Insurers act on defaulters
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Your support makes all the difference.A GROUP of insurance companies is establishing a blacklist of those who do not keep up premiums paid by instalments.
Most defaults will be because policyholders' finances cannot stand the strain. But some are thought to be connected to illegal activities.
A spokesman for Cornhill - which is in the group with General Accident, Norwich Union, Legal & General and London & Edinburgh - said a disproportionate number of people stopped paying instalments in the first two months of the contract.
'We suspect some are professional defaulters who want a cover note that they can show to the police or use to get a car taxed.'
Criminals may also insure a vehicle with several companies and then make a multitude of claims when the car is written off.
Most companies have allowed any policyholder to spread the payments on an annual policy without making any credit checks. Cornhill has been making standard credit reference checks - the electoral roll and county court judgments - on those who want to pay by instalments for six years. 'We were one of the first, and it is still not the norm,' said the spokesman.
But this arrangement is being extended so that insurers will swap information about people who fail to pay all the insurance instalments. The information will be held by Infolink, the largest credit agency, and will only be open to other group members.
Twenty per cent of insurance is paid for by instalments. The charges are reasonable compared with borrowing on a credit card. Cornhill, for instance, charges a flat rate of 8 per cent, which works out at an annual percentage rate of between 16.7 and 18.9 per cent. General Accident adds 2.5 per cent for paying over six months, an APR of 12.6 per cent, and 6 per cent over 12 months, an APR of 13.7 per cent.
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