A regular review of how we stay on top

There's no sign of innovation fatigue as ARAG powers forward with creative ideas to convert change into opportunity.

We always listen carefully to customer feedback and do our best to ensure our products are innovative and bang up to date. We also look for ways we can enhance and improve our cover so our customers get that little bit extra from us.

Before the event

As part of our Motor Breakdown Solutions UK update we have :

• increased the amounts available for alternative transportation and emergency over- night accommodation where it is necessary to arrange this,
  
•  removed the annual aggregate limit on the sum payable,
  
•  increased the size of vehicle available for onward transportation if it's not possible to fix a breakdown  the same day, and we will
• provide additional help with costs incurred in collecting a vehicle on completion of the repair.    

We have also added an additional section of cover for customers who accidentally fill their vehicle with the wrong fuel.
Due to increasing demand from customers touring further afield we have added a combined UK and Europe breakdown product to our range. Our European cover extends to the whole of Europe and also includes repatriation if your vehicle can’t be repaired.  

If you would like any further information on these products please call 0117 307 2278

After the event

With a leading market role in clinical negligence cases, ARAG is rebalancing its ATE activities with a new focus on Employers Liability/ Public Liability (EL/PL) business. For some solicitors this could mean lower premiums. It depends on the overall composition of supporting firms' ATE portfolios and applies particularly to firms new to ARAG.

A recent Reserve Analysis revealed there was some room for manoeuvre on rates, with premiums now being cut, slightly more in the case of PL.

To further increase competitiveness, split rates are being offered for fast and multi-track cases. This will avoid adverse selection from firms with a high proportion of multi-track cases on the current blended rate, and also for those predominantly insuring on the multi-track. It confirms ARAG's commitment to flexibility which will also be seen in high value multi-track cases (over £100,000) where individual rating can prove beneficial.

Meanwhile, firms wishing to restrict their ATE insurance needs solely to any failure to beat a Part 36 offer, can select cover either with, or without, the risk of their own disbursements. Taking such cover at the outset, for opponents' costs only, is £110 for both EL and PL.

If you would like any further information on these products please call 0117 917 1680.

FCA Market Study – past, present and beyond

Background

We have regularly written about the FCA’s Market Study of General Insurance Add-ons which focused on Gap, gadget, Travel, PA and Home Emergency Assistance products. Regular RAG readers and ARAG blog followers may recall our previous position statements in response to the FCA’s provisional and final remedies reports.
 

To recap, the FCA found that the manner in which add-on insurance products are sold disadvantages consumers’ decision-making ability at the point of sale and that some insurance products (not just add-ons) do not provide good value to consumers.

 
The current position

The FCA has recommended further consideration be given by comparison website providers to improve how information about add-ons and prices is displayed to achieve a simpler customer journey and achieve greater transparency.	ARAG's position    This seems sensible although we do not intend to engage in dialogue with the FCA as website providers are best placed to do this.
introduced a deferred opt-out method of sale for GAP insurance (from 1 September 2015).	This is likely to improve customer awareness and understanding of GAP insurance and improve price competition. We have not responded to the consultation in relation to this remedy as we do not offer GAP insurance products.
consulted on banning opt-out sales of add-on products – CP15/13 closed June 2015.	We agree in principle to the ban and require our agents to offer ARAG policies on the basis of the customer opting-in, or by embedding cover into the underlying insurance. We explained in detail to the FCA why we feel that many of the assumptions and assertions made in the market failure analysis and cost benefit analysis do not stand up to detailed scrutiny. We consider the findings unbalanced and despite further exchanges with the FCA concerning the data relied on, we are not confident that the figures have been based on sufficient data.
issued a discussion paper about publishing claims ratio for most general personal lines insurance products  - DP 15.4 closed September 2015.	This is a potentially powerful measure that could have a profound impact. Mis-guided ratios will have the potential to wrongly steer consumers away from particular markets or products, deterring individuals from insuring and exposing them to immeasurable financial loss. Claims ratios risk being used by consumers as an alternative to engaging more fully with the products.  For LEI product : • the value is derived from the benefits of taking legal action rather than the legal costs incurred in doing so; • high claims ratios can be a symptom of failed legal actions that deliver poor consumer outcomes; • up to seven years  reporting period would be required to give an accurate ratio • products are not homogenous but are bespoke to meet  demands and needs  of particular customer profiles making it  impossible to produce like for like comparisons. We have urged the FCA to reconsider the scope of the claims ratio remedy. It is wholly unsuitable to inform value judgments about LEI and could damage access to justice at a time when the legal environment is exceptionally challenging for individuals.

