Fronting - Aviva issues warning letter

Henry Ford III · 26-09-2016 10:11am #1

http://www.independent.ie/business/personal-finance/young-drivers-warned-they-might-not-be-covered-on-parents-policy-35078203.html

Interesting developement. Hard to prove who the main driver is. Easier to see who paid for the car.

Special Circumstances · 26-09-2016 10:43am

"Drivers who are fronting may not be covered in the event of an accident.
"If these drivers are involved in an accident and insurers investigate and find out that the named driver is actually the main user, the insurance policy will be deemed invalid," Aviva said.

The policy holder may then have to cover the costs of the accident, including vehicle damage and medical bills, as well as the costs of any other parties involved, it stated.
"It may result in a conviction, fine or both the policyholder and the driver of the vehicle could be convicted, fined and potentially banned from driving."

Has there ever been a case in the papers of an insurer or the law chasing an unaccompanied learner, fronter, no-NCT-er, 2.0-on-da-logbooker?

I'd love to see a level playing field for people, rather than paying for people with "creative" ways of getting their bit of paper for the window, but it looks like the Indo have just issued a press release for Aviva which happens to be full of scaremongering rather than being based in reality. Just regurgitation, no journalism. (said in a "just another example" way, rather than a "omg I'm shocked at the indo's lazy journalism" way)

Henry Ford III · 26-09-2016 11:06am

Plenty of non disclosure stuff has been handled with anything other than 3rd party claims rejected - not sure if it's that newsworthy.

Insurers need to root out the messers much more actively imho.

Liam McPoyle · 26-09-2016 11:07am

Henry Ford III wrote: »

http://www.independent.ie/business/personal-finance/young-drivers-warned-they-might-not-be-covered-on-parents-policy-35078203.html

Interesting developement. Hard to prove who the main driver is. Easier to see who paid for the car.

Good to see them being proactive.

I'd imagine there are a lot of policies that are written this way but that the policy holders don't know the potential repercussions and genuinely don't think they are doing anything wrong.

Blatter · 26-09-2016 11:18am

How do they go about investigating and then proving who the 'main user' of a car is?

It sounds totally infeasible.

Dardania · 26-09-2016 11:18am

The insurers would want to be careful here - there's a risk that young people will simply design their lives around not requiring cars, at all...

Special Circumstances · 26-09-2016 11:20am

Henry Ford III wrote: »

Plenty of non disclosure stuff has been handled with anything other than 3rd party claims rejected

That's my point... this idea of people being chased for money paid out to third parties or prosecuted for fraud is pretty much a fairy story.

Henry Ford III wrote: »

Insurers need to root out the messers much more actively imho.

Absolutely. Easier to ride the rest of us though unfortunately.

cruizer101 · 26-09-2016 11:23am

My issue with this is the lack of flexibility on the insurance market. What about the case of a couple who drive the car approximately the same amount who is the main driver then, why can't they both have a policy on one car which would allow both to have driving of other cars and to build up their own no claims bonus. But no insurance companies don't allow this instead we have this silly named driver nonsense.

ted1 · 26-09-2016 11:25am

Blatter wrote: »

How do they go about investigating and then proving who the 'main user' of a car is?

It sounds totally infeasible.

They can check the car park at the parents job and kids job/school.

Henry Ford III · 26-09-2016 11:26am

Special Circumstances wrote: »

That's my point... this idea of people being chased for money paid out to third parties or prosecuted for fraud is pretty much a fairy story....

It's hard to know. People who can afford better cars in general can afford higher premiums so blatant non disclosure shouldn't be so much of an issue.

Something like this however will certainly arouse suspicion in the event of a claim.....

https://www.donedeal.ie/modifiedcars-for-sale/vauxhall-carlton-same-drift-m3sierra-omega-holde/13114011

Wanderer78 · 26-09-2016 11:28am

Insurance companies need to get over themselves. I know a chap that was quoted 3 grand on his own policy, sure no wonder they're driving under their parents

Henry Ford III · 26-09-2016 11:30am

Wanderer78 wrote: »

Insurance companies need to get over themselves. I know a chap that was quoted 3 grand on his own policy, sure no wonder they're driving under their parents

I wonder do you understand the principle here? The insurer is correctly pointing out that "driving under their parents" is potentially voidable.

