Snow Ball

On his feet when it’s time to take cover ERIC GALBRAITH ERIC

0 Comments | Herald, The; Glasgow (UK), Oct 11, 2008 | by Simon Bain

IN penny-pinching times, insurance is seen as a place to save money – or for the less scrupulous or more desperate, even to make money.

The temptation to cut your premiums, or to try and trigger a pay- out, rises as economic confidence falls.

Even sound claims may be refused, and even supposedly sound insurers may yet be tested by the financial crisis.

For Eric Galbraith, the Glaswegian chief executive of the British Insurance Brokers Association (Biba), that makes brokers giving advice, rather than the cheapest product on the internet, more valuable than ever.

Galbraith, who ran the Royal Bank of Scotland’s insurance business in Glasgow in the 1990s and who took the helm of the industry body five years ago, predicts a multiple fall-out from the financial crisis on the business of insurance.

At a time of increased job insecurity, policies that properly insure against defaulting on mortgage, loan or credit card payments could become critical. But this month the Financial Services Authority slapped a record GBP7m fine on Alliance & Leicester for the mis-selling of payment protection insurance (PPI), and outlawed the sale of single premium policies alongside personal loans, in a market where banks have been charging up to 12 times more than independent providers for the same cover.

“PPI is a product individuals should consider, ” Galbraith says. “What we need is more competition in the market . . . it has got to take a step change, of consumers being aware they can buy this cover elsewhere in the market. Banks have an audience at the point of being loaned money, which makes people quite vulnerable.”

Travel agents enjoy a similar power over a captive audience when selling holiday insurance over the counter, but campaigning by Biba helped to ensure that they are now covered by full financial selling rules.

Paying too much for cover that does not work is one pitfall, paying too little is another. The explosion of internet comparison or “aggregator” sites has prompted an investigation by the Financial Services Authority into the broking industry’s complaints that online buyers are being sold short.

“We say many sites are unfair and misleading, ” Galbraith says. “We are working with some of them who have a different attitude, who don’t go out to manipulate the figures.”

The association praises gocompare. com for guaranteeing a quote once given and not building hidden assumptions into it. It lambasts other sites for practices such as quoting on the basis of a GBP500 excess and no windscreen cover on motor policies, which one user in three did not realise they had accepted, according to research. “These sites are coming up with the wrong cover at the wrong price
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