News: Cover corps set to take the road to Norwich

£1.1bn deal will spell the end of the RAC's insurance broking arm; credit card fraud up ahead of introduction of chip and pin
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The Independent Online

It may not have broken down but the Royal Automobile Club (RAC) is in line for a roadside rendezvous with Aviva, owner of Norwich Union.

It may not have broken down but the Royal Automobile Club (RAC) is in line for a roadside rendezvous with Aviva, owner of Norwich Union.

The proposed £1.1bn deal to buy one of the best-known brands in the UK emerged last week. If approved by shareholders, it will bring an end to the RAC's activities as an insurance broker for hundreds of thousands of motorists.

Alongside its breakdown and recovery service, the RAC currently offers competitive car and home insurance deals from 22 different providers - including Norwich Union.

But under the new arrangement, this broking arm would be replaced with a direct sales division, selling only Norwich Union policies.

Aviva says it wants to exploit a valuable brand in the UK financial services market - and ultimately cross-sell other products to the more than two million members of the RAC.

"Of these, only 13 per cent currently have more than one RAC policy," said an Aviva spokeswoman.

If the Aviva takeover were to get the go-ahead, consumers would have to make sure they were still getting competitive deals on their car insurance, said Richard Mason of the price-comparison website

However, given the size and financial firepower of Norwich Union, premiums could still remain competitive.

"[The takeover] seems to make a lot of sense for the RAC," said Mr Mason. "And Aviva is certainly in a position to deliver value for customers."

Endgame for card sharps

Criminals netted more than half a billion pounds through card fraud in the UK last year - up by more than a fifth.

The increase - to £504.8m - was partly down to fraudsters increasing their activities before the security benefits of chip and pin took effect, said the Association for Payment Clearing Services (Apacs).

"Card not present" scams (where goods are bought over the phone or internet) continue to be the most common type of credit card fraud - up by a quarter on 2003 to £150.8m. Identity theft linked to cards has also increased sharply - up by more than a fifth in the past two years, to £36.9m. And fraud committed using cards stolen in the post rose by nearly two-thirds, to £72.9m, as criminals took advantage of millions of new cards being issued as part of the rollout of chip and pin. Most shocking of all, fraud at cash machines shot up by more than 80 per cent.

Thankfully, chip and pin - still being rolled out across the country - is set to have a big impact on tackling crime in all these areas. Sandra Quinn, spokeswoman for Apacs, said its fraud forecasts showed that without chip and pin in the UK, card fraud losses would by now have topped £800m.

"As more of us use a PIN number, the harder the criminal's life becomes," she said. "But clearly they are going to keep on targeting cards."

This, she added, was why a wide range of anti-fraud initiatives had been put "in place and in the pipeline".

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