Car Insurance

The U.K. motor insurance market has suffered underwriting losses of more than GBP5 billion ($7.8 billion) in just seven years, Standard & Poor’s Ratings Services said in a report published today.

“Having failed to reach ‘breakeven’ or report a profit since 1994, the market is in a difficult situation,” said Standard & Poor’s credit analyst David Laxton. “Investment income earned by the market will have mitigated the underwriting losses in part, but will in no way have covered them, leaving insurers with very significant operating losses.”

With premium growth having halved in 2001, the market is now also faced with the prospect of renewed competition, suggesting that the current insurance cycle is close to peaking.

A brief return to profit by year-end 2002 remains possible, but the market’s long-term profitability looks uncertain. A resurgence of competition will come as something of a relief to motorists, who have seen the cost of their insurance policies rise exponentially in recent years, but threatens to ruin any chance of medium- to long-term profit for insurers.

Heralding the return of competitive forces, premium growth in the U.K. motor insurance market has more than halved, falling to 8% in 2001 from 20% in 2000. “The slower rate of premium increases is symptomatic of the growing competition for profitable business; evidence that has been supported in 2002 by a number of recent advertising campaigns promising motorists lower rates,” said Mr. Laxton.

Nevertheless, rates remain at a high level, with a break-even or better result possible for the first time in the current insurance cycle at year-end 2002, due to positive pricing actions in 2001. “Gross premiums written by the market totaled GBP10.4 billion in 2001, leading to a 10-percentage-point fall in the average combined ratio to 103%, and edging the market closer to the elusive 100% break-even mark,” said Mr. Laxton.

He added, however: “A further significant slowdown in growth during 2002 and 2003 — alongside recent evidence of an increase in claims costs — could reverse even the near-term forecast for profitability.”

Although recent new entrants to the market–such as esure and Egg — have resulted in more insurers vying for market share, it is the top 10 groups that continue to dominate the scene, representing 84% of total gross premiums written in 2001.

Among the top 10, Direct Line has outperformed its peers, reporting a combined ratio of 91% in 2001, a 9% improvement on 2000. Notably, the group is one of only three groups in the top 10 — including Allianz and Fortis — to have reported an underwriting profit. Aviva, meanwhile, remains the largest player in each of the main motor insurance classes; comprehensive, noncomprehensive, and fleet. Of these classes, noncomprehensive insurance saw the strongest premium growth, increasing by 25% to GBP900 million. Fully comprehensive insurance grew by 16% to GBP5.9 billion, and fleet insurance by 3% to GBP1.5 billion.

IN 1944, the avant-garde Australian poetry magazine Angry Penguins enthusiastically published the work of a hitherto unknown poet called Ern Malley. Ern had died of Graves’ disease, aged just 25, and the verses had been submitted by the poet’s sister, Ethel. She had not even known that her brother, a motor mechanic and insurance peddler, wrote poetry.

Shortly after The Darkening Ecliptic, Malley’s cycle of 17 ultra- modernist poems, had appeared in print, two traditionalist poets then revealed that they had invented Malley and fabricated his verses from various absurd sources. The lines were arrant nonsense, and The Darkening Ecliptic was a hoax to expose the fraudulence of modernist criticism and poetry. Max Harris, the editor of Angry Penguins, was humiliated; in a bizarre twist, he was then prosecuted for obscene innuendo in the poems of Ern Malley he had printed.

Hoaxes are like time bombs: having been been passed as safe by experts, they then blow up in their faces. Ern Malley, for example, could not possibly have died from Graves’ disease, as thyrotoxicosis is not fatal and, although few poetry editors could know this, the punning allusion to Robert Graves might have rung a note of alarm.

Once a hoax is revealed, though, the whole object of study is radically altered and it seems impossible that anyone - let alone an expert - could miss all those giveaway clues. The intention is to undermine an entire field and show that it is hokum; in Malley’s case, modernist poetry. Other recent examples include Alan Sokal’s attempts to debunk critical theory by getting a pseudoscientific article into print, and William Boyd’s disquisition on the invented 20th-century American artist Nat Tate.

