Insurance Articles

What is flood insurance in Australia?

Written on January 13th, 2011 by jonckie@arrivealive.co.za
Categories: Did you know?, General Information, Insurance Articles

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Earlier this week we share a blog post titled “Video captures scene as vehicles are swept away by floods in Australia”

These floods will have a significant impact on the financial, and especially the insurance industry in Australia. Much has been written  – and will still be written-  about this topic. We would like to share some info provided by the Insurance Council of Australia on flood insurance:

The Insurance Council of Australia provides information about Flood Insurance

Flood Insurance in Australia – some useful information

Key Points

• The general insurance industry is working on developing greater access to flood insurance products for Australian communities., including a national flood information database (NFID) and a minimum standard definition for inland flood, to support better understanding of the risks to the community.
• Using NFID, where respective state governments have provided access to flood maps, flood cover will be able to be offered on terms relative to the known risks of the location.
• Ongoing co-operation and data sharing with government is essential to ensuring that the risks can be mapped and understood.

Background

• Flood is a persistent risk in the Australian community that traditionally accounts for one third of natural hazard damage.
• There are several inundation risks captured by the general term ‘flood’. Community interest and focus on flooding has traditionally been restricted to rivers and creeks overflowing their banks due to long duration rainfall over large catchment areas.
• Flash Flooding, a significant part of the flood risk, is produced by high intensity but short duration storms producing localised flooding conditions. Inundation risks related to stormsurge and tsunamis are also risks faced, albeit to a lesser extent by the Australian community.
• Many legacy land-use decisions and a general lack of availability of accurate flood mapping, have contributed to a situation where flood cover is not widely available to consumers.
• The 1974 Brisbane City flood provides a graphic example of the underinsured or noninsured economic impacts that were borne by the community and the government, where a total economic impact of $980M was experienced with insureds having cover to $68M.

In 2007 dollar terms, should such a flood ever be repeated, this represents a potential insurance loss of $1.8Bn and a simply staggering uninsured loss for both government and the affected community. An increase in the availability of affordable flood insurance for the community is imperative, a project that the Insurance Council of Australia is
currently engaged in.
• Notwithstanding the prospect that flood insurance may become more widely available in the future for certain types of inundation, the Insurance Council estimates that there are approximately 170,000 homes in the community where a high flooding risk may lead to high localised premiums or a simple lack of availability where insurers cannot accept the risk level.
• The key for consumers today, is to ensure that they are informed of the current flood risks to their home and to take feasible and available mitigation steps.

Determining the risk to your home

• Flood maps are available for some Australian communities that primarily focus on rivers and creeks. In some cases these maps also cover historical localised flooding due to overtaxed drains, etc (flash flooding).
• In many regional areas, Australian governments and other agencies have studied, analysed and modelled the risks by producing flood maps showing areas of inundation for 1:100 year flood events. While the style and content of these maps may differ they will all classically focus on highlighting geographic areas generally referred to as “flood
zones” or flood “overlays”, simply meaning those places at greatest risk of flood. The zones and overlays identify areas that have been flooded in the past, or are predicted to flood in the future. History shows approximately 80 percent of all flood loss occurs within these areas.
• In Australia flood mapping is typically the remit of your Local Council or a floodplain management authority. In determining if there is a flood risk to your property consumers should approach the Local Council or floodplain management authority and ask if your property is known to be affected by flooding. Many States require Local Councils to develop and implement natural hazard and environmental information as part of development controls.

Some States also require this information to be provided as part of various property purchasing processes in an effort to ensure that consumers are made aware of any latent risks with the property in question.
• If, as a consumer, you have not been given flood risk information as part of your State’s property purchasing process you should seek out the Local Council and/or floodplain management authority and request whatever information is available.
• Consumers should be aware that many factors can influence the accuracy of flood mapping including building development, road works, new agricultural growth, changes to river & creek catchments as well as changes to drainage and sewer arrangements for your area. Frequent re-familiarisation of the risks through engagement with your local
council and/or floodplain management authority is essential.

Protecting your home if subject to flood risk

• Apart from choosing to not establish a home in an area of known flood risk – the most prudent prevention method – there are personal flood mitigation actions that can be taken that may reduce the level of impact experienced during a flood. As part of its climate change adaptation program, the Insurance Council of Australia is developing property protection guidelines which provide high level guidance on risk mitigation for flood events.
• Consumers in a known flood zone or overlay should familiarise themselves with their Local Council’s emergency management plan or any flood awareness material provided by your local council, floodplain management authority or state emergency service agency for information that will help protect both yourself and to some extent your
property.
• Consumers can also familiarise themselves with flood preparation guidance offered by Emergency Management Australia.

Determining if you are covered for flood

• Consumers with property and contents insurance, who may be at risk of flood damage, should review the terms and conditions of their cover by reading their Policy Disclosure Statement (PDS). Characteristically, restrictions on policy cover are listed as exclusions which detail the circumstances under which cover is not applicable. If in doubt make
contact with your insurer to clarify the extent of cover currently held and your insurance
needs.