Wanderer78 · 26-09-2016 11:39am

Henry Ford III wrote:

I wonder do you understand the principle here? The insurer is correctly pointing out that "driving under their parents" is potentially voidable.

Oh I understand it alright, but something must be done about rising insurance costs, surely it's increasing uninsured drivers. I think it's scandalous how much young folks are paying

Henry Ford III · 26-09-2016 12:26pm

Wanderer78 wrote: »

Oh I understand it alright, but something must be done about rising insurance costs, surely it's increasing uninsured drivers. I think it's scandalous how much young folks are paying

So do I.

Hard to know where to start to reduce premiums. Make PIAB assessment mandatory with no recourse to the courts?

I think a much tougher stance on spongers and scammers is another good idea. Identify them, and put them off the road.

Garda Traffic Corps should be beefed up considerably also, and they should target illegality constantly, making the chances of getting caught breaking the law much higher. Maybe the fines generated would make make such an expansion self financing?

ANPR on all Traffic Corps vehicles with updated tax and insurance databases - they'd spot the bogies in traffic.

ED E · 26-09-2016 12:33pm

Gangway ANPR. We should have it on all big routes like the brits. Makes crushing uninsured drivers cars like shooting fish in a barrell.

Stealthfins · 26-09-2016 12:42pm

The only reason insurance is gone up is to feed the fat cats high up the ladder.

Nothing more nothing less,some of these CEO's are on huge salaries.

The sooner people realize this the better.

SusanC10 · 26-09-2016 12:51pm

OSI wrote: »

Couples are a bit of special case in that both parties would have an insurable interest in the car, and so it doesn't really matter who is listed as the main driver.

My Broker told me this morning that I may not be covered if driving my Husband's car even though we are both Named Drivers on each other's cars if the Insurance Co deem me to have been the Main Driver in reality but Named Driver on paper at the time of any Accident. See my Post below asking for advice on what to do.

Henry Ford III · 26-09-2016 12:54pm

Stealthfins wrote: »

The only reason insurance is gone up is to feed the fat cats high up the ladder.

Nothing more nothing less,some of these CEO's are on huge salaries.

The sooner people realize this the better.

I don't think that's a reasoned argument.

1/. We don't know the salary and other compensation packages of "these CEO's".

2/. Even if we did we (or any regulator) are in no position to reduce them.

3/. Even were that possible there's no guarantee that reduced CEO costs would lead to reduced premiums.

listermint · 26-09-2016 12:58pm

I suspect its very much a large part of all this.

These companies just like most public companies on the stock market in the US are driven hell for leather to boost profits year on year if not quarter and quarter.

They have to be seen to be consistently 'growing' regardless if last year was good, if you get the same profits this year its bad.

This sort of stuff is not sustainable and the Execs are getting paid huge sums to push these 'growth' measures.

Its bull, its not real growth.

Insurance is another industry suffering from this utter crap that wall street is pushing.

Henry Ford III · 26-09-2016 1:03pm

Corporate profits from motor insurance aren't enormous, or are even growing strongly. The market is pretty stagnant - numbers of premium paying drivers aren't rocketing.

Prices have certainly hardened however.

Insurers blame claims costs including legal fees. Other issues are the lack of return on insurers investments, and the cost of uninsured drivers (MIBI etc).

listermint · 26-09-2016 1:14pm

Henry Ford III wrote: »

Corporate profits from motor insurance aren't enormous, or are even growing strongly. The market is pretty stagnant - numbers of premium paying drivers aren't rocketing.

Prices have certainly hardened however.

Insurers blame claims costs including legal fees. Other issues are the lack of return on insurers investments, and the cost of uninsured drivers (MIBI etc).

Who said they were enormous ?

But have you stats on growth for the last 3 years for any of the leading insurers

Bearing in mind some of these businesses are tied into other divisions for the same owners.

On the other side we have the legal industry saying the claims have not risen over the same period.

So who is telling porkies ?

NUTLEY BOY · 26-09-2016 1:15pm

Henry Ford III wrote: »

I wonder do you understand the principle here? The insurer is correctly pointing out that "driving under their parents" is potentially voidable.