The hoaxers claim to be making a legitimate challenge on grounds of accuracy or aesthetics, but it can backfire. Some intellectual renegades have been approvingly citing Sokal’s “Transgressing the Boundaries: Towards a Transformative Hermeneutics of Quantum Gravity”. Max Harris, Ern Malley’s publisher, continued to believe in him: “For me, Ern Malley embodies the true sorrow and pathos of our time.”

Indeed, Harris thought that the collaboration was the best work that the hoaxers McAuley and Stewart had managed, far better than their traditionalist verse. It has certainly been reprinted more often.

Peter Carey’s intricately-labyrinthine novel, My Life as a Fake, is deeply indebted to the Malley affair. Although the collaborators McAuley and Stewart are replaced by the single and singular figure of Christopher Chubb and Max Harris by David Weiss (while Ern Malley has become “Bob McCorkle”), other names, dialogue, and lines of poetry are lifted straight from the case. The account is written in the person of Sarah Wode-Douglass, known as “Micks”, fortysomething editor of The Modern Review. Following a chance encounter with Chubb in Kuala Lumpur, Micks begins to piece together the forgotten McCorkle case after a quarter-century.

The writing is precise and beautifully intense, blending impressions of Malaysia with the ebb and flow of Micks’s mental state, recalled, sometimes mistily, after many years - and perhaps unreliable. She is obsessive and anxious, listening to contradictory accounts of the McCorkle affair in alternating waves of amazement, confusion, irritation and bewilderment. It is difficult to see anything clearly; some stories she hears must be at best delusional, at worst simply mad. But they make compelling reading and, as they take shape, begin to outline something far more eerie than a literary prank.

Chubb claims that he cooked up the McCorkle business for his love of “truth and beauty”, because “There had been a complete decay of meaning and craftsmanship in poetry.” He believes that literature was being eroded by Weiss’s fashionable support of the pretentious poets in his trendy magazine, Personae: these frauds were the real fakes.

So, pretending to be Beatrice, supposedly the late Bob McCorkle’s sister, Chubb tells how he engaged in a correspondence with Weiss and sent him the spurious poems. Weiss was bowled over and printed the lot. Then things got out of hand. McCorkle took on a life of his own and Chubb became a victim of his own creation: “I imagined someone and he came into being.” The imagined poet was made flesh, and pursued his creator with an uncanny vengeance.

This unnerving tale is told to Micks in a series of interrupted monologues, spoken in a lilting patois. Micks’s spiralling account of Chubb’s story reads as a sort of neo-Gothic novel of stories-within- stories, with entanglements among the riddles of the past, doubling and mirroring, a fascination with books and manuscripts, and mysterious deaths. There are allusions to Mary Shelley’s Frankenstein and Borges, but the Gothic element is underplayed, subordinated to the luscious floral imagery that blossoms throughout the book to leave a heady, almost dream-like memory.

In creating an author as well as the work, literary forgers trespass on sacred ground and may disturb strange demons. But they can also pose fundamental questions about literary - and human - values. Carey gives profound attention to the mysteries of authenticity and poetry, especially on how fabricated fakes may become supernatural and inspirational. This is how he scintillatingly rewrites the Malley affair.

For Harris, the Angry Penguins project sought “a mythic sense of a geographical and cultural identity” for Australia. It was a bold attempt to rethink Australian art and literature, and reforge national culture - until it was torpedoed by Ern Malley. My Life as a Fake accommodates this fall within its own myth of creation, as part of its own composition. This is ultimately a novel about Australian cultural identity, but one which mythologises and embraces the fear of being fake, rather than shying from it. In a beautifully-crafted piece of storytelling, Peter Carey has produced an immensely powerful work that will resonate for generations.

