Analysts love talking about things like tipping points, paradigm shifts and perfect storms. Insurers this week provided a perfect opportunity to bring up the last of these as it emerged they have b*gger all chance of ever making any money in anything like the foreseeable future.

Ernst & Young warned somberly that a combination of “low interest rates, higher hedging costs, lower business volumes and the impact of Solvency II” mean insurers may as well give up and go home. Prices need to rise, warned E&Y bloke Carlos Astoria, or basically the game’s up. Which would be fine if punters had any money to spend on beefed-up premiums and insurers weren’t so keen to cut each other’s throats for the last few crumbs remaining.

What insurers need right now is a friendly helping hand from Government. Cracking down on the scandal of so-called access to justice was a good start. But what would really make a difference would be to give insurers a freer hand on telling potential customers that they have to buy insurance. Right now, however the powers that be seem to be doing anything but give insurers a break.

First there was all that fuss about so-called PPI miss-selling, now poor old Barbon Insurance (read Bankstone News’ sensational 2009 Barbon exposé here) have been forced to set aside £2.5 million to “compensate” customers of its subsidiary Hamlet for telling tenants they had to buy contents insurance. So what exactly is an insurance firm supposed to do if people won’t buy insurance of their own accord?!

If the coalition really wants to get behind British business, it needs to make more categories of insurance compulsory. It’s worked brilliantly in the motor market after all. Or, at least, it would have if so many young people weren’t deliberately cheating the system by opting out of vehicle ownership.

By declining to pay annual premiums of £2.5k (£5.5 if they live in Manchester or Merseyside) this feckless de-motorized generation are simply shirking their role in getting Britain back on its feet. The answer (David Cameron, please take note!) is obvious. Make driving, not just car insurance, compulsory and we’ll all be better off.


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