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									                                                       Taking the Stress out of Moving

Friday 12th January 2006

Mr Richard Wronka
Financial Stability and Risk Team
HM Treasury
1 Horse Guards Road

Ref: Deregulating freight forwarding insurance: A consultation

Dear Mr Wronka

I am writing to you in response to the above consultation paper.

We are Independent Relocation Consultants and we recommend professional Removal, Storage
and Shipping Companies to the public. You can find further information about us and what we do
on our website

One of the services that we offer is to “de-mystify” the Removal Industry. When a customer
contacts us to advise that they are moving home, we visit their house in order to evaluate the
volume of furniture and personal effects to be moved from A-B and then we approach 8-10
Removal Companies for their best price. If the client has a special requirement, i.e. they have
heavy equipment to move or are moving to a particular location that is not covered by all movers,
we obtain quotes from Specialist Removal Companies to save the client money. We then give the
best top 4 prices to the client and help them choose the best mover for their relocation. I suppose
you could call us a “Broker”.

Due to the nature of our business we deal with clients moving domestically (within the UK),
within Europe, Overseas and Commercially and we deal with all types of removal company, from
small 1-2 van companies to large multi-national Shipping and freight forwarding companies.

Each Removal Company has to be able to cover the client’s possessions adequately and therefore
at the time of quoting for the job they must also let us know their “Insurance” charge. Once the
client has chosen a Mover that company must then send the client a written quotation and the client
signs their acceptance form and agrees to their “Insurance/Liability” charges.

                                Grove House, Cross Drive, Sutton Valence, Kent, ME17 3NP
                                 Email: – Web:
                                            Telephone: 0871 384 9915 – Fax: 01622 842240
                                                      Taking the Stress out of Moving

Before January 14th 2005, Goods in Transit Insurance was very easy to understand - Both from a
public point of view as well as a Removers point of view.

I am sure you are aware, if you were moving house within the UK, Goods in Transit Insurance was
charged at a percentage of the Removal Charge – typically between 10% - 15%. VAT was not
added to this because it included the 5% Insurance Premium Tax (IPT).

This method was pretty much standard for the whole industry, here in the UK, regardless of
whether they were regulated by the Industry Trade Associations or not, i.e. The British Association
of Removers (The BAR) or The Guild of Removers & Storers (The Guild). It was an easy
insurance to understand and the charge varied between removers dependent on how much they
paid for their own bulk policy and the amount of insurance claims they had per year which put
their own premium to the Insurance Broker up.

International and European insurance was sold as Marine Transit Insurance and this was charged
to the client anywhere between 2% - 4% of the value of the goods being moved. This was a
typically higher charge than domestic insurance due to the larger risks involved with moving
overseas, i.e. third parties handling the goods, such as customs, shipping/freight companies and
clearing/delivery agents at destination.

When the Government Proposals for the New FSA regulation came out in 2003/2004 all hell let
loose within the industry.

The majority of removal companies are small to medium size companies running between 3-7
removal trucks, varying in size from small Transit vans to large Pantechnicons. Most of these
companies carry our local domestic and commercial removals within a 20 mile radius. Only about
25% of the Industry run much larger Articulated Lorries across Europe and specialise in
International Shipping.

When the new Regulations came into force on January 14th 2005 the industry was in chaos. Half
of all moving companies didn’t understand what they had to do, a quarter of them decided to
become FSA regulated and where prepared to go through the regulation process and the last
quarter decided not to become regulated and not charge anything at all.

Removal Insurance is not expensive in the great scheme of things, but it does produce a small
revenue stream enough to cover costs such as provide Insurance Policy paperwork to customers,
deal with insurance claims and other small overheads that need to be taken into account when
running a Removal company. It does not provide high profit margins such as a loan or mortgage
and the charges made by Removers do not exceed the high premiums that many loan and credit
companies charge, which can typically be anywhere between 5% - 35% of the loan request.

                               Grove House, Cross Drive, Sutton Valence, Kent, ME17 3NP
                                Email: – Web:
                                           Telephone: 0871 384 9915 – Fax: 01622 842240
                                                        Taking the Stress out of Moving
After a short while, Removers got used to the idea of the new regulation, but rather than sorting the
industry out, it created a black hole of confusion and uncertainty for both consumers and
Removers alike. (In fact many Removal companies went out of business because a large part of
their revenue stream had been taken away from them and they just could not cope any more.)