AN INSURANCE company is refusing to pay out a pounds 400,000 claim to the widow of a motor cycle accident victim because he had a mistress and his marriage would not have lasted.

The soldier’s wife did not know about the other woman until he died in the crash with his lover riding pillion, the High Court was told yesterday. Sadie Dalziel, 30, said she had “worshipped the ground walked on” by her husband, Jason, and was shocked to discover his double life. Elizabeth Simpson, who survived when the bike crashed in Hull in 1996, also had no idea there was a wife and considered herself his fiancee, the court was told.

Lance Corporal Dalziel, who was 25 and due to start a tour of duty in Kosovo, also left a baby daughter, Caris, now five.

Mrs Dalziel, of Burham, Kent, wants damages from the other driver, Gary Donald, from Doncaster. His insurers have admitted 80 per cent liability but say the widow should have only modest damages because her marriage was “unlikely to have survived”.

Mrs Dalziel told Deputy High Court Judge Robert Moxon-Browne QC that if her husband had survived she would have stayed with him even if she had discovered about the other woman.

Howard Elgot, representing Mr Donald, told the judge Miss Simpson, of Shiptonthorpe, near York, had been told by the soldier he would move to be near her when he returned from Kosovo in late 1996.

Mr Elgot said Dalziel began his relationship with Miss Simpson in January 1995 and proposed to her in November the same year, eight months after marrying his wife. He said the soldier had disciplinary problems in the Army and his career had also been unlikely to survive.

The widow’s lawyers argue that she and her daughter were dependent on Dalziel and are entitled to substantial compensation for his death.

THE MOTORBIKE is making a comeback. Last year motorcycle and scooter sales hit their highest level for 13 years, says the Motor Cycle Industry Association, with over 120,000 machines sold in the UK.

You might think that this is because more of us are buying trendy scooters, but the best-selling bike of 1998 was a whopping great 900cc Honda. The truth is that a growing number of thirty-something and forty-something professionals are splashing out on luxury high- performance bikes to ride in their spare time.

Ensuring that these bikers ride safely is now a concern for the insurance industry and the Department of Transport. The rise of the thirty-something biker led many insurers to think that biking was entering a new, safer era. Far from it. “The problem is that people are getting on bikes again maybe 15 or 20 years after owning their first bike, without realising that big bikes are a lot more powerful now,”

