Julian Knight: Insurers' stance is as clear as a cloud of volcanic ash

Have to hand it to those Icelandics, for an island with a population the size of Hull, they can't keep out of the news.

Not content with using billions of our savers' cash to fund their casino banking operations (and getting shirty when we have the temerity to ask for it back) their bilious volcano has grounded all our planes – not such a bad occurrence when you live on a flight path, like me. The response from insurers was, as ever, confused. One minute travellers are covered, another they're not. It's been reported widely that the volcanic eruption is classified as an Act of God (What happens, I wonder, if you're an atheist? Does "Act of God" not apply?) which means that travellers' losses are technically not covered.

Now, this is a bit of misnomer, because Act of God is a legal term – meaning events outside human control – and has nothing to do with insurance. There has never been an Act of God exclusion in insurance. Instead, they rely on the get out that only those events that are specifically mentioned in the policy are covered, and everything else – apart from events said to be excluded – is at the discretion of the insurer as to whether they pay out or not.

As a result, policyholders are left in limbo – whether or not something ends up being covered is often directly related to how much fuss the media kick up. With the Icelandic volcanic eruption it looks like most insurers are going to do the honourable thing (as they did with swine flu and the chaos at Heathrow Terminal 5) and pay up. But why is it that every time we see something out of the ordinary we have to go through this game of chicken with the insurance industry?

Instead of insurers having discretion, here's an idea. Policies should sum up the main points of what is covered – for travellers this would be stuff such as personal injury, medical treatment or luggage loss – and then they should list what definitely isn't. And any events which fall between the cracks, so to speak, should be covered automatically. In other words, take insurer discretion out and let consumers clearly see the circumstances where they will and won't be paid.

What a rotten business

Despite the sight of former Northern Rock deputy chief executive David Baker nearly in tears when apologising publicly after being fined half a million by the Financial Services Authority for mis-reporting the status of the Rock's loan book before the bank run in September 2007, there is no doubt that he and former credit director Richard Barclay got off lightly.

In the US, the Rock twosome would probably have faced trial and the prospect of years in jail. But Baker and Barclay aren't the only ones to blame. What about the executives who thought it was a bright idea to start offering the notorious Together mortgage at an LTV of 125 per cent? Their actions were really only the finishing touch on what was a thoroughly rotten business.

And what about the other rotten businesses? RBS, for instance. Will we see Fred the Shred Goodwin fined and banned by the FSA for managing the bust of the then world's biggest bank? What about HBOS, with its irresponsible lending practices, or Bradford & Bingley, which dived head-first into the murky sub-prime universe?

Then there are the building societies – Derbyshire, Cheshire and the Dunfermline (the last of which the Scottish nationalists laughably tried to claim was a case of economic wrecking by London rather than what I believe to be the most incompetent management action in the history of UK financial services). There are so many men in suits to blame – where does it all end?

Keep tax-cut cash in pensions

The Lib Dems say in their manifesto launch that they want to abolish higher rate tax relief on pensions. Now, I agree with them, but not on how the money is used. It is ridiculous that four-fifths of the tax relief on pensions savings go to the highest earners. The Lib Dems want it to fund what amounts to an income-tax cut – which will just get blown in many instances on a holiday, car or big telly. I'd much rather keep it invested in pensions, but how? Use the money to raise the basic rate of tax relief from 20 to 26, 27 or even 28 per cent, thereby incentivising millions more on average earnings to save.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
Life and Style
Powdered colors are displayed for sale at a market ahead of the Holi festival in Bhopal, India
techHere's what you need to know about the riotous occasion
Arts and Entertainment
Larry David and Rosie Perez in ‘Fish in the Dark’
theatreReview: Had Fish in the Dark been penned by a civilian it would have barely got a reading, let alone £10m advance sales
News
Details of the self-cleaning coating were published last night in the journal Science
science
News
Approved Food sell products past their sell-by dates at discounted prices
i100
News
Life-changing: Simone de Beauvoir in 1947, two years before she wrote 'The Second Sex', credited as the starting point of second wave feminism
peopleHer seminal feminist polemic, The Second Sex, has been published in short-form to mark International Women's Day
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Evening Administrator

    £8 per hour: Recruitment Genius: This Pension Specialist was established early...

    Guru Careers: Executive Assistant / PA

    £30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...

    Ashdown Group: Graduate Application Support Analyst

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Reach Volunteering: External Finance Trustee Needed!

    Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

    Day In a Page

    Homeless Veterans campaign: Donations hit record-breaking £1m target after £300,000 gift from Lloyds Bank

    Homeless Veterans campaign

    Donations hit record-breaking £1m target after huge gift from Lloyds Bank
    Flight MH370 a year on: Lost without a trace – but the search goes on

    Lost without a trace

    But, a year on, the search continues for Flight MH370
    Germany's spymasters left red-faced after thieves break into brand new secret service HQ and steal taps

    Germany's spy HQ springs a leak

    Thieves break into new €1.5bn complex... to steal taps
    International Women's Day 2015: Celebrating the whirlwind wit of Simone de Beauvoir

    Whirlwind wit of Simone de Beauvoir

    Simone de Beauvoir's seminal feminist polemic, 'The Second Sex', has been published in short-form for International Women's Day
    Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

    Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

    Why would I want to employ someone I’d be happy to have as my boss, asks Simon Kelner
    Confessions of a planespotter: With three Britons under arrest in the UAE, the perils have never been more apparent

    Confessions of a planespotter

    With three Britons under arrest in the UAE, the perils have never been more apparent. Sam Masters explains the appeal
    Russia's gulag museum 'makes no mention' of Stalin's atrocities

    Russia's gulag museum

    Ministry of Culture-run site 'makes no mention' of Stalin's atrocities
    The big fresh food con: Alarming truth behind the chocolate muffin that won't decay

    The big fresh food con

    Joanna Blythman reveals the alarming truth behind the chocolate muffin that won't decay
    Virginia Ironside was my landlady: What is it like to live with an agony aunt on call 24/7?

    Virginia Ironside was my landlady

    Tim Willis reveals what it's like to live with an agony aunt on call 24/7
    Paris Fashion Week 2015: The wit and wisdom of Manish Arora's exercise in high camp

    Paris Fashion Week 2015

    The wit and wisdom of Manish Arora's exercise in high camp
    8 best workout DVDs

    8 best workout DVDs

    If your 'New Year new you' regime hasn’t lasted beyond February, why not try working out from home?
    Paul Scholes column: I don't believe Jonny Evans was spitting at Papiss Cissé. It was a reflex. But what the Newcastle striker did next was horrible

    Paul Scholes column

    I don't believe Evans was spitting at Cissé. It was a reflex. But what the Newcastle striker did next was horrible
    Miguel Layun interview: From the Azteca to Vicarage Road with a million followers

    From the Azteca to Vicarage Road with a million followers

    Miguel Layun is a star in Mexico where he was criticised for leaving to join Watford. But he says he sees the bigger picture
    Frank Warren column: Amir Khan ready to meet winner of Floyd Mayweather v Manny Pacquiao

    Khan ready to meet winner of Mayweather v Pacquiao

    The Bolton fighter is unlikely to take on Kell Brook with two superstar opponents on the horizon, says Frank Warren
    War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

    Baghdad fights to win back Tikrit from Isis – but then what?

    Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable