With the chaos that has surrounded the opening of Heathrow’s Terminal 5, and the late Easter school holidays upon us, families are looking to take a break and the issue of baggage being lost or delayed is prominent.When travelling abroad, if your luggage is lost or delayed and you need to purchase items such as a change of clothes, hygiene products or any other necessary items, you would expect your insurance policy to reimburse you. Similarly, if your flight was delayed you would expect your insurance policy to provide some form of compensation for you being stuck in the airport lounge.
Defaqto has looked into the single trip travel insurance market to see what cover is provided for lost and delayed baggage as well as being delayed at an airport. The research noted:
- 14% of single trip policies do not provide any cover for delayed baggage.
- 40% of single trip policies only provide a maximum cover of £100 or less for delayed baggage.
- 40% of single trip policies only provide a maximum cover of £100 or less for compensation for flights being delayed.
- 74% of single trip policies provide £20 or less for the first 12 hours of being delayed at the airport.
- 82% of single trip policies provide £20 or less for the each subsequent 12 hours of being delayed at the airport.
Mike Powell, Consultant for General Insurance at Defaqto, said: “With the problems that have occurred with the opening of Terminal 5 and the fact that there has been widespread reports in the media of people not being able to collect their luggage and flights being cancelled or delayed, consumers do not always consider what cover is provided by their travel insurance policy for these types of eventualities. It is therefore important to check what is provided by a travel insurance policy before purchasing cover.”
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For further information contact:
Defaqto Limited
Insight person, Chris Johnston or Luci Mylward
01844 295 454
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The CML in its comment on January’s gross lending figures suggests that it was business as normal. However, it did concede that the coming months were likely to see lower gross lending volumes in the coming months.
We now await the actual composition of the lending figures. Ten years ago, the proportion of loans for house purchase was 79% of all lending; by 2007 this had fallen to 43%, with remortgaging and the buy-to-let category being the major beneficiaries of this reduction1.
David Black, Principal Consultant - Banking at Defaqto commented: “With credit harder to obtain, the housing market in the doldrums and moving costs a major consideration, don’t be surprised if the only sector of the market that is likely to show any sign of life for the next few months is remortgaging. Those lenders with access to funds may be looking for other niche areas to bolster their lending”.
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1CML Gross mortgage lending by type of advance, February 2008
For further information contact:
Defaqto Limited
David Black, Chris Johnston or Luci Mylward
01844 295 454
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Findings by the British Insurers Brokers’ Association (BIBA), following its investigation into price comparison websites, confirm Defaqto’s own findings in its survey of aggregators for its Motor Insurance in the UK report[1] published in October 2007.
Defaqto carried out a detailed study of the services offered by 17 leading aggregator sites, including Moneysupermarket, Confused.com, GoCompare, Comparethemarket and TescoCompare. Key findings in the report were:
- 65% of the aggregator sites had ‘default’ positions for underwriting questions and, in effect, could complete these questions on behalf of the proposer.
- 53% of sites automatically defaulted to a voluntary excess of either £200, £250 and more worryingly £500
- From the quotations obtained, 59% did not actually state who the insurer was.
- Only 47% of the sites analysed provided a “comparison feature” which allowed the proposer to check policy cover information.
- Only 41% of sites actually transferred the correct risk information to the insurer’s/intermediary’s website.
- Only 41% of insurer/intermediary websites matched the initial premium given by the aggregator.
- Only 12% of consumers who applied directly to the insurer/intermediary’s own website were provided with the same premium as provided by the aggregator site.
- 88% of the insurer/intermediary websites needed the proposer either to ‘re-key’ or provide additional information.
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In recent times the credit card industry has done little to encourage customer loyalty, preferring instead to pursue new customers with a wide range of enticing introductory deals, such as 0% balance transfers, 0% purchase or enhanced introductory cash backs.Meanwhile, existing customers were largely ignored and, unsurprisingly, the credit worthy ones decided to take advantage of these deals and switched cards on a fairly regular basis.
Against this backdrop Capital One has announced an initiative which is a genuine attempt to engender loyalty within its current customer base, as well as an initiative designed to win new customers.
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- New report identifies problems and solutions -
In its latest report, “Unit Linked Bonds in the UK 2007″ (1), Defaqto examines the pressures that are undermining these saving instruments and how they will affect their appeal to investors.
The report examines the likely impact of the proposed introduction of the 18% flat rate of Capital Gains tax, the implications of the Retail Distribution Review, the growing importance of fund supermarkets and how life companies are likely to react to the growing influence of multi-manager propositions in the consumer investment field.
