expense of their other investments.

The result of the contraction in their investments and increase cash reserves means Insurers are unable to accept so many customers. As the Insurers become more picky with the customers they accept and they charge a higher premium for the customers they accept.

5-    Lack of capacity in the market – We had been in a soft market due to good investment returns which results in new Insurers entering the market which force the premiums down (a price war). When a recession or catastrophe hits, you enter a Hard Market and capacity reduces, Insurers pull out of the markets and premiums go up as there are fewer insurers competing with each other for the same customers

It works in a circle though, as the premiums go up in the hard market, it attracts new Insurers into the marketplace and investments tend to pick up. This completes the circle by forcing premiums down and you return to a Soft Market until the next trigger event. Recently a Gibraltar based insurer, Enterprise Insurance, went bust. So again, fewer insurers competing for the business and the remaining insurers can charge more or be picky about who they are willing to insure.

6-    The insurance industry are playing everyone for fools by blaming price rises on fraud, whiplash claims and claims management companies. They have been jacking up the prices based largely on the reasons already outlined above, but they want to blame the problems on fraud and whiplash claims and claims management companies so that they can lobby government for changes to avoid paying any legal costs on injury claims with a value of less than £5k and even more dramatic than that, ban recovery of compensation for whiplash. If the insurers succeed with their dream of not paying legal costs on injury cases under £5k in value and abolishing whiplash, the savings they create will be biblical. They promise these savings will be passed onto consumers with reduced premiums, but they have already been caught out with this in a recent article in The Times, which challenged the previous savings promises had not been passed on.

Be under no illusion, the insurance industry are as hell bent on profits and moulding the landscape in which they operate as the bankers. They are major players in our economy and have a sympathetic ear from government, who listen to the excuses as to why premiums have risen and take them as gospel. On many occasions the insurers are asked to be transparent with their figures and data on which they base their revelations and time and time again they are unable to come up with transparent and credible data.

But let’s be honest, there is a problem with fraud, but nowhere near the extent to which the insurers bleat. There remains a system to deal with insurance fraud, it is called the criminal justice system. If fraud arises, investigate it and pass the evidence to the relevant authorities. Don’t deny all other UK citizens their rights just because of the actions of a minority and the never ending desire for greater profits.

Whiplash does exist and it genuinely hurts and can affect people’s ability to work and can disrupt their lives for months and even years afterwards. We live in a time where government legislation now allows us to claim compensation due to a late train or flight, causing some minor inconvenience for mere hours, yet get injured in a road accident or at work and suffer limitations and restrictions for months or longer and the insurance industry want your rights to claim completely removed or for injured claimants to lose out by having to pay all their legal fees from their damages.

Claims Management Companies (CMC), yes there are good and bad examples out there. CMCs do provide a helpful service and some are very well behaved. Others are an utter nuisance and use automated diallers to pester people over and over again or pressure them into making claims, promising them there is a pot of money just set aside for them etc. There needs to be a tightening of the regulations surrounding CMCs.

The one key fact the insurance industry will routinely deny is that they are an integral part of the problem they are claiming about. It is a dysfunctional system that operates whereby insurers continue to cut each other’s throats by passing their customers onto law firms they have a relationship with or vehicle hire companies after non-fault accidents. Insurers are the biggest introducers of claimants into the system due to their own claims capture activities.

As a result of this, the insurer of the at-fault party has a more expensive day out. This merry go round just repeats itself over & over again. Maybe the insurers should come clean about the £millions they earn in commissions from law firms, medical agencies & hire companies each year.

The problem is they can blame the reasons for price rises on these issues and they will get sympathy from government and support from the public as they can relate to the nuisance call in the middle of East Enders or the press headlines about whiplash claims and insurance scams which have been drip fed via the media channels for years. Yet the problem is that if the insurers succeed in driving forwards reforms to drive a large sector of the personal injury industry out of business, the reasons for price hikes set out in points 1-5 will still be there and there will be another excuse for the reasons your premium is going up. So you will still be paying the same premiums, but you will have fewer rights if you get injured and a more expensive time making any claim you are entitled to. Meanwhile, expect another year of record profit announcements and dividend payments by insurance companies.


