LOSS OF SUBSIDENCE INSURANCE COVER UPON RENEWAL

Annemos

You are so correct. The problem I have had, is that I assumed that SAGA was a reputable provider. I was not looking at the cost at all. In fact, I paid extra for their Premier policy. 
I had no idea that they fragmented their homeowners amongst an insurance panel of several providers and so we ended up as small batches of homeowners within strange chains of companies. As laypeople, we have no idea what is happening to us, until we have to make a claim for Subsidence, in particular. 

This may all end up with the Financial Ombudsman for a complete review. 

Another revelation has been just how many companies I have had to deal with since I had to claim. 
So the group of four above (five if you count Munich Re) 
A new broker who managed to set up the insurance policy for 2020 renewal (angels, but attached to UK General, so they will likely not be available next time). 
The Loss Adjuster/Claims Handler Company with their sister company who has the contractor book. Then their selected contractor plus their sister repair company. 
Councillor and also Chief Exec of the Local Authority to push for the trees to be dealt with. Their local government hub lady. 
Borehole people, crack monitor people, asbestos ceiling strippers. 
Then my own engineer when it went wrong. 
That's at least 17 and counting. Not to mention being out of pocket now by quite an amount. 
This has certainly been the worst experience of my life. Thanks for listening, Huckster. 

Annemos

Oh eighteen....I forgot the Hospital Consultant who advised I was having symptoms of Stress!! 

Sandtree

huckster said:
I have always thought it was very important to use a Buildings Insurance underwriters that was likely to be around in say 10 or 20 years time, at the time of buying an Insurance policy.  It is more likely that say Aviva or Legal & General would be around in 10/20 years time, than some small underwriter.  The trouble with comparison websites, is people are buying based on price and also just know the name of the Insurance brokers/intermediary and not the actual underwriter.

I personally think the last point is key, especially when you get into complicated supply chains like the OP has found themselves in with their broker Saga placing the business with the MGA UK General (who describe themselves as a pseudo insurer) who did actually do the underwriting of the policy but their capacity provider is Great Lakes. 

People looking into Great Lakes will see its part of Munich Re and so has a group history from 1880 so on the surface not a fly by night company thats likely to disappear over night... the issue in this case is they act more like a reinsurer than an insurer and pretty much have little/no direct involvement with the policyholders. UK General certainly have delegated claims handling responsibility, in addition to underwriting, up to at least a sizeable sum.

Annemos

Sandtree, sorry to bother you on this, but can you just give me more explanation on what you mean by the difference between a Re-insurer and an Insurer?

I mean this is something else that laypeople have never heard of. When I saw Munich Re, I just assumed Re was part of their German name, that is how basic our knowledge is. And I am not normally daft. I have been doing International Tax for 34 years, not on the Audit side, but the personal tax side,  so I had never heard of these things regarding insurance before.

Also, are you saying that UK General actually do have the financial capacity to continue to cover my property in the future? I had always assumed that they did NOT have the financial assets to be able to do that. 
Thank you so much for your help. 

Sandtree

To put it simply... as you buy home insurance to make sure if you suffer any losses over your excess your insurance company pays for it so do insurance companies can buy reinsurance which enables them to claim part of their losses back from their reinsurer.  The simplest type of reinsurance conceptually is really for large commercial insurance as one insurance policy attaches to one reinsurance policy... so if you think of a large industrial building, the owners insure it for £100,000,000 with a £5,000 excess, the insurer may decide to buy reinsurance against that policy as they don't fancy paying out £100m and so could say have a policy that covers 50% of any claims over £10m (think of it as a £10m excess). 

For personal lines general insurance companies normally buy treaty reinsurance so that many insurance policies attach to a single reinsurance policy and thats where they get more complicated. 

Reinsurers themselves may not want to retain all the risk themselves too and so they also can buy reinsurance on the reinsurance... an insurer cedes to a reinsurer, a reinsurer retrocedes to another reinsurer.

In most countries, a company that sells insurance can also sell reinsurance however if a company specialises in reinsurance they tend to have "Re" at the end of their name, hence Munich Re, Swiss Re, Hiscox Re, Flood Re etc. Just as insurers specialise in certain customer types, risk profiles etc so do reinsurers. There are some that will consider most risks and others that specialise in really remote events, eg only if a single claim exceeds £200m.

Its important to note that even though an insurer buys reinsurance it is still 100% on the hook for paying the claim to the policyholder... it cannot for example make the policyholder wait until their reinsurers have paid them their claim.

UK General isnt an insurance company, they are doing many of the functions of an insurance company but ultimately they are acting with the delegated authority of Great Lakes (presently). If Great Lakes withdrew that delegated authority and UK General couldn't find another insurance company to give them delegated authority then they wouldn't be able to continue.  You will see people refer to insurers as "underwriters" (a term that comes from the processes in Lloyds of London) but this gets messy with MGAs because the MGA can be the actual underwriter even though the actual insurer is someone else... hence where MGA's are involved we tend to talk about the capacity provider, the insurer that provides the delegated authority to the MGA.

How much authority is delegated can vary significantly... some MGAs will be able to sell say up to £20m of premium a year with pricing within fairly tight bounds and will do no claims handling at all. Others have much greater authority over both amounts they can sell and how much they charge plus potentially can settle claims up to millions. 

Annemos

Sandtree. This is a wonderful explanation. I cannot thank you enough for explaining this to me. 
(Isn't the Martin Lewis site phenomenal. It really helps us get to the bottom of issues, through such helpful people as you and Huckster, for example.)

I shall take some time to digest all this new information.

It does all make sense now you say it, but it does seem to remind me again of endless deflections and reflections. Like those financial derivative instruments. The world is getting too complicated to cope with and it is not always done in our best interests? 

Thank you so very much. 

Sandtree

No worries @Annemos

For clarity, in the set up you have Great Lakes is actually an insurer however because of the middleman of the MGA UK General and the fact I know they do all the claims handling (certainly up to 6 figures at least) it is very similar to reinsurance because Great Lakes doesnt have to deal with the policyholder in 99.9% of circumstances. Unlike reinsurance though Great Lakes would step in if the UK General failed.

It is complicated but unlike certain derivatives it has been for a very long time and its is this web of contracts that makes the insurance industry generally so resilient, the risk is spread around many different organisations, each of those will insure a different blend of risks and the probability of all the risks materialising at the same time is low (and in some cases near impossible - think a company that has a large annuity book so the biggest risk for them is that cancer is cured and everyone lives longer but they buy reinsurance from a Life insurer who's biggest risk is a pandemic happens and every one dies earlier... that life insurer now becomes more stable as whilst the pandemic hits their life book hard the annuities all end early making the reinsurance deal highly profitable offsetting the life losses and so does the annuity company as it'll be supported if cancer is cured (at which point life claims go down))

Where it is complicated is when you have a large insurance group like AIG which writes both insurance and reinsurance, plus has intra-group agreements, and you are trying to calculate what the gross and net (of reinsurance) position is for an event like 9/11 both at an entity and group level. Thankfully there are software that help and very bright actuaries/statisticians who can create models to estimate both the likely cost and the level of certainty in the estimate

Annemos

Great Lakes doesnt have to deal with the policyholder in 99.9% of circumstances.
Well, I have certainly become one of their other 0.1 per cent. I am awaiting their reply! 

Sandtree

As they say, there's always one

Annemos

I would say happy to oblige....but I am anything but happy!