Julian Knight: Insurers' stance is as clear as a cloud of volcanic ash
Sunday 18 April 2010
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.
- 1 Howard Jacobson: Let’s see the 'criticism' of Israel for what it really is
- 3 Gingers face extinction due to climate change, scientists warn
Sustained immigration has not harmed Britons' employment, say government advisers
British jihadist calls for 'flag of Islam' over Downing Street and Buckingham Palace
Australia facing international condemnation after turning around Sri Lankans at sea
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
There’s a nasty smell in the political air – and it’s coming from the Tories
iJobs Money & Business
£40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...
£40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...
£300 - £380 per day: Orgtel: Financial Planning Manager, Banking , London, £30...
£60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: A leading fina...
Day In a Page
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar
A newly refurbished one-bedroom flat in the heart of Mayfair, close to Grosvenor Square
A charming four-bedroom house overlooking Burleigh Square Park, close to Thorpe Bay
A three-bedroom farmhouse with a large inglenook fireplace and exposed beams