I take issue with this argument.

The practice of fronting has been going on for many decades. The present focus probably arises from the fact that it has become more prevalent. Issuing a letter to indicate that the practice may render a policy void is IMHO a wholly useless scare tactic and evidence of poor underwriting practice by insurers.

As I understand the insurance underwriters' case the practice of fronting means that they are not receiving a premium that is adequately sufficient to cover their true exposure to the risk that they are actually running. Fronting means that they are actually insuring a young driver at the wrong and an inadequate rate. On the face of it the insurers' argument appears to be valid.

So, why don't insurers cop themselves on and write the policies in such a way as to exclude or minimise the risk created by fronting.

A big argument around this issue relates to the issue of ownership. I am aware that there are a number of different legal arguments about the concept of ownership of a car. Some argue that registration of the car in a person's name constitutes legal ownership and that the title is defensible against all comers. If that view is correct the insurers seem to be wasting their time issuing scary letters. If Daddy is the registered and legal owner of the car it is game over and the insurers should not win the point.

However, the legal concept of ownership from other areas of law can have very different meanings that run very far beyond the narrow issues of who paid for the property and even in whose name it is registered. If an insurer could persuade a court to adopt that broader view of the concept of ownership that could kill the practice of fronting.

In the preceding scenario insurers would have to argue along the lines that the legal owner may be Daddy but that the real owner is little Mary in all true and practical senses. That argument might then get behind and break the practice of fronting.

BTW if the preceding argument could be sustained I think that Daddy and Mary could well be guilty of fraud as they would be gaining pecuniary advantage by deception.

IMHO insurers should not be allowed to seek to threaten policyholders in this way where the true cause of the problem is that the insurers have failed repeatedly and consistently to deal with a long standing problem well known to them. There is touch of the it's my fault but you will get the blame about this threat.

Rant over.

NUTLEY BOY · 26-09-2016 1:17pm

Stealthfins wrote: »

The only reason insurance is gone up is to feed the fat cats high up the ladder.

Nothing more nothing less,some of these CEO's are on huge salaries.

The sooner people realize this the better.

IMHO a lazy argument. And your evidence is........?

Graham · 26-09-2016 1:34pm

NUTLEY BOY wrote: »

So, why don't insurers cop themselves on and write the policies in such a way as to exclude or minimise the risk created by fronting.

The letter from Aviva appears to be expressly to 'exclude or minimise the risk created by fronting'.

It sounds like this could be the warning bell before they start and take a hard line against the practice.

Liam McPoyle · 26-09-2016 1:35pm

NUTLEY BOY wrote: »

I take issue with this argument.

The practice of fronting has been going on for many decades. The present focus probably arises from the fact that it has become more prevalent. Issuing a letter to indicate that the practice may render a policy void is IMHO a wholly useless scare tactic and evidence of poor underwriting practice by insurers.

As I understand the insurance underwriters' case the practice of fronting means that they are not receiving a premium that is adequately sufficient to cover their true exposure to the risk that they are actually running. Fronting means that they are actually insuring a young driver at the wrong and an inadequate rate. On the face of it the insurers' argument appears to be valid.

So, why don't insurers cop themselves on and write the policies in such a way as to exclude or minimise the risk created by fronting.

A big argument around this issue relates to the issue of ownership. I am aware that there are a number of different legal arguments about the concept of ownership of a car. Some argue that registration of the car in a person's name constitutes legal ownership and that the title is defensible against all comers. If that view is correct the insurers seem to be wasting their time issuing scary letters. If Daddy is the registered and legal owner of the car it is game over and the insurers should not win the point.

However, the legal concept of ownership from other areas of law can have very different meanings that run very far beyond the narrow issues of who paid for the property and even in whose name it is registered. If an insurer could persuade a court to adopt that broader view of the concept of ownership that could kill the practice of fronting.

In the preceding scenario insurers would have to argue along the lines that the legal owner may be Daddy but that the real owner is little Mary in all true and practical senses. That argument might then get behind and break the practice of fronting.

BTW if the preceding argument could be sustained I think that Daddy and Mary could well be guilty of fraud as they would be gaining pecuniary advantage by deception.

