The UK’s biggest banks have signed an agreement with the government this week. Many say that this is just what is required in order to help small business in this very difficult trading period.

The landmark agreement which has been signed by HSBC Bank, Barclays Bank, Lloyds Banking Group, Royal Bank of Scotland and Santander is designed to provide business with £190bn of lending which includes £76bn to small business. It is said this will improve the relationship between the government and the banks considerably.

After much debate and negotiating between the two it was also agreed that the banks will also put a curb on bonus pay. Senior Financial officials have advised that they have taken into consideration the “Public Mood” and feel that this will really help SME’s to start to grow throughout 2011 and beyond.

It is essential that small business receives the required capital to grow in such desperate times, as banks have been extremely restrictive with lending criteria and the transparency required when making their decisions. At present most small business owners feel they are being slowly strangled which is reverberating throughout the country and can be seen at its most prominent and manifesting in high rises in unemployment.

The questions remains, have the banks and government reacted quickly enough so they can implement their plans and release funds to the many business owners who require it?

Many experts predict that whilst the banks may agree to meet the government guidelines on lending to SME’s they will impose more stringent lending criteria which will continue to alienate most business owners.

Unless the banks release their stranglehold many more companies will fail and individuals will suffer. The rise in unemployment will increase and more families across the UK will suffer.

It is essential business owners protect their business by making cuts and it is crucial that the individual employees protect their income. As unemployment rises it is protection insurance that can provide that lifeline to the individual when they need it most.

Income protection insurance or payment protection cover will provide a 12 month, tax-free monthly benefit giving the individual time to find another position in this very competitive job sector.


Challenging times for the employment market in the UK

On February 25, 2011, in Uncategorized, by Kesh Thukaram

Two major reports released by the Office of National Statistics (ONS) this week just re- affirms the challenges that lies ahead for the employment market in the UK.

Firstly, the inflation figures released deflated the hopes of many people who were hoping that interest rates would be left untouched for some time. The inflation at its current levels of 4% is double the target rate set by the government for Bank of Inflation. Most analysts believe that the Bank of England has to increase the base rate of interest from its historical low levels of 0.5% by at least a quarter or half a point to curb increasing inflation. Though the Governor of Bank of England made a few comments that has dampened the expectations of an early rise, it is inevitable that an interest rate rise is in the offing in the near future.

Secondly, the unemployment in UK for the last quarter of 2010 was 7.9% up a tenth of point from the third quarter of 2010. The major challenge is with the 18 – 24 years olds, wherein about 755,000 people are unemployed, up 42,000 when compared to the third quarter of 2010.

While on one hand the inflation increases the cost of doing business for most small to medium scale businesses which will force them to cut costs even further which may result in more redundancies, the impending cuts of the government of the public sector is only going to make matters worse as there will be more unemployed people in the UK. The government has made repeated statements that the private sector should be able to absorb some of the people made redundant by the public sector, but how much of that is practical is anybody’s guess.

Banks have to be liberal in lending in order to get some momentum in the UK market. But the early signs of the banks implementation of recent agreements with the government for lending to small to medium-sized businesses are far from satisfactory. In the short-term, it is very important for people to consider and invest in a good quality payment protection or income protection insurance so that if they lose jobs, they at least have an alternate cash flow to support themselves and their families.

The next 12 months will be very challenging across almost all sectors of the UK employment sectors and unfortunately there are no easy answers.


Interesting News For the industry

On February 25, 2011, in Uncategorized, by Stuart Boseley

Interested in Redundancy Protection Insurance….

A few days back I heard some very interesting news of an announcement made by the government, today I have had that announcement confirmed by a very reliable source.

Currently all individuals making a claim for Unemployment / redundancy insurance are required as part of the claims process to register themselves with jobseeker as unemployed and actively seeking work. The AB1 form as its known is the form provided by jobseeker’s to the individual confirming they have registered. The AB1 is then requested by the insurer and forms an integral part of the insurer’s claims handling and verification process.

The government announcement confirms that they will no longer issue AB1 forms from the 1st April. I am not sure how this will affect individuals who have purchased income protection insurance policies or for that matter the insurer. It will certainly be one less worry or concern for the individual at what is an already difficult time, knowing you have been made unemployed is always stressful so from a clients perspective this is good news.

From an insurers perspective it will cause concern for that I am sure, they have not repsonded across the industry just yet but rest assured I will keep you updated when they do.

I’m looking forward to your views an comments on this news as it’s certainly an important question or topic that most customers want to discuss and understand clearly when they buy a policy. My guess is it will certainly raise a few eyebrows across the industry.


Income Protection vs Payment Protection Insurance

On February 25, 2011, in Uncategorized, by Kesh Thukaram

What is the difference between income protection and payment protection insurance?

I have not come across a simple, clear, well defined explanation of these two most commonly used terms in the protection industry. Though I have read reams of policy wordings, key fact documents of Best Insurance and our competitors, its baffling that the difference is not well explained. I have all sympathies for my insurance colleagues who due to nature of their work, the difference would seem very obvious and I remember some of them looked baffled when I asked this and the expression on their faces was all about – how come this person does not even understand such a fundamental difference. However when I asked around my friends and people I know who are not in the industry almost mis-took one for the other. A section of them thought whats all this fuss all about and the ones who cared to reflect on my question, thought it was not trivial – afterall both are insurance policies which pay out when one loses job or has an accident or sickness leading to loss of pay.

So what is the answer really?

Both Income and payment protection protect – accident, sickness and unemployment (ASU) and both pay out for 12 months or 18 months depending on the benefit period chosen. The fundamental and most important difference is the basis on which the policy is issued. In terms of payment protection – the monthly benefit amount is always based on the re-payment instalment of mortgage, rent or a secured loan but income protection does not have any of those requirements. Income protection is based on your income rather than the payments you are due to make every month. When a claim has to be paid out, the payment protection insurer will seek proof of mortgage, rent or loan payments payments due to be made by you and an income protection insurer would like to see proof of your income. From an insurer’s perspective, in a typical underwriting language – it all comes down to “insurable interest”. I will not bore you on that.

So it is really simple. If you want to get your accident, sickness and unemployment insurance on the basis of your monthly outgoings – then go for payment protection if not it is income protection for you.

Hope the above few words helps in understanding these often used (wrongly used) terminologies.

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