The Insurance Council’s flood insurance project

• Following on from the considerable research and work undertaken by the general insurance industry on the issue of flood mitigation and management, the Insurance Council Board endorsed an approach for the industry to pursue a framework which will lead to flood coverage becoming available for nearly all households in Australia.
• The industry has also reaffirmed its commitment to working in partnership with Governments to address the issues of flood mitigation and management, noting that flood remains a significant community issue that stands to worsen with the various inundation predictions arising from current climate change models.
• The Insurance Council believes a partnership approach with Government and the general insurance industry is needed to find ways in which community understanding of flood risk and its management can be increased. This includes flood insurance being made more widely available when the risk of flooding is reduced to an acceptable level
through mitigation measures.
• To reduce consumer confusion, the general insurance industry worked to develop a voluntary common definition for inland flood. It is envisaged that this definition of flood would be adopted on a voluntary basis by individual insurers; i.e. – insurers would remain free to offer coverage to alternative definitions for flood, with consumers able to use the
voluntary common definition as a reference point for comparison of the product actually being offered.
• The primary obstacle to achieving greater market availability of flood cover for the majority of households, is the ability for insurers to understand and price the risk.

NFID – National Flood Information Database

• Development and maintenance of flood maps and how they impact upon the built environment is a role typically left to local government authorities and/or floodplain management authorities in each of the states.
• In some instances there are highly accurate flood maps made available to the community and industry, upon which reasonable risk decisions can be made. In other instances no flood mapping is or can be made available, leaving a situation where local communities and insurers are unsure of the extent of the risk.
• The general insurance industry is preparing a national property database using available government flood studies, provided by each respective State.
• This database will be employed by Insurance Council members to test the risk applicable to an insured’s property and then to offer flood cover if the risk is within the insurers own calibrated limits.
• Apart from engendering a knowledge environment where the predicted risk to all flood prone homes will be able to be understood, quantified and priced according to individual underwriting tastes, the industry will also be in a position to work closely with government on those areas collectively identified as being at extreme peril and beyond the risk
appetite of the market.
• A key ingredient for the success of this project is the availability of and access to all current flood mapping, in all its diverse forms presently held by government agencies.

Working with Government(s)

• Insurance Council of Australia research indicates that a joint industry-government approach for flood insurance has been successfully undertaken by several OECD countries and it is our hope that this success can be replicated in Australia.
• The Insurance Council and Government have engaged on the flood issue through the newly formed National Flood Risk Advisory Group (NFRAG) operating under COAG.
• The key ‘ask’ from industry to government(s) on this issue is the provision of all available flood mapping data currently held at local, state and federal agencies, for incorporation in the national flood map.
• Consumers may not be able to access flood cover in areas where local or state government have not provided access to flood studies and maps.

Contact
Karl Sullivan
General Manager
Policy Risk & Disaster Planning

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City of New York looks to Pay As You Drive Insurance to change driver behaviour

Written on December 28th, 2010 by jonckie@arrivealive.co.za
Categories: Car Insurance Advice, Car Insurance Benefits, Car Insurance Claims, Cheaper car insurance, Insurance Articles, Pay As You Drive

SnipImage(16)At the time of writing this blog post there is much less travelling taking place in New York. Icy cold weather and blizzards have brought traffic to a near standstill and closed airports in and around New York. This is however not a regular occurrence – usually traffic is hectic at the best of times and traffic congestion a major concern to city authorities.

We have found some interesting information in an article by Jeremy Olshan in the New York Post about car insurance and the potential benefits of reducing traffic congestion in the Big Apple. The Bloomberg administration is considering measures to reduce traffic, and Pay As You Drive or mileage based car insurance are believed to be important tools in the fight against traffic congestion.

Pay as you drive (PAYD) / Usage based car insurance means that the insurance premium is calculated dynamically, typically according to the amount you drive.

Olshan says that these policies have been available around the country for a decade, but not in New York. Yesterday, the city’s Department of Transportation put out a request seeking ideas on how to use “mileage-based insurance pricing signals to trigger change in driver behavior.”

According to a 2008 study by the Brookings Institution, these incentives could reduce driving by as much as 8 percent, reduce emissions by 2 percent, oil consumption by 4 percent, and provide an average savings of $270 per car.

“A one-size-fits-all approach doesn’t make a lot of sense when it comes to pricing insurance,” Transportation Commissioner Janette Sadik-Khan told The Post. “Paying based only on how much you drive is a potentially innovative way to make it less expensive for New Yorkers to get around.”

Critics of the Pay As You Drive insurance schemes have expressed concerns about the invasion of privacy that comes with the more advanced telematic monitoring devices.

Even the critics however have to confess that PAYD is a money-saver for many people who don’t drive a lot!

Also view:

What is usage based car insurance?

B25 Hollard_PAYD_705x90

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Posted in Car Insurance Advice, Car Insurance Benefits, Car Insurance Claims, Cheaper car insurance, Insurance Articles, Pay As You Drive | No Comments »

What is the causal link required before a car insurer can reject your claim?

