Warning to young employees opting out of auto-pensions

By Jeff Prestridge
Last updated at 9:53 AM on 19th December 2011

Workers who delay taking advantage of new rules next year allowing them to auto-enrol in an occupational pension could end up with a retirement fund 20 per cent lower than if they had joined immediately.

The finding is based on research by the Pensions Policy Institute for insurance giant Prudential. The PPI found that thousands of workers would opt out of the pensions.

Barry O'Dwyer, Prudential UK deputy chief executive, said: ‘Auto-enrolment is expected to encourage an extra four to nine million people either to start saving into a pension earlier or to save higher amounts.

'But we need to be realistic and recognise that some young people will not want the additional expense of investing in a pension.'

He said it was crucial that employers should continue to back workplace pensions with generous contributions made on behalf of employees.

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The U.K.'s Faulty Car-Insurance Market

Car insurance in the U.K. is a wreck.

Prices for auto insurance are rising 40% annually, but many of those writing the business still are losing money. The Association of British Insurers estimates the industry as a whole hasn't been profitable for 16 years. Now, the Office of Fair Trading is investigating the rise in prices. It certainly could apply the jumper cables.

With 10 companies, and none exceeding a 30% market share, car insurance looks like a competitive market. Price-comparison websites, which now dominate sales, are helping to drive prices down. But the role of such websites will be included in the Office of Fair Trading's investigation. This year, it raised concerns about insurers sharing car-insurance pricing information on market analysis software.

Insurers blame spiraling prices on claims inflation and litigation costs, following the emergence of a "no-win, no-fee" claims-management industry. For low-value claims, insurers now estimate they are paying almost as much to lawyers in fees as they are to the injured party. They say insurance fraud, too, has risen. Over the last five years, personal-injury claims from car accidents have risen 10% annually, including a large number recently for whiplash, which is hard to prove medically.

But claims inflation is partly insurers' own fault. The problem is referral fees, money insurers receive from passing accident victims' details onto third parties. That helps fuel the growth in claims, because lawyers recoup the money off the insurer of the party at fault. Insurers are now pushing for the government to ban such fees, a move backed by the legal industry's representative body, the Law Society. AXA, already, has stopped the practice, but some companies are reluctant to act unilaterally.

Outlawing such fees would be a good first step. Requiring greater proof of damage to the car or driver before paying injury claims might be another.

Still, one reason for high prices simply is that insurers are earning lower returns on their investment portfolios, which in the past made up for weak underwriting profitability. There's little the Office of Fair Trading can do about that.

One in seven drivers has no insurance

Despite laws in nearly every state requiring auto insurance, one in seven drivers in the USA goes uncovered.

That's according to an industry group that estimates 13.8% of motorists are uninsured, a number that has climbed during the economic downturn as many financially-pressed Americans allowed their insurance to lapse.

"Over the last 20 years, uninsured motorists and the unemployment rate have tracked fairly closely," says David Corum, vice president of the Insurance Research Council, a non-profit supported by insurers.

Insured drivers pay a hefty price for fellow motorists who have no policies — $10.8 billion in 2007, according to the most recent data from the National Association of Insurance Commissioners.

"Most of the people that do have insurance have coverage that includes uninsured motorist coverage … to protect them (if) they're injured in an accident caused by another motorist who does not have insurance," Corum says.

Automobile insurance is compulsory in every state except New Hampshire, says Loretta Worters, vice president of the Insurance Information Institute— but that doesn't deter scofflaws.

"Laws in most states have proven ineffective in reducing the numbers of drivers who are uninsured," Worters says. "Some drivers can't afford insurance, and some drivers with surcharges for accidents or serious traffic violations don't want to pay the high premiums that result from a poor driving record. It is costly to track down violators of compulsory insurance laws, and unless the odds of getting caught are high and the penalties severe, drivers will continue to flout the law."

The rate of uninsured motorists varies widely — from 4% in Massachusetts to 28% in Mississippi, according to the IRC.

In Massachusetts, drivers must show proof of insurance before they can register a vehicle. Insurance commissioner Joseph Murphy attributes his state's low rate of uninsured motorists largely to that requirement. About half the states have a similar requirement, according to the Insurance Information Institute.

Mississippi, however, has no way for police to determine whether a driver has coverage, says insurance commissioner Mike Chaney. He says he worries about privacy and entrapment if data are misused, and his state doesn't require proof of insurance. "The legislature has never had the fortitude or the backbone to do it," he says.

As economy sinks, pay-as-you-go insurance soars

As job growth stalls and household budgets shrink, more drivers are warming up to cost-cutting "pay-as-you-go" car insurance programs.

Pay-as-you-go car insurance plans peg your car insurance rate to the number of miles you drive. Drivers also receive discounts for avoiding violations and accidents, and for limiting time on the road during peak hours and late-night hours.

If you meet all pay-as-you-go requirements, it's possible to save up to 30 percent on car insurance rates.

A majority of drivers who took a joint MSN-Insurance.com online poll said they would at least consider driving less if it meant they could save money on car insurance.

Car insurance companies respond to demand
Two of the nation's biggest insurers are now responding to this growing demand for pay-as-you-go coverage.

A few weeks ago, State Farm - the country's largest insurer - announced plans to introduce a new telematics-based effort dubbed In-Drive to drivers in Illinois. Additional states are slated to receive In-Drive in 2012.

Allstate - the nation's third-largest insurer - also recently expanded its Drive Wise pay-as-you-go program to Ohio and Arizona after an earlier rollout in Illinois.

