Car insurance premiums to rise to £600 after tax hike

Car insurance premiums are set to break through the £600 barrier for the first time next year as insurers pass on higher costs and this week’s premium tax hike, experts are warning. On Wednesday the chancellor, Philip Hammond, announced he is to increase insurance premium tax (IPT) from 10% to 12% from June.
This means drivers, now typically paying around £50 a year to the Treasury when they insure their car, will see it rise to above £60. Some young drivers could have to pay more than £250 just in the IPT part of their premium, according to comparison site GoCompare.
IPT, levied on around 50m insurance policies (including car, home and medical), has gone up nearly five times since it was introduced in 1994 at a rate of 2.5%. The AA says the extra tax will add further pressure on drivers already battling steep increases in underlying premiums. Its benchmark British Insurance Premium index shows a 16.3% rise over the past 12 months with the average “shop around” premium at £586.

“It’s disappointing the chancellor seems to have used the potential £40 saving on the average premium due to the whiplash crackdown, to increase IPT,” says the AA. “The upward pressure on premiums continues, which coupled with the unwarranted hike in IPT will see premiums go through the £600 mark before any benefit from the whiplash crackdown takes effect.”
Matt Oliver, car insurance spokesperson at GoCompare, says there are still “genuine inflationary forces in the market”. “That means it is unlikely we will see any real flattening for motor premiums in the next few months.
“Until firm action is delivered on whiplash and the compensation culture, claims costs will continue to rise. Any signs that the rate had slowed earlier this year are likely to be completely undermined by the announcement of a further increase in IPT.” Source: theguardian

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With mortgage rates up, Trump already makes a mark on housing market

The day before Thanksgiving isn't typically a busy time in the home mortgage business. Then again, it isn't a typical year.

First, there was real estate developer Donald J. Trump's surprising victory in the presidential election.
Then interest rates for mortgages spiked to more than 4 percent — rising faster in the days since the election than they have in more than three years, when fretting over their persistently low levels has consumed economists, policymakers and investors alike.

That partly explains why C. Stuart Kiehne, president of Annapolis-based Redwood Mortgage Services, was in his office Wednesday, running numbers for clients newly concerned they would miss their shot at favorable rates.

"I'm just taking care of the panicky people that all want to lock in," he joked.
The surge in interest rates that followed Trump's win signaled the incoming president's market-moving power. But analysts said that for home sales and residential construction — a sector that fuels more than 15 percent of the country's economy — it's not clear how Trump might affect the market. Source: baltimoresun

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Last Call to Enroll for 2016 Insurance Under the Affordable Care Act

 

THIS weekend is the final deadline to sign up for health insurance coverage this year under the Affordable Care Act.

If consumers don’t sign up at HealthCare.gov by midnight Pacific time on Sunday — that’s 3 a.m. Monday on the East Coast — they must wait until the fall, and their health coverage won’t start until 2017. (States that run their own insurance marketplaces have similar deadlines.)

In December, HealthCare.gov extended the deadline (for coverage starting Jan. 1) by two days, because of a last-minute surge in enrollments. But there’s no indication that will happen again.

“We’d encourage consumers not to rely on a possible extension, but to plan for the deadline,” said Cheryl Fish-Parcham, private insurance program director at Families USA, a consumer advocacy group.

If consumers enroll by the Sunday deadline, their health coverage will start March 1.

Those who miss the deadline can sign up later for 2016 coverage only if they have a qualifying circumstance, like getting married, having a baby or losing job-based health coverage.

Last year, taxpayers who missed the open enrollment deadline were allowed to sign up later if, when filing their income tax return, they were surprised to learn that they would have to pay a penalty for not having coverage. But there will be no special “tax time” enrollment option this year, the government has said.

In addition, the government may start doing more to verify that consumers are truly eligible to sign up during special enrollment periods. Insurers have complained that the government has been too lenient in allowing consumers to sign up after open enrollment, making it difficult to manage plan costs.

It’s not clear what documentation may be required, said Sabrina Corlette, a health care researcher at Georgetown University. But after Sunday, she said, “People should not be surprised if they start getting asked to provide some form of proof” that they qualify.

As the Sunday deadline approaches, consumers can get help by phone 24 hours a day by calling 800-318-2596. Or they can find in-person help in many areas over the weekend. To find a site nearby, visit LocalHelp.HealthCare.gov. Some locations may require an appointment, but others will accept walk-ins.

“We have been busy,” said Pranay Rana, a consumer education specialist in Atlanta with the nonprofit group Georgians for a Healthy Future. Enrollment help will be available over the weekend at a variety of locations, he said, including community centers and churches.

Here are some questions and answers about coverage:

■ What is the penalty for not having coverage in 2016?

The penalty for not having coverage this year is $695 per adult, or 2.5 percent of household income, whichever is greater. (That’s up from $325, or 2 percent of household income, for 2015.) If you sign up for coverage by Sunday and keep it for the rest of 2016, you won’t have to pay a penalty when you file your taxes next year. The law allows you to have short-term gaps in coverage without paying a penalty.

