§ Mr. RedmondTo ask the President of the Board of Trade what is the role of his Department in ensuring that only motor insurance companies with current valid authorisation can issue insurance cover; what steps are taken to protect policy holders where there is no valid authorisation: if he will list all recent cases of companies issuing cover without authorisation; and if he will make a statement.
§ Mr. Neil HamiltonMy Department has responsibilities for administering the Insurance Companies Act 1982. Part of this responsibility is to ensure that only properly authorised companies underwrite motor insurance business in the United Kingdom. When the Department becomes aware of possible illegal underwriting of motor insurance business it will therefore seek to act to have any illegality stopped. Depending on the circumstances of a particular case action by the Department against those who may be in breach of the Act might include investigation, prosecution and seeking a winding up; and if fraud is suspected, referral and/or assistance to the police. Where appropriate, it would also seek to alert the public to the dangers of an illegal operation through appropriate publicity and would liaise with other bodies e.g. the Department of Transport, that may need to be aware of a case or may be able to help with it.
It is the responsibility of drivers to make certain that they are properly insured. They can help themselves by dealing through reputable intermediaries or direct with authorised insurance companies. They should always ensure that they know the name of the insurer carrying their risk as well as the name of any intermediary with whom they deal. If they have doubts about the status of the insurer, they may contact the Motor Insurers Bureau for advice or, failing that, ask the Department. In the event that an uninsured motorist is involved in an accident the Motor Insurers Bureau will meet a third party claim but may pursue the uninsured motorist for recompense.
Recently there has been an increase in the number of illegal motor insurance operations coming to the attention of the Department. The list gives the names of those who over the last three months are believed to have issued motor insurance without proper underwriting by an authorised insurer. In addition, a further four cases are currently being investigated to establish whether the issuers of the insurance are acting legally. Many of these cases have involved targeting particular groups of motorists who have been affected by rises in insurance premiums. For example, young drivers and those with convictions may be attracted by the unusually attractive rates offered.
Those running illegal operations will usually advertise their products in a very limited way. Thus advertising may be restricted to particular local areas or limited to distribution of leaflets to domestic premises. By these means they seek to minimise risk of detection. Such approaches should be treated with some caution. As with all fraudulent activity, it is the responsibility of those paying money to take reasonable precautions against being duped.
RECENT CASES OF COMPANIES ISSUING MOTOR INSURANCE WITHOUT AUTHORISATION
February 1993
- Westbridge Corporation Ltd.
106 - 72 New Bond Street
- London
- trading through Red Rose Insurance Consultants in Bolton
March 1993
- Royal Lytham Insurance/Royal Lytham Holdings
- Lytham St. Annes
- Sunrise Insurance Co. (UK) Ltd./L & G Security Ltd.
- Neath
- Crest Motor Securities (UK), trading as Springwood Insurance Services
- Ipswich
April 1993
- Sterling Motor Securities UK Ltd./Sterling Union Assurance
- 72 New Bond Street
- London
- trading through Nationwide Insurance Bureau Ltd
- Westbridge Corporation Ltd.
- 72 New Bond Street
- London
- trading through Paul Rogers Insurance & Financial Consultants in Hove