While all these influences are likely to cause serious challenges to the life companies, the report is far from pessimistic about unit linked bonds. For instance, as a result of CGT changes, IFAs are predicting a drop in business, (2) with 71% seeing a fall of up to 25%, but it is far from terminal. The press coverage proclaiming the death of unit linked bonds seems greatly exaggerated as only 11.5% expect a drop in business of more than 75%.
| Estimated %age drop-off in business placed in Bonds should CGT changes go through |
| No Drop |
32.0%
|
| Up to 25% Drop |
39.0%
|
| 25% to 50% Drop |
16.0%
|
| 50% to 75% Drop |
1.5%
|
| More than 75% Drop |
11.5%
|
Source: Unit Linked Bonds in the UK - December 2007, Defaqto Ltd
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Defaqto has launched a buy-to-let home insurance table for the residential market on its Aequos online database. This is the first time that a comprehensive analysis of the buy-to-let market has been made available to insurers and brokers.
The table analyses policies from 32 providers and includes a full listing of policy features, product benefits and policy excesses. Also included is the full policy wording for each product.
The table provides detailed cover information for Buildings, Loss of Rent, Landlord’s Contents, Liabilities, Excesses and additional covers such as Rent Guarantee and Legal Expenses.
Commenting on the new database Mike Powell, Consultant - General Insurance at Defaqto, said: “The table was built following requests from a number of our clients and is the first time the buy-to-let market will be able to access these dedicated insurance policies in one place. It will greatly assist brokers to recommend the most suitable products for their customers and confirms Defaqto’s commitment to providing new and innovative solutions.”
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For further information contact:
Mike Powell, Chris Johnston or Luci Mylward
01844 295 454
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- Call comes following ABI’s qualified support for Personal Accounts -
In a recent press release (1), the ABI gave its support for Personal Accounts but only on the basis that they add to savings rather than undermine existing pension provision. This position is supported by consumer research (2) carried out for Defaqto’s Retirement Savings & Income report 2007 (3).
This revealed that 71% of those surveyed will be relying on the State Pension to provide them with income in retirement while 49% stated that they will rely on their employer’s pension scheme, 24% will rely on bank or building society savings and 22% said they would be relying on personal pension savings.
Matt Ward, Defaqto’s Principal Consultant for Pensions & Wealth Management and lead author of the report, stated that: “These findings underline the pressure on the Government to better encourage private pension savings and to deliver a successful Personal Account proposition, thereby alleviating future strains on the State system. They also confirm that employers will have a huge role to play in future pension provision in the UK.”
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Just as the FSA is raising doubts about the ability of some advisers to justify multi-manager selection (1), and with the industry in a state of flux, an independent updated guide designed to help financial advisers improve their understanding of multi-manager fund management has just been produced. Called “Blending Talents: A guide to multi-manager investing in the UK”, Defaqto’s latest guide not only contains highly relevant information about the structure, benefits and information on the investment process itself, it also provides a methodology and is crammed with fund statistics to identify likely funds for further investigation.
The guide also comes at a time when the level of fund manager moves in this section of the industry is unprecedented as many fund management companies are positioning, or repositioning themselves in anticipation of further growth in what is becoming the managed solution of choice.
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Savers thinking of investing in regular savings accounts offering high rates of interest should carefully evaluate what they will actually earn and the conditions of the offer, says Defaqto. The majority of the highest paying regular savings accounts have conditions attached to their availability. Typically they are restricted to customers who either have a specific current account with the bank or to new customers prepared to open such an account. Depositing a certain amount of money into the current account each month may also be one of the conditions that applies before the high paying regular savings account can be opened.
David Black, Principal Consultant - Banking at Defaqto said: “Some of these offers have cracking headline rates but all of them are limited to a one year period so the actual amount of interest that can be earned looks surprisingly low when compared to the headline rate”
“Many people wrongly assume that if they invest £100 a month for a year at 10% that they’ll get gross interest of £120 (i.e. 10% on the entire £1,200). In reality only the initial monthly investment that will earn interest for a full year. The actual interest earned would only be £65 for a non-taxpayer, £52 for a basic rate taxpayer or £39 for a higher rate taxpayer”
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Nearly half of providers marketing SIPPs offer a defined link to fund platforms in their propositions to aid mutual fund trading, according to Defaqto’s Retirement Savings & Income Report 2007.
The figure has risen from 43% earlier in 2007 to 47% currently, with Defaqto expecting the rise to continue as the battle between structured and flexible SIPP propositions intensifies.
Matt Ward, Defaqto’s Principal Consultant for Pensions & Wealth Management and lead author of the report, says: “This movement provides a key example of where sections of the market are shifting away from full flexibility and towards more packaged propositions with tangible process improvements and cost efficiencies.”
“As the search continues for the holy grail of straight through processing and up to the minute online valuations through SIPPs continues, it is inevitable that more of these relationships between investment service providers will be formally established.”
Defaqto’s report also highlights the clamour for other providers of investment services and trading platforms to seek distribution opportunities via the buoyant pensions market.
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