Companies that were now regulated by the FSA were charging exactly as before, but time and
again were coming up and quoting against companies that did not charge. Therefore they have
found it increasingly hard to sell their Insurance and the only person loosing out is the client. On
the other hand, there have also been many regulated companies that have been holding it over their
competitors and have almost been frightening their clients into moving with them (even if they
were not the best company for the job), saying that the client would not be covered against damage
if they moved with a non regulated company.

Fortunately this is not the case, most of the time. However, Regulation of Goods in Transit and
Marine Transit Insurance providers has led to companies charging all sorts of premiums to cover
furniture and personal effects whilst in their care, causing the public to be confused and in many
cases uninsured.

Limited Liability and Standard Liability, which is written into most Removers Terms and
Conditions, then came into force and is now the Industry norm. As you probably know, Limited
Liability greatly reduces the pay out if there is a claim and the onus is on the client who has to
prove that the remover was negligent to get anything more back after any damage or loss has been
incurred. Standard Liability is now pretty much being treated as the same as Goods in Transit
Insurance, except that as it is not an insurance, there is no Insurance “excess” to pay, because the
client’s goods still need to be covered in case of damage, fire or theft. Many movers now charge
the “old” Marine Transit Insurance charges of between “2% - 4% of the value of the goods for
European and International Moves, which they call Extended Liability, making it virtually the
same as Marine Transit Insurance – but without the excess.

So as of today, exactly two years later after regulation, if you speak with 7 different Removal
Companies you might get one of the following responses regarding their insurance cover.

   1) You might not be covered at all in case of damage because they don’t have a bulk
      insurance policy and they advise you to insure elsewhere
   2) You might only be covered under their Limited Liability policy, which covers your goods
      to the bare minimum
   3) You might pay extra for Standard Liability which is now pretty much the same a Goods in
      Transit Insurance, without the excess
   4) Standard Liability might be included in the removal charge and therefore have no extra
   5) You might have to pay a percentage of the value of your goods under Extended Liability,
      without the excess
   6) You might have to pay a percentage of the value of your goods under Marine Transit
      Insurance, with the excess
   7) Or you might have to pay a percentage of your removal charge for Goods in Transit
      Insurance, with the excess

                                Grove House, Cross Drive, Sutton Valence, Kent, ME17 3NP
                                 Email: – Web:
                                            Telephone: 0871 384 9915 – Fax: 01622 842240
                                                        Taking the Stress out of Moving

So as you can see from the above, rather than making the industry more professional and the
consumer less gullible or at risk, all that regulating Goods in Transit Insurance and therefore, the
Removal Industry has done, is confuse everyone even more so than before.

Goods in Transit and Marine Transit Insurance are only a very small, but crucial charge that must
be included in the costs that a client pays when they move house and should not be seen as an
optional extra. Because, more often than not, as much as a removal operative can be trained and
be experienced within the art of packing and moving furniture and personal effects, there is still a
likelihood that damage may occur due to the nature of the industry.

Unlike Payment Protection Insurance that comes with Credit Cards and Loans, Goods in Transit
Insurance should be seen as standard within the industry when moving home or office, because the
risks of damage, fire and theft far out weigh the advantages of not having any cover at all.

So as you can see from my letter, I am “for” removing the Removal and Shipping Industry (and
therefore the Freight Forwarders) from regulation by the FSA. Removal Goods in Transit
Insurance is only a very small charge that is added to the clients invoice and in fact the total
Removal charges including VAT and Insurance are very often much less than 1% of the total sale
price of the average house at today’s extortionate property prices, because Removal Companies are
so cost effective and efficient.

I hope that I have been able to explain why Freight Forwarders Insurance should be deregulated
and I hope that I have made myself clear. Please forgive me for writing such a long letter, but I
felt it necessary that you understand the effect to the moving industry as a whole and not just after
the event (i.e. January 2005).

I look forward to the outcome of your consultation paper.

Kind Regards

Jane Finch
Independent Relocation Consultant

                                Grove House, Cross Drive, Sutton Valence, Kent, ME17 3NP
                                 Email: – Web:
                                            Telephone: 0871 384 9915 – Fax: 01622 842240

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