Written on December 20th, 2010 by jonckie@arrivealive.co.za
Categories: Car Accidents, Car Insurance Advice, Car Insurance Claims, Car Insurance Law, Insurance Articles, Ombudsman

understanding_t&c

Introduction

Car Insurance is not supposed to be the field of battle for fights between policyholders and big insurance companies. It is rather an agreement reached through mutual understanding whereby an insurance company agrees to provide cover for specified risks in return for the payment of monthly/ yearly car insurance premiums.

Both parties agree to clearly specified clauses and warranties in the car insurance policy and both undertake to abide by these clauses. If a party to the contract does not abide by these clauses – he is in breach of contract and the Law or Ombud has to ensure that justice and fairness prevail.

Exclusions/ Breach of Warranty and having your claim rejected

Most often the rejection or dismissal of a car insurance claim will be motivated and identified by the car insurer as a serious breach of contract – and usually manifests itself in conduct from the insured clients that amounts to an aspect excluded by the policy or a breach of a warranty provided!

We would like to refer briefly to a few examples:

Car insurance cover will be excluded if:

-          The driver of the vehicle is not a licensed driver

-          The driver of the vehicle is found to be intoxicated

-          The vehicle is stolen and did not have the specified alarm system or tracking device

-          The vehicle damaged in an accident is found to be non-roadworthy etc.

The insured client basically provides a “Warranty” that the vehicle will be operated and kept under certain circumstances.

But are these Breach of Warranty exclusions in car insurance policies fair?

This very important question will lead us closer to the importance of establishing a causal link. To answer this question we would have to reflect on the basics of car insurance and the obligations of both parties to make a complete and truthful disclosure of all aspects pertaining to the policy.

It is recognized that there are some facts which only falls within the field of knowledge of the vehicle owner. These are the very important facts on the disclosure of which the insurance company is able to calculate risk and decide on a premium.

Aspects to be disclosed by the vehicle owner/ client will include detail with regards to the driver, the vehicle, security features, where the vehicle will be driven etc. It is only fair to expect that a quote can only be provided and an agreement reached if such disclosure of facts is done with complete honesty.

If the vehicle owner discloses and provides a warranty that the vehicle will be parked in a closed garage at night in a gated community in Bloemfontein and will be fitted with an alarm system, the car insurance company cannot be forced to make payment if it later appears that the vehicle was stolen after it was regularly left overnight without an alarm system outside a pub in Hillbrow.

The requirement of a causal link

It can be expected that every insurance company will pay close attention to all accident claims. It makes business sense not to make payments where the client has acted outside of the scope of the agreement and where such conduct or breach of warranty excludes their duty to make payment.

It would however not be fair if the insurer is allowed to search and use the finest “potential deviation” that could possibly help them to avoid making payment…

The principles of fairness should apply – and this is where we meet the requirement of causation!

What is causation or a causal link?

The simplest explanation would be that there is causation where the specific conduct “causes” or brings about a specific result. In our criminal law we use the “conditio sine qua non test” – or “the condition without which not “. We may ask – would the result still have occurred had it not been for the specific condition or conduct?

This is however not as simple as it might seem. There is sometimes a new intervening event between the initial conduct and the end result. A good example would be where you cause an accident and the occupant of the other vehicle is not badly injured. He is taken to hospital in an ambulance but the ambulance overturns on the way to the hospital and the injured person dies in this accident. It would not be fair to charge you with causing the death of the person even though without your initial conduct the person would not have been transported via the ambulance, would not have been in an accident and would still have been alive!

When we refer to the requirement of a causal link between the insured’s breach of a term in the insurance contract and the insured’s loss we apply the same questions and use the same test.

In the latest newsletter from the Ombud we find a very detailed discussion by Prof JP van Niekerk on this topic and he uses an excellent example from the Roman Dutch Law to explain why the principles of fairness should still apply:

Short Term Insurance Example

“Suppose… that in the case of insurance on a ship destined for some Mediterranean port it was agreed that she had to be armed with ten guns of war so that there would be protection against attacks and possible capture by the enemy or by pirates; and suppose further that this term of the contract was not complied with by the insured but that only six guns were placed on board.

If the ship was then captured by Turkish pirates, the insurer would clearly not be liable (there in such a case being the required causal link between the breach and the loss).

But if the ship, without encountering any enemy or pirate vessels, was lost in a storm (something which would in any case have occurred even if there had been no breach of the contract and, actually, something which would have been even more likely in that case, because of the fact that had there been no breach she would have carried a heavier load of guns and would have been more prone to getting caught in a storm) the insurer would certainly have been liable for that loss.

Therefore…even if there was a breach of an undertaking by the insured at the time of the loss, the insurer could only avoid liability for that loss if it was causally linked to that breach.”

Application to Car Insurance

What do we say when we require the existence of a causal link between the insured’s breach of a term in the car insurance contract and the insured’s loss?

This can best be described with the following example:

-If the insured vehicle is driven by a driver and the tyres are smooth, making the vehicle non-roadworthy, and the driver then veers off at a turn on a wet road and causes an accident  – the car insurance claim can be rejected if the car insurer can prove that there is a causal link between the smooth tyres, the driver losing control around the turn in the road and the resulting vehicle damage.

- If the driver is driving the exact same car and some speeding motorist smashes into the back of the vehicle – the car insurer cannot then on finding out that the tyres were smooth, dismiss the car insurance claim as there was no causal link between the smooth tyres, the accident and the vehicle damage!

What is the test to be used?

“The warranties provided are to be interpreted reasonably and equitably and for that reason, even if the clause itself does not so provide, an independent and substantial causal link between their breach and the loss should be required before the insurer would be entitled to rely on such breach. Thus, where the insured can prove that his non-compliance with the clause was not the cause or a (contributory) cause of the loss, the insurer would not be able to escape liability.”[ Prof JP van Niekerk]

Conclusion

We will strive to continue with our discussion on these and other aspects of car insurance that could help vehicle owners in gaining greater clarity of their obligations in terms of their car insurance policies.

The better we understand car insurance  – the greater the chances of finding the best car insurance to meet our needs!!

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Easy Steps and Guide to Reporting an Accident [Part2].

Written on December 14th, 2010 by jonckie@arrivealive.co.za
Categories: Car Accidents, Car Insurance Advice, Car Insurance Claims, Insurance Articles, Road Safety, Safe Driving Tips

reporting-an-accidentThe first part in this series dealt with the basics of reporting and accident. Aspects discussed focused on when such report has to be made and by whom. To refresh, view Easy Steps and Guide to Reporting an Accident [Part1]

In this section we would like to have a closer look at the Accident Report Form and the information that you might need to gather for the efficient completion of this document. You have to report the accident within 24hours – and even though this is required by law, there are also another important consideration for early reporting…There are many bits of information that you might forget if you do delay making the report!

In this section we would like to provide advice with regards to the area where the accident occurred and what you need to remember about the location and the type of the accident.

Important details to remember and collect from the accident scene include the following:

Time

  • Note the time of the accident.
  • This is important as it might also provide an indication of the condition of “light” at the time of the incident and how visibility might have been.
  • Often in accidents with animals on roads, especially a driver driving into farm animals it becomes a dispute whether the sun has already set and whether the driver should have had his lights on at the time.

Weather and Visibility

  • Note the weather conditions at the time of the accident.
  • This would also confirm aspects such as visibility and the condition of the road surface.
  • Take note whether it was wet, misty or whether there might have been smoke from veld fire etc.

Location

  • Where did the accident occur?
  • Try to be as precise as possible and write down the street names or crossings.
  • Did the accident occur on a specific stretch of road, between 2 roads or at an intersection?
  • If at an intersection, what type of intersection?
  • Write down possible “markers” such as shop or place names. Even though you might not be familiar with the area, the police official assisting with the report might know the area well and might be able to reconstruct the scene with you.
  • Also note specific road signs, traffic lights, traffic circles etc.
  • These signs are referred to on the Accident Report Form as Traffic Control Type information.

Direction of Traffic

  • In which way were the cars heading? What were the position of the cars just before the accident?
  • It is important to make a note of the direction of travel of the cars in the accident.
  • This will provide clarity on the “Accident Type” – i.e..whether it was a head/rear end, head on, sideswipe accident etc.
  • Write down whether the roads were single or multi-lane roads and whether there were other cars travelling at the same time.
  • Was it a freeway, one way road or which other type of road?
  • Be attentive to whether there were changes in direction of travel by any of the vehicles such as a vehicle turning in a specific direction.

Condition of the Road

  • You should make a note of the type of road that you were travelling on – gravel, tarmac, dirt etc
  • Note the condition of the road and the presence/ absence of potholes
  • Were there any road markings or construction activity such as road works?
  • Note the condition of the road markings and whether they were visible.

View an example of the Accident Report Form at the Arrive Alive website at Accident Report Form

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Bitterly cold in Europe provides opportunities to hijackers!

Written on December 11th, 2010 by jonckie@arrivealive.co.za
Categories: Car Insurance Advice, Car Insurance Claims, Car Insurance Crime, Car Insurance Law, Insurance Articles, Road Safety, Safe Driving Tips

frosdtEver heard of the term frost –jacking? South African vehicle owners might not be familiar with this term but this is something that our friends from the Northern Hemisphere are well aware of – and something that might cost them their cars!!

Car Insurers in Europe have warned motorists to be extra vigilant when defrosting their cars in the morning to avoid becoming a victim of frost-jacking.

What is frost –jacking?

There has been a spate of incidents up and down the UK where opportunist thieves have pounced on cars as the owners have left the engines running to warm up before heading off to work. It could be summarized as hijacking a vehicle where a vehicle owner leaves his vehicle engine running in the process of defrosting the windscreen. Even though a less violent type of hijacking, the financial consequences could be more severe!

Why is frost –jacking such a danger to vehicle ownership?

Car Insurers have warned that vehicle owner might not be covered for such vehicle loss by their car insurance policies as this kind of theft could invalidate the insurance policy. Leaving a car unattended with the engine running is an open invitation to thieves, and this could potentially leave your insurance cover void.

It has been reported that in just one week 50 frost-jacking incidents have been recorded in the West Midlands in Britain, with 3 attacks taking place within 20 minutes in the Greater Manchester area on a Monday morning. Vehicle thieves and hijackers are believed to be roaming the streets on the prowl for drivers leaving the cars running while they warm up and defrost their windscreens, so it’s vital drivers don’t leave their cars unattended to avoid becoming a victim of this kind of crime.

Vehicle owners have been warned to be extra vigilant and be attentive to where they park their cars and not to leave these vehicle unattended when the key is in the ignition!

We would like to urge vehicle owners to pay attention to vehicle security at all times!

Car Insurance and Crime

Car Insurance and Hijacking

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Do you receive quality car insurance service?

Written on November 23rd, 2010 by jonckie@arrivealive.co.za
Categories: Car Insurance Advice, Car Insurance Claims, Car Insurance Humour, General Information, Insurance Articles

Employee Of The Month

This is the level of dedication we expect from all staff members!!

This is the level of dedication we expect from all staff members!!

In the highly competitive car insurance industry, insurers have little movement to manoeuvre in an effort to gain market share.  The fast changing insurance industry and online environment have brought together many new players to the industry – and many direct insurers have gained significant market share.

It is especially amongst these direct insurers that we find aggressive competition with clients often migrating from one direct insurer to another. The ease with which a quote is received and a policy purchased has lead to reduced brand loyalty – and poor service can easily motivate a client to move to another provider.

In this blog post we would like to take a closer look at service delivery in the car insurance industry.

Why is Service so important for Car Insurers?

Car Insurance Companies are by law “Financial Services Providers [FSP’S]” and by its nature the providers of services. Delivery of quality service has always been an essential component to the financial sustainability of these businesses – but has now become even more important.

Why do we believe service has become more important?

  • Increased competition is placing more pressure on pricing.
  • Reduced brand loyalty requires increased efforts to retain clients.
  • The online environment has delivered a greater sharing of information.
  • Online communities and social media platforms enables clients to share both positive and negative consumer experiences.

“Service excellence” the buzz word in the car insurance industry

Many big corporates are reverting to the values of service excellence. They send employees on training courses with the objective to improve the quality of their service. I was once privileged to attend such a course and I still remember one key phrase…”The client is NOT always right….the client you want to keep is always right…”

In the car insurance industry – and especially amongst direct insurers where we find a high migration of clients between insurers – it is even more important to ensure that good clients are kept on the books!

How do we measure quality service in the car insurance industry?

Most companies will rely on client feedback via surveys. They might do regular surveys themselves – but the bigger role players will appoint independent companies to conduct a survey amongst clients on their consumer experience.

Some brave companies who are confident about their levels of service delivery might even allow clients to comment, praise or criticize the service received on the company website or blog. In South Africa there are a few consumer websites as well – the most well known is “Hello Peter”  – where consumers will voice their opinion, often allowing the company/ insurer to respond.

Whether car insurers do surveys or not – clients will find a way to voice their dissatisfaction! This is not only “word of mouth” any more – but via social media platforms. We often say that the problem with bad service is not the one dissatisfied customer – but the 10 persons with whom he shares his story. With platforms such as Facebook and Twitter such a bad experience is now revealed to an audience of thousands!!

What is the best car insurance service?

It is important to consider which level of service can be regarded as quality service. Quality service is not necessarily reliant on the best possible outcome for the client – but most definitely will require a fair process with a “human touch”.

Not every claim is a legitimate claim – and the best car insurance service is not necessarily provided by the company who pays out the most claims.

We would like to submit that the following would be characteristics of quality service in the car insurance industry:

  • Accessibility

Can you easily get hold of your insurer / broker when you need them – or do you have to make endless numbers of calls and are sent from A to Z before you are assisted?

  • Transparency

Are you well informed and are the necessary procedures to follow well explained to you? Is there perhaps a company website where you can gain further clarity or gain information about your cover or claims via FAQ’s?

  • Knowledge and Professionalism

Quality service can only be provided if the insurance provider has well trained staff capable of answering the questions raised correctly. A client who finds out during the delivery of service that he has been incorrectly advised will not be a satisfied client.

  • Courtesy & Friendliness

Quality service does not need the best packing of the most beautifully branded documentation or client cards. Most often what is needed is basic human courtesy and friendly conversation. This is especially important for direct insurers where the client does not see the consultant and have the “face to face” experience. The consultant might have to do a bit extra to put the client at ease through his assistance and friendly attitude.

  • Patience & Compassion

An aspect often neglected is the ability to respond with patience. The consultant / broker needs to remind himself that the client who has lost his vehicle or who has just been in an accident might be traumatized and in severe distress. Quality service will require that such a person is treated with patience and with the necessary compassion. This might require that a bit more time be spent in conversation with the client to put his mind at ease that his best interest are cared for and his concerns will be addressed.

The above are just some of the characteristics of quality service in the car insurance industry. We will discuss this topic further in the next few weeks and can only wish that our vehicle owners receive the best possible service!!!

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Is the bidding war on trademarks and car insurance keywords about to erupt?