It's no coincidence that pay-as-you-go insurance is on the upswing at a time when the economy is in a downward spiral, according to Robert Passmore, spokesperson for the Property Casualty Insurers Association of America (PCI).

"A lot of companies are offering it, and a lot of people are driving less and looking for ways to save money," he says.

More control, lower car insurance costs
If you join a telematics-based program, you'll typically be asked to install a device into your car's diagnostic port (located below the steering column) that records information such as:

How many miles you drive
How often you brake hard
How smoothly you navigate turns
Initially, privacy advocates raised concerns about these devices and their ability to snoop on drivers. But the success of programs such as Progressive's Snapshot and a GMAC Insurance program based on OnStar technology apparently has convinced more insurers that pay-as-you-go insurance is the wave of the future.

The future of pay-as-you-go car insurance
Although pay-as-you-go insurance is just now catching on, advocates have been pushing it for years as a way to both save customers money and to achieve other social benefits, such as reducing traffic fatalities and cutting back on pollutants that contribute to global warming.

A 2008 study by the Brookings Institution noted that, "Just as an all-you-can-eat restaurant encourages more eat­ing, all-you-can-drive insurance pricing encourages more driving. That means more accidents, congestion, carbon emissions, local pollution, and dependence on oil."

While it appears the world is catching up with those sentiments, it's unlikely that pay-as-you-go insurance will become the dominant form of pricing in the industry.

Kraft points out that such programs are not the best option for all policyholders. If you drive frequently or have a spotty driving record, pay-as-you-go probably doesn't make sense.

"It's not going to be a program that we're going to end up seeing 60 [percent] or 70 [percent] or 80 percent of our customers opt into," he says.

Still, Kraft believes drivers who choose pay-as-you-go automobile insurance coverage to save a buck during hard times will stick with the program long after the economy heals itself. And Passmore still sees room for the trend to grow.

"If people like it and perceive it as a value and save money, why not?" Passmore asks.

Stamping out of the Women’s Car Insurance

The court has already decided to all intents and purposes to bring to an end the diverse rates charged to men and women.

Women’s car insurance was already eradicated in which, prejudice opposed to them will still be present including the truth that on wellbeing, existence or tour insurance according on sexual category will be dropped as well.

Setting the women’s car insurance aside, Malta Confederation of Women’s Organisations representative Ms. Renee Laiviera, shared that the drawbacks on wellbeing and existence guidelines is already prevalent around the world. Prejudice in women is also present at times on personal annuity since men have a shorter expectancy of existence.

The National Council of Women representative, Grace Attard not only greeted the decision of the court with open arms, but also with an open mind wherein the assembly approved so long as it was functional across the board together with the insurance about wellbeing. Women’s car insurance, although phased out of the insurance industry, a provisional exclusion authorized the utilization of sexual category as a basis for the estimation of payments and remuneration if pertinent and truthful numerical information are employed and made available.

Car insurance companies 'slashing rates to attract customers'

Insurance firms are desperately trying to attract consumers, an expert believes.

Consumers searching for attractive deals on personal finance products such as car insurance are likely to have many options available to them due to the intense competition between companies in the sector.

That is the opinion of Lindsay Williamson, secretary at the Insurance Society of Edinburgh, who has said that this market - which also includes other areas such as home insurance and travel insurance - is being hotly contested by firms desperately trying to attract customers.

Ms Williamson noted that because organisations are slashing quotes in a bid to gain a share of the sector, individuals may be able to access cheap deals in the near future.

"Most products are very price-sensitive - even commercially, companies are competing in a market now that is probably a bit overcrowded," she explained.

This comes after Aviva revealed last week that it had experienced a 26 per cent rise in its operating profit figures last year.

Auto Insurance Problems Revealed

The battle of the sexes does not only exist in the non-technical side of life. It has already reached the Insurance industry particularly the auto insurance.

The European Court of Justice (ECJ) currently announced a decree banning companies from using the gender of the person to establish prices. Women benefitted this decree more than men wherein the short term distinct probable frontrunners are the insurance companies. For over a decade now, propositions for the parity in gender in the insurance industry are still rolling. Good thing that in 2004, it was made into an ordinance to have parity in the provision of merchandise and services.

Several accounts of gender disparity continue to arise despite the fact that the European Court of Justice has already promulgated an ordinance concerning the uproar of different individuals. There was a general rule, according to Juliane Kokott, an advocate of the ECJ, that states the premiums and benefits of unisex will be invalid by the 21st of December 2012. It was believed to be disparaging and has earned a lot of denunciation not only from the auto insurance industry, but to everyone concerned as well.

How to Get Low Cost Teen Auto Insurance

Once kids hit the adolescent stage, their parents start popping maintenance pills for hypertension. This may be a bit of an exaggeration but we can’t erase the fact that as soon as teens reach the age where they can legally drive, parents can only kiss low-cost car insurances goodbye. It’s hard enough to continually remind your child about the dangers of irresponsible driving. But don’t lose hope. There is a way where parents can get low-cost car insurance.

Insurance companies can give lower rates if your kid/s is/are performing well in school. Good academic performance means that the child is capable of exercising good responsibility.

Regardless of whether you have a teen driver in the house or not, taking a higher deductible works well for getting cheaper car insurance. You can go from a $250 deductible to a $1000 deductible, because you will find that it will definitely lower your rates.

Some sneaky insurance company would sometimes automatically assign the youngest driver to the most expensive vehicle. This can be really expensive. A good advice is to check with your insurance company so that you can assign your kid to a less expensive car.

Lastly, you can get discounts if your kid/s will sign up to supplemental driver’s ed classes. This can definitely lower down your insurance rates.