Insurers adding to numbers of uninsured drivers by ignoring mileage
A US consumer group is critical of insurers in a new report on low-mileage drivers. The Consumer Federation of America says that three of the five largest insurance companies do not offer discounts to drivers who do less than 5,000 miles a year with the exception of those in California where it is a requirement. Farmers, Progressive and Allstate have been criticized for failure to offer lower premiums, while State Farm was found to consistently offer cheaper premiums to low-mileage drivers.
Stephen Brobeck, CFA's Executive Director says that insurers are adding to the problem of uninsured drivers by discriminating against older and lower-income drivers who may do fewer miles: "This lack of concern for mileage, along with an emphasis on other non-driving factors such as occupation and income, help explain why insurers charge many lower income drivers such high prices for minimal, state-required liability coverage."
New Zealand insurer reports losses after quake pay-outs
New Zealand insurer Tower has reported a first-half loss following greater-then-anticipated claim payments following the Canterbury earthquakes in 2011. Although the company’s underlying earnings were up it had exceeded its reinsurance cap for the quake and reported losses of NZ$4.9 million compared to a $13.1 million profit for the same period a year earlier. The industry-wide cost of rebuilding following the earthquake is estimated to be as high as $37 billion.
Which country is facing the end of insurance agents?
The rise of bancassurance could mean the end of insurance agents in Kenya as an increasing number of agents drop out of the industry. Deals between banks and insurance companies has meant agents and brokers are under increased pressure to be financially viable and many are choosing to give up while the number of new agents is falling. Kenya’s Insurance Regulatory Authority reports that agents are also struggling with low commission rates. A report from PwC predicts more bancassurance deals being signed this year and there are incidents of some lenders refusing loans unless their own insurance recommendations are followed; a practice which agents want to be made illegal.