Written on October 19th, 2010 by jonckie@arrivealive.co.za
Categories: Car Insurance Advice, Car Insurance Law, Cheaper car insurance, General Information, Insurance Articles, Pay As You Drive

Bidding-on-Car-Insurance-TermsIn the online world there is a war on the horizon –not a war with guns and missiles –but a war of words – and to be even more precise, a war about AdWords! For many years there was not much interaction between the legal department and marketing gurus in major companies. It was relatively clear where the boundaries of trademark infringement and unfair competition could be found- but this has since changed significantly!

A battle about search engine results, AdWords and paid searches have revealed how complex the protection of trademarks and intellectual property in the online environment might be! I would like to reflect on this battle and what the possible impact could be on the car insurance industry!

Value of search engine rankings

To understand the importance of this battle we need to reflect briefly on the value of search engine rankings. During the past 10 years many new industries and businesses have been built on the tools provided by the internet, blogs etc.
The success or failure of these online businesses depends on the “find ability” of such businesses.

It is of extreme importance for these businesses to be found easily on search engines such as Google, Yahoo, Bing etc. With this in mind many of these businesses employ search engine optimization specialists to deliver advice and assistance in achieving good search engine rankings. These techniques include quality copyrighting, effective metatags, hyperlinks, and purchase of AdWords etc.

All these techniques are aimed at the delivery of good search results or search rankings. It is important to recognize that the average consumer do not search much further than the third page of Google search results – and if a company and his offerings can only be found much later than the third page – such company is unlikely to attract much business!

Sponsored search results versus normal search results

I have always been a strong supporter of Google – and a believer that the search results found is a fair reflection of quality. In the online world there is a phrase that “Content is King” – and I believe that Google has succeeded in creating a search engine where the best quality of content is recognized and reflected in the results on the first pages.

There is however also a small space above the first “normal” search results – and this is called “Sponsored links”. I am not a strong supporter of these results – and believe that this is the playground of the companies with the big pockets. It is however easy to understand that consumers might be attracted by these sponsored links and that this might provide a significant amount of business to the advertisers.

How much does it cost to gain the top search result?

This exact question was asked and the answer provided in a Google search result. I would like to share a brief and simple version of the answer:

“There is not a specific amount that you can pay to gain the top spot or a specific way to ensure a particular spot.

It isn’t a simple auction. The auction is closest to a CPM (cost per thousand) auction. Imagine that each advert has a specific click through rate. Each advertiser pays so that the CTR times the Average Cost Per Click generates the CPM. Google ranks the adverts with the highest CPM at the top.

What you will end up paying also depends largely on the industry and what you are advertising – and how competitive that market is.

If you are in very competitive market such as “mortgages” or “car insurance” you are likely to have many, many competitors, nearly all of whom will want to be on the first page, if not in the top spot. In this scenario, you are almost certain to have a much higher CPC (Cost Per Click) in order to be competitive in the ‘auction’.”

Litigation and legal battles between corporates about sponsored ads

These top search results or Sponsored links have now become the topic of debates and legal battles. We would like to refer to 2 rather different examples of litigation:

  • Interflora v Marks & Spencer

A legal challenge has been launched by in Europe by Interflora against department store Marks & Spencer over ads it pays Google to display. Interflora alleges that the department store is unfairly paying Google to place their ads ahead of Interflora’s search results when customers search for the website of Interflora.

Marks and Spencer Group Plc paid Google to have keywords associated with its own flower business on the Google Internet platform. Basically when particular words such as “interflora” are typed in, users would see the Marks & Spencer logo under the search engine’s “sponsored links” section.

Interflora alleges that Marks &Spencer is unfairly stealing its business by paying Google for keyword ad placements. Marks & Spencer defends itself saying that this is industry standard practice and no laws were broken.

It is important to recognize that in this battle Interflora is not suing Google, but rather suing Marks & Spencer for buying search term from Google which it says infringes on its own trademarks.

  • LVMH v Google

It is also important to reflect on a slightly different case in Europe. The French luxury goods company LVMH accused Google of promoting competing retailers in an unfair manner.

LVMH Moet Hennessy Louis Vuitton SA, the world’s largest luxury-goods maker argued that the promotion of third party retailers through sponsored search results was not legally sound and undermined their brand and business.

LVMH in an important distinguishing characteristic was not losing business since the third-party retailers were still selling its product.

LVHM failed in the court case and Google won in March.

Conclusion and Potential impact on the Car Insurance Industry

The Interflora v Marks & Spencer case will be closely monitored by legal and marketing teams – especially those operating in the highly competitive financial and insurance industries. It is believed that if Interflora wins the battle, it will create a precedent and a number of advertisers are likely to follow suit!

The accusations from Interflora have been referred to as “ambush marketing.” Legal experts will play an increasingly important role in having to protect the intellectual property and trademarks that companies have built up over a number of years and at considerable expense.

In the car insurance industry there will always be a high premium placed on the value of good search results for keywords such as “cheap car insurance” , “best car insurance” etc. No car insurance company would be able to claim these keywords as their own – but there might well be keywords related to specific business models which could justify protection.