■ If I was automatically re-enrolled in the plan I had in 2015, can I still change my plan for this year?

Yes. You can change your plan selection if you act by the Sunday deadline.

■ If I had marketplace coverage last year, do I need to do anything special when filing my taxes?

If you had coverage through the Affordable Care Act in 2015, you’ll be mailed a statement with information you’ll need to file your income tax return. HealthCare.gov advises that you wait to file your return until you receive the form, which should arrive by early February. Source

 

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Mortgage applications up 8.8% as buyers look to lower rates

 

Defying expectations for the start of 2016, mortgage rates spiraled down further last week, spurring more volume in the mortgage market. Total applications increased 8.8 percent on a seasonally adjusted basis last week from the previous week, according to the Mortgage Bankers Association.
Refinance applications were behind much of the surge, rising 11 percent from the previous week, seasonally adjusted. The results include an adjustment for the Martin Luther King Jr. holiday.
Borrowers are clearly seeing the rate drop as perhaps a last opportunity to seize on historically low rates. Refinance volume is still down 30 percent from the same week a year ago, when mortgage rates were even lower. Most economists predict that interest rates will rise steadily through 2016, although plunging equity markets in the U.S. and overseas have trumped that premise so far.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to its lowest level since October, 4.02 percent, from 4.06 percent, with points decreasing to 0.40 from 0.41 (including the origination fee) for 80 percent loan-to-value ratio loans.

"As a result of more financial market volatility and continued flight to quality by investors, mortgage rates have decreased 18 basis points since the first week of January 2016," said Joel Kan, an MBA economist. "With a 30-year fixed rate of 4.02 percent in the most recent week, the refinance index was at its highest since the week ending October 1, 2015, a week when rates were 3.99 percent, and there was a rush of applications before the Know Before You Owe rule implementation deadline."

That new rule from federal regulators, designed to protect borrowers, was widely expected to delay loan closings, and recent Realtors' confirm that it did.

Mortgage applications to purchase a home increased 5 percent week-to-week, seasonally adjusted, and were 22 percent higher than the same week one year ago. Homebuyers are less sensitive to weekly rate moves, as they are facing a much bigger issue in the market today, namely a lack of homes for sale and fast-rising prices.

Home sales rebounded in December, but largely due to the new mortgage rule that delayed some closings into December. Real estate agents are not looking for the same growth in January, as decade-low supply continues to plague neighborhoods nationally.

"At Redfin we are seeing one of the slowest starts to the year that we've seen in a long time. Lots of people are touring homes but few are making offers," said Nela Richardson, chief economist the real estate brokerage. "Even where there is inventory, a lot of it is overpriced or unappealing. Homebuyers this year are motivated but not desperate, and they refuse to overpay." Source

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The Address Downtown fire Owners of Dubai high-rises urged to check insurance

 

DUBAI // Owners of high-rise homes in Dubai have been urged to examine their building insurance policies before an expected barrage of litigation over the New Year’s Eve fire at The Address Downtown.

As a result of the fire, authorities ordered checks on every building, amid suggestions that the aluminium composite panels that clad hundreds of towers are a fire risk.
Even minor remedial fire-prevention work on aluminium-clad buildings would be expensive: the cost of replacing the cladding could be ruinous.
Lawyers now predict a scramble among building owners, developers, construction contractors, designers and material manufacturers to avoid liability, with insurers eventually footing the bill.
“All interim owners’ associations need to dust off their insurance coverage and have a good look at it,” said Michael Lunjevich, a partner at the law firm Hadef & Partners.
“Owners may not be aware of the insurance put in place for their building. There could be gaps that might allow insurers to dodge liability. Is this caused by faulty design, faulty materials, faulty installation or a structural defect? Each possibility has a different treatment under insurance, and should be investigated.
“If this issue is as big as people suspect, then everyone needs to pull out their contracts, whether that be the sale and purchase agreement, the construction contract or insurance contracts, and take legal advice.”
The legal fallout from the Address fire also illustrated the need for more clarity over the liability of building owners, and lawyers said more legislation may be required to settle the issue.
A law for jointly-owned properties in Dubai was enacted in 2007, creating freehold property rights for expatriates and requiring owners’ associations to manage the maintenance and operation of their buildings.
However, the associations have not yet been fully recognised as legal entities. They remain “interim” bodies, which limits their ability to start legal proceedings or take collective action.
“Both Rera and Land Department need to act to bring the Jointly-Owned Property Law into full effect,” said Mr Lunjevich.
“Also, Dubai Municipality and civil defence need to act on projects under construction to ensure that if there is an issue this is not repeated.”
Insurers are also considering the implications of the Address fire for underwriting risk for high-rise buildings.
Global insurance groups have taken a keen interest in building facade blazes after high-profile fires in Europe, the US and Asia in recent years. Groups such as Liberty Mutual, FM Global and Tokio Marine have funded research into facade fires.
Unlike many other cities, where panel-clad buildings may constitute only a small part of the building stock, most of Dubai’s high-rise skyline was constructed in the decade before the 2008-2009 financial crisis, using this type of facade. Many of these buildings have aluminium cladding with flammable material in its core.
Beyond the claims generated by the Address fire, insurers and reinsurers will now also be analysing the costs associated with the fire tests that will be conducted on buildings across the city, any remedial work that may be required as a result, and the retention of lawyers to advise owners’ associations.
“We have received some claims notifications and are analysing the situation,” said a spokesman for Zurich Insurance Group. “It’s way too early to make any statements on the role of the cladding in this incident.”
In the meantime, lawyers expected the fire to result in litigation. “Insurers will probably bear the brunt if the insurance coverage is in place. A unit owner may sue a developer, who in turn sues the construction contractor, who sues the designer, who sues the material manufacturer and they all call on their insurers to pay up if they are found liable,” said Mr Lunjevich.
“Developers, consultants, contractors, manufacturers and insurers will all play a part in this. This is not a standard building fire – here we are talking about a fire that has highlighted problems with materials, and lots of it is possibly still in the market.” Source