Tuesday, 19 July 2016

Our top tips for those summer journeys

"Are we there yet mum?"

  1. Plan Your Journey

    map illustrationAvoid stress whilst you’re on the road and plan ahead. It is well worth planning a route to take across the country, planning roughly how much you can spend each day and planning activities that you can stop and do along the way.

     
  2. Check Your Car’s Fluids

    Check car fluid levelsTo keep your car in tip top condition and avoid the risks of breakdowns, you should make sure the following fluids are kept topped up: including engine oil, windscreen washer fluid, engine coolant and of course, fuel.
  3. Check Your Tyres

    Check car tyre pressureTake a few moments to check the tread and pressure of your car tyres. This may save you from breaking down or worse, a crash. Check that you have a road worthy spare wheel in your car in case of an emergency and maybe a can of tyre foam?

     
  4. Prepare Car Games

    Prepare car gamesPreparing a range of car games that the children can play may delay or at best, prevent the dreaded question asked by every child on a car journey, ‘Are we there yet?’. Grrrrrrrr!

     
  5.  An Emergency Kit

    Emergency Car KitMo matter how old or new your car is, it could break down. An emergency kit should consist of a breakdown triangle, a blanket, a torch, high visibility jackets (legal requirement in France), a mobile phone, a map, and most importantly breakdown cover details. If you break down put on the hazard warning lights, get out of the car on the passenger side and move away from the vehicle.
  6. Pack The Car Well

    Pack the car wellIf you pack the car in a rush you have a tendency to miss things, and to forget where everything is in the car. Take your time, put things in the glove box that you will need on the journey. Make sure you can easily reach things like CD’s, tissues, snacks, map etc. Everything else should be packed in the order you will need them.
  7. Stop For A Picnic

    Have a picnicWho says that your holiday has to start when you reach your destination? Why not start it on your journey and stop for a picnic along the way? Take a few snacks, sandwiches, crisps, drinks and fruit and find a nice spot to stop and have a picnic.
     
  8. Plan A Scenic Route?

    Avoiding MotorwaysRather than just traveling along the boring motorways, why not plan a scenic route for your journey? Advantages of taking a scenic route to your destination include, avoiding long holiday tailbacks, stopping to stretch your legs more often, and discovering quaint little villages and beautiful scenery along the way
  9. Take Anti Sickness Remedies

    Prevent Car SicknessThere is nothing worse than having poorly children in the back of the car. As well as over the counter anti sickness tablets you can use acupressure bracelets which have a small plastic button on the inside which put gentle pressure on acupuncture points. One final remedy would be to try ginger snap biscuits, as ginger can be a natural remedy to nausea.
  10. Have you got your Free Motor Legal membership card & accident survival checklist? If the worst happens and you have a bump that was not your fault, calling our 24/7 claims line on 0800 144 44 88 could have you back on the road without needing to claim from your own insurance policy and avoid paying your excess.

Tuesday, 3 November 2015

Solved - the increase motorists are seeing from IPT hike
Instead of being nearly £100m worse off, Britain can be £219m better off!

With no shortage of news stories appearing about the affect the rise in Insurance Premium Tax (IPT) caused on 1st November, data from the Association of British Insurers (ABI) says that 7.3 million car policies will be affected with an average increase of £13.00

This means that aside from any other reasons for prices increasing, Britain will be paying £94.9m more in premiums solely as a result of the IPT increase.

There is no way of avoiding the IPT increase and insurers are not absorbing the costs, so motorists need to stay on their guard to make sure they can still get the best value for money. Enter Free Motor Legal, a UK based company that offer all motorists in England, Scotland & Wales a genuine free alternative to paying for motor legal protection insurance.

Motor legal protection is usually sold as an add-on in addition to the basic motor insurance policy and a typical annual premium for motor legal protection is £30. By offering all British motorists free lifetime membership, Free Motor Legal can completely reverse the additional charges the UK motorist is seeing from an increase of nearly £100m to actual savings of up to £219m! 

If those 7.3 million car drivers opted to choose a free alternative to motor legal protection, that would be 7.3m people saving up to £30 a year from their motor insurance costs, adding up to a staggering £219m!