IMHO insurers should not be allowed to seek to threaten policyholders in this way where the true cause of the problem is that the insurers have failed repeatedly and consistently to deal with a long standing problem well known to them. There is touch of the it's my fault but you will get the blame about this threat.

Rant over.

If you know a sure fire way of getting people to truthfully declare who the main driver is then you need to get a job in an insurance company because every single one of them would be tripping over themselves to employ you.

The truth of the matter is that its exceptionally difficult to get the truth and more importantly prove it.

I regularly issue main driver declaration forms to policy holders that I suspect are fronting.

I can count on the fingers of one hand the number that I've gotten back which have the young driver listed as the main driver.

Its not simply a matter of rating the young driver as the main driver because if we do that then we are basically calling the policy holder a liar. Its extremely frustrating to issue terms on a policy that I KNOW is fronted but I cannot allter the policy without reasonable proof.

This tactic by Aviva is actually a very good idea because it makes people aware of what may happen if they are fronting.

I'd suspect that a lot of parents are doing it without knowing the potential ramifications so by drawing attention to it then it will hopefully have the desired effect.

Henry Ford III · 26-09-2016 1:37pm

listermint wrote: »

....These companies just like most public companies on the stock market in the US are driven hell for leather to boost profits year on year if not quarter and quarter.

They have to be seen to be consistently 'growing' regardless if last year was good, if you get the same profits this year its bad.....

To be fair it's you who made the claim that it's all profit driven. I simply disagreed.

So the ball is very much in your court to back up your initial claim.

Graham · 26-09-2016 1:43pm

Saul T Nutzz wrote: »

by drawing attention to it then it will hopefully have the desired effect.

unfortunately I doubt that will happen until people start to see/hear/read about policies being voided and the ensuing consequences.

Liam McPoyle · 26-09-2016 1:46pm

Graham wrote: »

unfortunately I doubt that will happen until people start to see/hear/read about policies being voided and the ensuing consequences.

That will never enter the public domain though.

Unless its a court case for a claim that is being contested then it would all happen behind closed doors.

Sue Pa Key Pa · 26-09-2016 1:48pm

NUTLEY BOY wrote: »

I take issue with this argument.

The practice of fronting has been going on for many decades. The present focus probably arises from the fact that it has become more prevalent. Issuing a letter to indicate that the practice may render a policy void is IMHO a wholly useless scare tactic and evidence of poor underwriting practice by insurers.

.........................

IMHO insurers should not be allowed to seek to threaten policyholders in this way where the true cause of the problem is that the insurers have failed repeatedly and consistently to deal with a long standing problem well known to them. There is touch of the it's my fault but you will get the blame about this threat.

Rant over.

Fronting has being going on for as long as I can remember. However, insurers allowed it to slide, as things were going relatively well and it wasn't generally abused. Some insurers even encouraged it to give children of good customers a 'kick start'. However, times are harder now and the letter of the law/policy wording is being applied. Insurers have seen EVERY cute hoor idea attempted by motorists and are saying enough is enough

It is likely that the current political climate will enforce some directives on insurers, which they won't like and in return insurers will take a tougher stance on abuse. This is a warning and expect more action when it comes to Driving of Other Cars, Non-Disclosure & Windscreen Cover

It's not threatening policyholders, it is giving advance notice to people to get their affairs in order. If you've not done anything wrong, you have nothing to fear about this. You have no idea what a pain in the arse it is for insurers to have to void a policy, especially if there is an accident. They don't want to catch people at this, they want to avoid getting them on the books in the 1st place. They don't want extra money, if their underwriting strategy is to avoid young main drivers

Graham · 26-09-2016 2:00pm

Sue Pa Key Pa wrote: »

It is likely that the current political climate will enforce some directives on insurers, which they won't like and in return insurers will take a tougher stance on abuse. This is a warning and expect more action when it comes to Driving of Other Cars, Non-Disclosure & Windscreen Cover

Nail on the head.

Alun · 26-09-2016 2:11pm

Sue Pa Key Pa wrote: »

This is a warning and expect more action when it comes to Driving of Other Cars, Non-Disclosure & Windscreen Cover

OK, the first two I get, but how is windscreen cover being abused?

Fronting - Aviva issues warning letter

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