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Cruz reveals he doesn't have health insurance

 

ed Cruz revealed on Thursday that he is not currently covered by any health insurance, chalking up the lack of coverage to Obamacare.
"I’ll tell you, you know who one of those millions of Americans is who’s lost their health care because of Obamacare? That would be me," Cruz told a Manchester, New Hampshire, audience. "I don’t have health care right now."

Cruz explained that he had purchased an individual policy and that Blue Cross and Blue Shield of Texas had canceled all of its individual policies in Texas, effective Dec. 31. Cruz and his wife, Heidi, who is on temporary leave from her job with Goldman Sachs, purchased an individual plan last year after previously receiving coverage through the Wall Street firm. A spokeswoman for Cruz's campaign did not immediately respond to a request for comment to clarify his remarks.
"So our health care got canceled, we got a notice in the mail, Blue Cross Blue Shield was leaving the market. And so we’re in the process of finding another policy," Cruz said. "I hope by the end of the month we’ll have a policy for our family. But our premiums — we just got a quote, our premiums are going up 50 percent. That’s happening all over the country. That’s happening in New Hampshire."
It would appear that news of the cancellation did not go over well in the Cruz household.
"By the way, when you let your health insurance policy lapse, your wife gets really ticked at you," he remarked. "It’s not a good — I’ve had, shall we say, some intense conversations with Heidi on that."
Blue Cross Blue Shield of Texas did stop selling some of its individual policies for 2016 but not all of them. The company earlier said its individual PPO products — which give people a broader choice of providers — were no longer financially sustainable, so they were discontinued at the end of last year. Blue Cross HMO plans, which are more restrictive, are still available in Texas on HealthCare.gov, and other insurance companies in the state offer a variety of network types.
Also, while premiums did rise across the country this year, they did not spike 50 percent. Source

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Car insurance up £100 a year because of George Osborne’s premium tax, AA says

The average cost of car insurance cover has risen by more than £100 a year thanks to a so-called "stealth tax" introduced in George Osborne's summer budget, according to the AA.
The AA’s car insurance index showed that the average premium rose 10 per cent in three months and 20 per cent in a year to £625.70. That's an increase of £105.64 in a year.
The hike marked the biggest increase in insurance since 2010.

The AA said an increase in the rate of Insurance Premium Tax from 6 per cent to 9.5 per cent was behind the added cost to the driver.
George Osborne was accused on introducing a “stealth tax” when he slipped higher insurance premiums into his summer budget.
It has affected around 7.3 million policies since coming into force in November and is estimated to earn the Treasury more than £8bn by 2021.
Michael Lloyd, director of AA insurance, said that made up personal injury claims were pushing up premiums for all.
“The UK suffers the unenviable reputation for being the ‘whiplash capital of Europe’ with the number of claims continuing to pile in, encouraged by vigorous cold-calling claims firms,” Lloyd said.
The AA is taking a harder line against false claims including everything from organised crime to opportunistic attempts to rip off insurers.
The Government is backing the effort with new legislation that should curb fraudulent injury claims. The AA said that a tougher line on false claims should bring down insurance premiums.
Some 11 per cent of drivers think it is acceptable to make an insurance claim after a collision, even if no injury was sustained, according to an AA survey.
“It’s this acceptance that it’s OK to defraud insurers that has become endemic.  It is stealing and it affects the premiums paid by your friends, your family and your colleagues – those that most wouldn’t dream of defrauding,” Lloyd said.
But he pointed out that the Insurance Premium Tax was the main reason that premiums had increased so dramatically over the year. Source

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