The insurance community is working through the implications of the government’s recently announced “scrappage” scheme and snatching ‚ like a kitten scampering after a torch beam‚ at one or two glimmers of encouragement.
Many have questioned the wisdom and “vertitude” of a spellchecker-unfriendly initiative that rewards people for junking perfectly sound older vehicles for newly manufactured ones.
But insurers are busy convincing themselves that “scrappage” will act like a dose of Viagra on the less than rampant motor market.
Leading the charge, the ABI have pointed out that each time someone ditches their old banger for the £2k bounty and the right to make regular payments to a motor finance provider, said person will have to cancel their old policy and take out a new one.
Bingo! Thanks to the short-rate premium return available on most cancelled policies, the motor market stands to benefit from several months’ extra premium income for every vehicle “scrappaged.”
But if the customer switches insurance provider, some carriers (and brokers?) might consider a couple of months’ risk-free premium a poorish consolation for losing a customer. “Well, yeah,” the ABI might concede if it weren’t so nicely-spoken, but policyholders with nice new shiny (little) cars might well wish to upgrade from, say, third party only to fully comp and thus put more money the industry’s way.
Meanwhile in another part of the forest (Milton Keynes to be precise) valuations firm ETWB sees “scrappage” muddying the waters ‚ what with a third of the claims it saw last year involving vehicles that would have qualified for the scheme and many total losses involving cars worth less the two grand.
“We had our first call an hour after the budget,” ETWB CEO David Stubbs told Post Magazine. “There was a client who’d accepted a value on their vehicle ‚ £500, £600, whatever it was. They wanted to retain the salvage and we said no, because you can’t benefit from an insurance payout and the scheme.”
Well, yes. There is also the stipulation that any vehicle offered up for “scrappage” (or scrapp-aah-je as the Park Lane dealers hesitantly mention, sotto voce) must also have a current MOT which might disqualify one or two total loss contenders.
The facts a) that vehicles must have been in the current owner’s possession for a year and b) that the scheme ends next March have also put paid to many a cunning plan to pay £300 quid for an old wreck and cash in quick.
They weren’t born yesterday, these legislators, you know!
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