Google has not responded to the Interflora case, since it has not been sued in this matter. In a posted blog regarding the LVMH decision, Google however stated that the “user interest is best served by maximizing the choice of keywords” and their “guiding principle has always been that advertising should benefit users.”

We can only hope that the principles of fairness and respect for the Rule of Law will be victorious. There is a place for everyone under the sun and if fair competition in the online environment can assist vehicle owners to find the correct car insurance for their clients – we could ask for no more!!

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Posted in Car Insurance Advice, Car Insurance Law, Cheaper car insurance, General Information, Insurance Articles, Pay As You Drive | 2 Comments »

Car Insurance Blog celebrates a year of sharing information and advice

Written on July 27th, 2010 by jonckie@arrivealive.co.za
Categories: Car Insurance Advice, General Information, Insurance Articles, Road Safety

CAR_BLOG

The 27th of July 2010 was the one year anniversary of the Car Insurance Blog at carinsurance.arrivealive.co.za. Even though the Arrive Alive road safety website has been online for 7 years, and we have included a section on car insurance and road safety, it is only a year since much more attention has been given to providing blog posts about car insurance.

The development of the Arrive Alive website has been made possible with the assistance of a variety of corporate sponsors, including the car insurance industry, and this has enabled us to share important two-way communication with visitors.

It became evident that there is great uncertainty pertaining to aspects of car insurance, on what to do not only to protect against vehicle accidents claims, but also how to find the correct insurance and what to do when an insurance claim is rejected.

On a personal level it was the opportune time to use my experience having read law for 5 years, lecturing in law for 5 years and working in the financial services field for 8 years – to provide advice that could benefit many of our vehicle owners.

The information on the Arrive Alive website can be found on these pages:

These suggestions and advice were supported during the past year with regular blog posts on car insurance. It is perhaps time to reflect on some of the interesting insights we were able to gather about the car insurance blog through the tools provided by Google Analytics.

Car Insurance Blog and Google Analytics search results

27 July 2009 – 27 July 2010

- 28,797 Visits
- 56,115 Page views
- 231 Referring sources
- 13,716 Keywords used in search engines
- Visits came from 140 countries

We are pleased to find that many visitors have been able to find the important advice they required and were searching for. We will continue to be guided by visitors and their quest for information.

Many other car insurance sites have been able to benefit from the information, often referring to the car insurance blog as source – whilst other have unfortunately plagiarised many of these posts.

This will not deter us from the ultimate objective – to provide independent and credible information, advice and suggestions about car insurance to vehicle owners.

If we are able to assist more vehicle owners to find affordable car insurance and protect themselves from vehicle accident claims through safer driving behaviour – all these efforts would be worth every minute spent on writing these blog posts!!

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Finding Cheaper Car Insurance – Myth or Fact?

Written on July 26th, 2010 by admin
Categories: Car Insurance Law, Car Insurance Myths, Cheaper car insurance, Insurance Articles

Finding Cheaper Car Insurance – Myth or Fact?
I will admit to being a bit of an addict to Mythbusters myself. I enjoy it when the guys from the show on the Discovery channel investigate some well known myths/ beliefs and then stretch them to the limits. I thought it might be a good idea to challenge a few myths and beliefs from the car insurance industry as well…

Myth 1: It is impossible to find cheaper car insurance

Perhaps we need to analyze this myth a bit closer to avoid it appearing silly. We all know that there are always cheaper insurance providers – and even some operators who might be trying their luck with lesser known products…

But can you find a cheaper car insurance product which provides the exact same coverage you are entitled to at present? We need to compare apples with apples and we can only pride ourselves in finding cheaper car insurance if the product is not “less comprehensive” or weaker than what we have at present!

Recognizing annual increases

We need to acknowledge that there is significant upward pressure on car insurance premiums. This is not only inflationary pressure but also the results of increased motor vehicle accidents and more recently – a significant increase in car insurance fraud. This trend is not limited to South Africa as we see car insurance companies in the UK and USA also warning that premiums will have to increase significantly.

Facts on Finding Cheaper Car Insurance

There are many variables in the process of calculating your car insurance premium. This could be discussed in more detail in several blog posts on the car insurance log, but for now we would like to briefly summarize how some of these could benefit you in the search for cheaper car insurance premiums.

1. Competition in the Car Insurance Industry

Even though there will be car insurance premium increases on account of inflation, accidents and fraud, the industry is a highly competitive industry and insurers might still offer highly affordable and even cheaper car insurance premiums for those clients with safe driving records.

2. Product innovation

One of the benefits of competition in the industry is the innovative products design by providers. You might well benefit from products designed to meet your specific needs – which might be able to exclude some of the thrills and add-on’s you do not need but are paying for under your existing car insurance policy.

3. Specialization to meet specific needs

During recent years we have found significant specialization. Some new car insurers focus only on specific segments of the market – and if you belong to such a segment i.e. – you are a female driver, it might be well worth requesting a quote from an insurer recognizing women as lower risk drivers!

4. Cutting the middleman and going direct

Have you considered what you are paying for with our monthly premium? Do you believe that your premium only goes towards insurance cover for your car – or do you know that a percentage of the premium would also goes towards your broker or financial advisor in commissions? Could you save money by cutting out the middleman by finding car insurance through a direct insurer?

