Paymentshield Premium Freeze

December 2009

We're freezing our Buildings & Contents Insurance renewal premiums from 1st January 2010!

We've listened to your feedback and worked hard with our underwriters, Royal & Sun Alliance Insurance plc to offer the best possible pricing and cover for your customers so we're delighted to announce a freeze on our Buildings & Contents premiums.

This means that approximately 95% of Paymentshield policyholders whose policy anniversaries fall from the 1st January 2010 onwards will continue to pay the same core premium as in 2009*. This is despite us fully expecting the trend of increasing renewal premiums to continue due to the impact of claims cost inflation and recessionary factors which are placing additional pressure on insurers. In addition, the recent floods in Cumbria may put further pressure on insurance pricing in 2010.

Customers whose policy anniversary occurs from the 1st January 2010 onwards will find that their premiums have been frozen when they receive their renewal packs 3-4 weeks prior to their renewal date. Their statement of price will however show a small 50p increase in the monthly administration fee. This increase will enable us to fully service your customer's policies where we make no charge for mid term adjustments and against the backdrop of a challenging market environment with claims levels expected to increase.

In addition to the freeze on premiums at policy anniversary, and re-selling the benefits of a Paymentshield policy, should a client call us to cancel, our retention program now also includes enhanced tools to enable us to maximise the number of customers we retain.

We strongly believe that the combination of our excellent levels of cover, limiting renewal price increases and enhanced retention tools will have a positive impact on retention which is not only good for the customer, as they maintain a high level of cover,but good for you in terms of renewal commission.

* Only 5% of Paymentshield policyholders in higher risk postcodes where the premium needs to reflect the increased risk will not be included as part of this premium freeze.

FAQs

1. What does 'Premium Freeze' mean for my customers?

   Approximately 95% of Paymentshield policyholders whose policy anniversaries fall from the 1st January 2010 will have their core Buildings & Contents Insurance premiums frozen at the same level as last year. Customers will start to receive their anniversary letters from around the 6th December.

   This will be a major benefit to Paymentshield policyholders as we expect the rest of the market to follow the recent trend of increasing prices at renewal as a result of continued claims inflation, increased theft, fraud plus the more recent flood and weather related claims.

2. Why aren't you freezing every customer's premiums?

   A small percentage of policies will require some premium increase to reflect the higher risk associated with the area that they live in. Higher risk postcodes are generally considered as areas of high flood, theft or subsidence risk. Approximately 5% of our policyholders currently live in these high risk postcodes or their current premium level does not accurately reflect the insurance risk.

3. How long will you be freezing premiums for?

   For policyholders benefiting from the freeze on their premiums, it will apply for the full 12 months until their next policy anniversary. We will closely monitor any changes in market conditions and will continue to work with our underwriter to review pricing in order to continue to freeze premiums at policy anniversary for as long as possible.

4. So will my customer's overall policy cost be exactly the same as last year?

   The core Buildings & Contents Insurance premiums will not change so the monthly cost will be the same as their 2009 premium. The policy admin fee does need to increase by 50p per month which will enable Paymentshield to fully service your customer's policies where we make no charge for mid term adjustments and against the backdrop of a challenging market environment with claims levels expected to increase.

5. What will happen to my customer's Home Emergency and/or Legal Cover?

   We have again been able to agree no change in the premium for Home Emergency & Legal Cover with the product provider DAS Legal Expenses Insurance Company Limited. Certain customers who have benefited from a discounted price over the last year will be charged the full amount for these products following their policy anniversary however the vast majority of customers who selected Home Emergency and/or Legal Cover already pay the usual premium for these products.

6. If my customers have claimed in the last 12 months will their premiums still be frozen?

   Yes, other than the small number of high risk postcode properties the freeze of premiums at policy anniversary will be applied to all customers from 1st January 2010.

7. What happens to my customer's no claims discount?

   Your customers' no claims discount (NCD) will continue to adjust at policy anniversary as per normal. However, most of our customers are actually already on the maximum NCD and whereas any no claims discount would normally be overridden by premium increases, customers will now benefit from the 0% increase.

8. Does this affect my customer's terms and conditions?

   No. Cover, terms and conditions have not been compromised to achieve the freeze on premiums.

9. How does this affect my commission?

   There is no change to the commission structure.

10. Why are you only doing this now?

    We have listened to broker feedback that our pricing at policy anniversary can be expensive and recognise that the market has become increasingly competitive and customers are not immune to marketing messages from competitors. Amongst other things, renewal pricing reflects market conditions, individual customers' circumstances, insurer results and competitor activity. As a result, we have worked hard with Royal & Sun Alliance Insurance plc to improve renewal pricing to give us a competitive advantage in 2010.

11. How does this affect new business?

    We will be sharing good news regarding changes to new business pricing for 2010 with you shortly!

12. What happens if my customer has made a mid term adjustment to their policy in the last 12 months?

    The renewal premium will be a continuation of their last monthly payment, i.e. policyholders who have made a mid term adjustment will also benefit from the 0% increase at policy anniversary.

13. What happens if my customer makes a mid term adjustment next year? Will their premiums increase?

    Their premium will only change if they make a change that affects the insurance risk such as adding an element of cover. The underlying premium will not change.

If you would like to talk more information, please call our Broker Support Team on:
T: 0845 0615 100
E: brokers@paymentshield.co.uk
Lines are open:
8.00am - 7.00pm, Monday to Friday
8.00am - 1.00pm, Saturday

This page is intended solely for the attention of Directly Authorised or Exempt Firms as defined by the Financial Services Authority.

© Paymentshield Limited, 2010

Paymentshield Limited (registered number 02728936) is a company registered in England and Wales at Paymentshield House, Southport Business Park, Wight Moss Way, Southport, PR8 4HQ. Telephone calls may be recorded for security purposes and monitored under our quality control procedures

Paymentshield Limited is authorised and regulated by the Financial Services Authority (FSA) under registration No. 312708. See www.fsa.gov.uk/register for further details