The future

We hope the FCA takes our representations on board. Watch out for more blogs from us as soon as the FCA makes further announcements. 

Interesting decision in employment claim for Care Homes

The decision
An on-call night worker was not entitled to the National Minimum Wage for all hours of the night shift; only those when he was working.  Nor was he entitled to accrued holiday pay for earlier years when he was not prevented from but did not ask for leave.

Summary
The Claimant wished to appeal against an employment tribunal (ET) decision which dismissed his complaints for arrears of pay under the National Minimum Wage Act  (“NMWA”) and holiday pay under the Working Time Regulations.

More detail
 The claimant worked as an "on-call night care assistant at a residential care home in which provided for up to 16 elderly residents.  He lived at a top-floor staff flat known as “the Studio”. He was required to be in the Studio from 10pm until 7am and was able to sleep during those hours.  However, he was required to respond to any request for assistance by the night care worker on duty at the home.  In return the Claimant was provided with free accommodation in the Studio, together with a payment of £50 per week, rising eventually to £90 per week.  In practice he was very rarely asked to assist the night care worker.
During the daytime the Claimant had day jobs as a driver. 
Before selling the care home to the Respondent in this case the previous owner asked the Claimant to sign a contract of employment that included a wider range of duties than he had previously carried out.  He also signed a tenancy agreement, agreeing to pay rent of £120 per week for the Studio.  His weekly pay was increased from £90 to £210 per week to cover the rent.
Relations with the new owners were far from happy and the Claimant was dismissed shortly after the care home changed hands.

National Minimum Wage
 The claim was for £239,490, being the NMW since the NWMA came into force on 1 April 1999, applied to his full nightly on-call hours.
The ET was required to determine whether the Claimant was entitled to be paid for the hours 10pm to 7am when he was required to be in the Studio, including time when he was asleep or only when he was awake and actually performing work assisting the night care worker on duty.
The ET found that his home, the Studio, was at his place of work and the time in question was spent at home.  Only time spent awake for the purpose of working counted as salaried hours. The ET concluded that he was not working throughout each night shift; only on those rare occasions when he was called upon to do so by the night care worker on duty.  He was paid the NMW for those limited occasions, hence this claim failed.

Holiday Pay
The Claimant did not take holidays after the WTR came into force on 1 October 1998.  Could he carry forward his paid leave entitlement totalling some £15,000?  Having considered various cases that set legal precedents the ET decided that where a worker could have requested paid leave but chose not to he cannot carry forward his past entitlement to pay in lieu of holiday pay.  

The Appeal
National Minimum Wage
The Claimant's solicitor argued that the ET failed to take into account the fact that the Claimant was required to be present in the Studio between the hours of 10pm and 7am and that the ET was wrong to find that the Claimant was not working throughout his shift when his presence was required for the Respondent to meet its statutory obligation to have adequate staffing levels in the home.  He argued that the ET took into account irrelevant factors, namely the presence of another worker on the night shift and that the Claimant was content with his working arrangements..

The EAT considered previous cases in relation to night workers. One case concerned staff at sheltered accommodation. On that occasion the  EAT drew a distinction between cases where a worker was working merely by being present at the employer’s premises and those where the worker was provided with sleeping accommodation and was merely on call.  The EAT went on to interpret that
•    the Claimant was available at his place of work,  for the purpose of doing salaried hours work and was required to be available for such work so on these facts, his working hours were between 10pm and 7am on each night shift.
•     However, his home, the Studio, was at his place of work and he was entitled to spend the entire shift at home.  Accordingly only those times when he was awake for the purpose of working counted as working hours and his flat-rate pay (plus accommodation) meant that he was at all times in receipt of the NMW. 
The EAT agreed with the ET and the appeal failed.
 
Holiday Pay
 The question for the ET was whether the Claimant was unable or unwilling to take annual leave as it fell due for reasons beyond his control, for example due to sickness or (maternity) paternity leave or because the employer would not allow him to do so.
 The ET found that the Claimant was aware of the right to holiday pay because he received it in his “day job” as a driver.  They rejected the Claimant’s evidence that he made no complaint because he was frightened of upsetting the care home owner.  The EAT agreed with the ET's original decision.