If your needs are not so complicated that you need extensive analysis and financial expertise, it might be worthwhile to find a car insurance product with the exact same cover through a direct insurer!

5. Changes in personal circumstances

Changes in your personal circumstances might allow you to find cheaper car insurance premiums. This might well be possible if you get married, if younger drivers are no more included as drivers on your policy or you could experiences changes in employment. You might also have moved to an area perceived to be of lesser risk or might have gained increased security for your vehicle.

6. Driving habits have changed

There could be many reasons why you might be driving a lot less. In South Africa the World Cup has brought about significant improvements in public transport. Many more vehicle owners are using train and bus rapid transit systems to go to and from work. If you are travelling less – you should consider Pay As You Drive [PAYD] car insurance to reduce your car insurance premium.

Conclusion and Advice

It is a myth that car insurance premiums should always increase and you would not be able to find cheaper car insurance premiums. This myth is totally busted! With the necessary attention and some effort, we are all capable of finding cheaper car insurance.

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Comparing car insurance quotes – why are you not doing it?!!

Written on July 20th, 2010 by admin
Categories: Car Insurance Advice, Car Insurance Claims, Insurance Articles

We have on the Car Insurance Blog at carinsurance.arrivealive.co.za discussed the importance of comparing car insurance quotes. We have even provided some advice and suggestions on how to approach this important method of finding the correct product to meet your needs. But why are so many not comparing car insurance quotes? We have decided to share a few thoughts on car insurance comparison – and why this is neglected too often!

Comparing car insurance quotes – why are you not doing it?!!

• I don’t think it is necessary – I am insured

The car insurance industry has experienced significant changes over the past 10 years. The internet has made possible new business models and has increased competition in the industry. Direct insurers and insurance aggregators/ comparison websites have provided competition to the traditional business models, benefitting vehicle owners both on product range and price.

Your car insurance premium should recognize these changes. By not comparing car insurance quotes – and communicating with your existing insurer – you might be missing out on significant savings.

• My broker knows best – I trust my broker with my car insurance

This might well be true – but even if you have a very effective and professional broker, you need to ask whether he is comparing car insurance quotes on your behalf. Your broker might have a long standing relationship with a specific insurer – and only market the products of that car insurance provider.
Ask your broker with which car insurance provider he has contracts with – and ask him to provide you with some comparative quotes.

Should you only rely on the advice of your broker – you will be missing out on offerings from the direct insurers who are cutting out the broker or “man in the middle” in an effort to reduce the costs of car insurance. Reducing or cutting out broker commissions could provide huge savings.

• I am afraid to do the car insurance comparison myself

Many might fear not being able to compare car insurance quotes. We do not all have the same level of financial expertise and might fear being lead on the wrong path. It might be worthwhile to test the car insurance aggregators or comparison websites. These are designed to allow for easy and swift comparison of car insurance quotes for basic needs.

You should be able to do so with ease. It is important to recognize that you can still use a financial adviser to assist in comparing these quotes. Rather pay him a fee for his professional services in assisting with car insurance quotes – and then save on the monthly broker fees and reduced premiums gained!

• I am not computer literate / Not comfortable with the internet

Many older vehicle owners might not be as comfortable doing business online as our younger generation. Car Insurers and especially direct insurers have however made the process of acquiring and comparing car insurance very simple.

You need not fear the internet – and even if you are cautious of technology – you can ask a broker or financial advisor to assist in using the internet. The internet could be used not only to compare prices – but also to do find and read more information about car insurers and their products.

• I am loyal to my broker

Many people have a blind loyalty towards their broker. They would stay with that broker or might even have “inherited” them from their parents. They will tend to stay with that broker come hell or high water – and might believe that raising the request for comparative quotes might be regarded as a lack of loyalty.
Times have changed however – and there is much less loyalty towards brands. If your broker is not comparing car insurance quotes or not keeping you updated on new products and possible savings – your loyalty might be misplaced.

There is nothing wrong with loyalty – but the professional broker or advisor will respect your desire to receive more information and to compare insurance quotes in the search for the correct product to meet your needs!

• I do not know how to compare car insurance quotes

There is no shame in admitting that you are not comfortable with the “How to?” of comparing car insurance quotes. This recognizes that you are someone not jumping into the process of making financial decisions. On the Car Insurance blog we will guide you towards making the correct comparisons. With the correct approach you will be able to find either confirmation that you are adequately insured – or will make big strides towards financial security and saving on expensive car insurance premiums.

• I have recently compared my car insurance

This is the best answer to the above question. We would advise that this comparison be made every year – either by yourself –or your broker. There is increased competition in the car insurance market, and “new generation” products are developed every year. Keep in mind that there are many other variables on the side of the vehicle owner as well, such as changes in occupation, marital status or even changes pertaining to your vehicle.

Compare your car insurance yearly to ensure that you have the best car insurance for your specific vehicle!!

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Posted in Car Insurance Advice, Car Insurance Claims, Insurance Articles | 1 Comment »

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