Managing Director of Free Motor Legal, Lee Jones, said “Motor insurance premiums are already on an upward trend and any further increases due to the tax levy are an unwelcome sight for motorists.”

Jones went on to add “By offering a free membership scheme which provides lifetime membership, this saves most motorists around £30 from their annual motor insurance costs. Households with several vehicles can see significant savings as most insurers sell a motor legal protection policy for each separately insured vehicle.. Because we are not selling an insurance product, we are also exempt from having to add IPT”


This offers key savings for any motorist who is paying for motor legal protection, be it for cars, vans or motorcycles. Better still, this is not a one-time-only offer or only available to new customers. With free lifetime membership, there is no need to renew membership each year and the savings therefore continue.

This offers motorists great savings but also the flexibility to still choose who they insure with each year and therefore shop around as there are no rewards with the insurers for remaining a loyal customer.

Monday, 20 July 2015

Free Motor Legal scoops an award

That's right, we have been selected by BBC Radio 2's resident Business Expert Nick Brown as Small Business of the Week!  #smallbusinessoftheweek 

Nick said "I first came across this company when the managing director of Free Motor legal, Lee Jones, rang me when I was on The Jeremy Vine Show on BBC Radio 2 ‪#‎R2Vine‬ a few months ago to tell Jeremy and I and the programme's six million listeners all about his business. The more I found out about it the more I liked the concept."

"Free Motor Legal was established in order to provide all motorists in England, Scotland & Wales with a way of making sure they had all the necessary assistance after a non-fault collision, but without the need to charge them for an annual policy. It is 100% FREE. To find out more visit www.freemotorlegal.co.uk or see them on Twitter at Free Motor Legal Well done Lee and the team."

We are delighted to be chosen for this award and it helps to single out our product and service, which is unique compared to the UK motor insurance industry, by offering motorists a free and genuine alternative to buying motor legal protection cover.

We remain committed to saving as many motorists on their annual insurance costs as possible and aim to save the UK motorist over £100 million a year. These savings are welcomed at a time that insurance premiums are increasing and a further rise is expected in November when Insurance Premium Tax (IPT) increases, which will put all premiums up across the board.



Friday, 10 July 2015

Insurers don't want to provide data in relation to "add on" products to help consumers decide on the "value" of the product.

Legal Expenses Insurance or Motor Legal Protection is an insurance "add on"

A lot of the focus of the report from the Financial Conduct Authority into the sale of add-ons was relating to products like Gap Cover, but Legal Protection insurance also comes under this banner.

An article in a trade magazine Insurance Age  reveals that providing such information would be a very difficult task and the insurance lobby will argue that it won't help consumers decide.

Our position is that the insurers and brokers do not want to provide any data such as the amount of claims where motor legal protection policies have actually paid out any costs or fees as they rarely if ever do so!

Our own insider knowledge is that often the motor legal protection policy that many people buy for around £30.00 each year as an add-on to their main motor insurance policy actually cost somewhere in the region of £0.50p to £1.00. The mark up is therefore incredible at almost 3000%!

The reasons the core cost of the product to the insurer or broker selling the legal protection policy is so low is that the policies seldom, if ever, pay out any legal fees. The solicitors who get appointed to deal with the claims work are essentially told never to claim for any fees if they lose a case and therefore the actual underwriter of the policy never has to pay out any money. Hence why the basic cost is as low as 50p.

If the claim does not appear to have "reasonable prospects of success" they will refuse to take the case on, so that no legal fees are incurred. Again, allowing the cost of the underwriting to be very low and the mark up and commission eared by the insurer or broker who sells you the motor legal protection policy very high.

We feel that insurers should have to reveal their claims cost exposure and the outlays they have had to make in relation to the number of claims they have had notified. We feel this would expose the true underlying fact that whilst motor legal expenses insurance/ motor legal protection is a good thing to have, the actual value of the product in terms of what you are being charged for relative to what the unit cost of the product is and the lack of any real risk the underwriting insurers face represents a product that consumers are being over charged for.

The alternative to being over charged is to look at the free alternatives like Free Motor Legal