explains Richard Alger, market support manager at Norwich Union. “A whole new set of riding skills are now required and many born-again bikers are having accidents because they don’t realise this.” So if you are thinking about joining this band of born-again bikers, you need the right insurance. Specialist insurance broker MC Edwards, which has put together a policy for Peugeot scooter owners, offers comprehensive cover at a flat rate of pounds 225. This is reduced to pounds 150 if you just take out third party, fire and theft cover. Insure a classic scooter (more than 20 years old) and your premium could be pounds 40. The premium for a high-performance bike is more expensive. Under Carole Nash Insurance Consultants’ Ultima policy, an office worker of 39 living in Milton Keynes with two years’ no claims and adequate security, riding an pounds 8,000 Yamaha YZF-R1 registered this year, would pay pounds 534. There are three ways to buy motorcycle insurance: through a specialist insurance broker, from a motorcycle dealer (usually arranged via a broker) or from a direct insurer. The only direct company actively selling motorbike cover is Hastings Direct. When the insurer burst on to the market a couple of years ago, it was offering some cheap premiums. They are not as competitive now but it is still worth getting a quote. Motorcycle Direct is also offering good premiums. Motorbike insurers have become more sophisticated but there are two basic things all of them look for: adequate security and evidence of safe and competent riding. Motorbike theft is a growing problem. A bike is stolen every 13 minutes, and for this reason insurers will require an immobiliser on many higher- value bikes. In some cases the owner will be required to garage the machine and secure it to the floor with a ground anchor. To encourage owners to take theft seriously, most insurers will offer discounts for security devices. For example, Cornhill offers a 7.5 per cent discount for garaging and between 5 and 7 per cent for security devices. Norwich Union offers discounts of up to 8 per cent for immobilisers and tagging devices on its Premier Bike policy. Anyone wanting to ride a motorbike or moped must complete Compulsory Basic Training (CBT). The training is thorough, covering areas such as bike maintenance, gear changing and junctions. Many motorcyclists also undertake advanced rider training. Insurers will usually reward these policyholders with a discount. For example, Motorcycle Direct has an agreement with the British Motorcyclists Federation that anyone successfully completing its riding scheme will get a 25 per cent discount. Most motorbike policies have similar standard sections, covering damage to, or loss of, vehicle, liability to third parties and usually legal expenses. However, some specialists offer policies with a wide range of standard and optional extras. The first thing you should look for in a policy is an emergency breakdown service. Norwich Union charges an extra pounds 28 for the RAC’s service, Bennetts also offers RAC rescue and Motorcycle Direct offers a recovery service from DAS. Lombard is one of the few companies that does not provide roadside recovery. Most policies will also offer automatic green card cover for riding in Europe. Check whether the policy covers personal possessions; some do not and others have low limits. Carole Nash’s Icons has a limit of pounds 1,000 for helmets, leather and other accessories; Norwich Union charges an extra pounds 22 for pounds 250 of possessions. Also ask if personal accident insurance is available - Norwich Union is unusual in offering up to pounds 1,000 of cover. If your motorbike is damaged beyond repair, some companies - such as Bennetts and Motor-cycle Direct - will replace the bike if it is less than six months old and if the damage exceeds 70 per cent of its listed price. Finally, you must check the excess. Most insurers will base this on a sliding scale according to the bike’s power. It usually ranges from pounds 100 to pounds 500. Beware some of the small ads in the back of motorcycle magazines. The premiums maybe cheap, but the excesses can be as high as pounds 1,000. Tim Collison is editor of `Professional Broking’ magazine. bike specialists Bennetts, 0870-333 0007 Carole Nash, 0800-298 5500 Devitt’s Direct, 0645 279305 Motorcycle Direct, 01454 419801 Hastings Direct, 0800 001066 MC Edwards, 01536 510100 NU Direct, 0800 125750 For Norwich Union, Cornhill, Lombard and Eagle Star policies, contact a specialist broker.

Strong competition in home and motor insurance failed to take the gloss off results from General Accident, which beat market forecasts by turning in a record pounds 428m profit before tax last year.

The bottom-line figure, which rose from pounds 295m in 1993, was pushed up by a particularly strong surge in business in the final quarter. GA, one of Britain’s biggest composites, said it was well-placed for further progress this year, despite the fierce competition in the market and the conventional wisdom that the general insurance profits cycle is peaking.

Nelson Robertson, chief executive, said: “We’re on to a good profits stream now, and we need to manage the downturn in the UK market. Obviously we can’t sustain these profit increases in the UK, but that represents only 36 per cent of our business now, and the other parts of the world are improving. Even if flat profits are inevitable in the UK, progress in other areas will compensate.”

GA’s top management accepted that there had been downward pressure on premiums for home insurance, but said the market was more stable than motor business, where the arrival of direct insurers has squeezed margins across the industry.

Bob Scott, deputy chief executive, said: “Some people may save 10-15 per cent this year on their household premiums, but that is because insurers are differentiating between customers. Those who have poor claims records may see premiums rise, while those who are in neighbourhood watch schemes, for example, could see reductions of up to 25 per cent.”

GA bucked the trend in its life insurance division, with profits of pounds 53.3m ( pounds 49.1m) despite the downturn as a result of the pension transfers scandal and the bad publicity about endowments. Life premiums rose from pounds 866m to pounds 887m.

Losses from the estate agencies edged up pounds 500,000 to pounds 10m, but Mr Robertson said the insurance and pensions business that came through the chain made it a business worth remaining in.