Connect with us


Ringing a bell for bike insurance



Why is it that Lycraman riders on racing bikes don’t have cycle bells? Instead, they shout to warn other road users of their imminent presence.

I can understand that champions like Bradley Wiggins want to shave every gramme off their machines to reduce weight. But, fast though they are by my slouchy standards, most of the riders I see tearing around north London are not in the Tour de France category.

Bell critics say that “a polite shout” is better than a ring because pedestrians resent having to jump at the sound of a bell. This may be true on quiet country lanes. But it hardly applies on busy city streets, especially with the explosion in cycling triggered by the pandemic.

The law is a bit of a mess. Bikes must be sold with bells but may be ridden without. The Highway Code, currently under revision, says in both its old and proposed new version: “It is recommended that a bell be fitted.” 

I am not arguing for the UK to follow the Netherlands — where more of the population cycles than anywhere else — in making bells compulsory. The police already have too much to do.

But with more cyclists taking to the roads than in any period since the early 1980s, it is time perhaps for a publicity campaign for riders to take action themselves.

Admittedly, cyclists cause very few serious accidents, being responsible for just one or two out of about 1,800 road deaths annually. But more bells could help reduce near misses, cut down arguments and improve the sometimes fraught relations between riders and other road users.

Even more important, in its way, is promoting bicycle insurance. While the Cycle to Work scheme to boost bike commuting through tax breaks is a seen as a success, too little has been done about insurance.

Nobody even knows how many of the estimated 4.5m Britons who cycle at least once a week are insured for theft, or for legal claims arising from accidents. While a bike is not a four-by-four, even a minor car door scrape can be expensive to fix.

Specialist cycle insurers are ready to help but are generally small. The sector is dominated by the big general insurance companies through their home and contents policies. These only cover around two-thirds of UK households, omitting most cyclists living in the other third.

Also, insurers’ terms vary. Some cover bikes only when they are home, and then only if they are securely locked, even in a garage. More generous policies cover bike thefts wherever they take place, but these often cost more.

Cyclist policyholders should read the fine print. For example, so-called third party liability cover — insurance which offers protection in the event of legal claims from other people — is sometimes limited to accidents around the house and sometimes not. 

Also, policyholders are usually required to pay an excess — in many budget policies this can be £500, a big amount in relation to the £400-£700 typical cost of a new bike.

At this point, I must declare an interest and say that I had my bike stolen from a locked garage at home this month. Axa, my insurer, dealt with the loss in a breathtakingly hassle-free way.

However, the experience is not always so painless. Tobias Taupitz, a former insurance executive and founder of Laka Bicycle Insurance, a specialist provider, says. “Many people think they have been failed by insurers. They have a £750 bike stolen and find there is an £800 excess. They feel angry. They have paid a premium and think they have not got much in return.”

Mr Taupitz’s answer is a new form of bike insurance in which customers pay a variable monthly premium determined by the claims previously paid out to all clients, who currently number 7,000. This encourages riders to take more care, keep claims down and reduce everybody’s premium, he says. “They think they are looking after their own and other cyclists’ money, and not the insurer’s profits.”

But before cyclists even consider the likes of Laka or other specialists such as Cycleguard or PedalSure, they have to accept that they need insurance. This is the nub of the problem, especially for people without home insurance, who tend to be on lower incomes and therefore more likely to be hit hard by a loss. Steve Garidis, executive director of the Bicycle Association, the industry trade body, says: “Bicycle shops usually don’t offer insurance. They don’t want to spoil the experience of buying a bike by talking about something bad like theft. So cyclists just don’t think of it as something they need.”

The industry is adamantly against mandatory bike insurance. With good reason. As bikes are not compulsorily registered in Britain, cycle insurance would be much harder to enforce than motor insurance, which causes the police many headaches.

But if compulsion is ruled out, the current voluntary approach needs to be seriously reinforced — and quickly, given the pandemic-linked surge in bike thefts.

First, insurers could do more to reach cyclists not covered by household insurance, often young people, frequently living in rented accommodation. Why not expand what is offered through retail websites? For example, the household insurance services arms of Sainsbury’s, Marks and Spencer and John Lewis all include specialist insurance for pets? Why not bikes?

Next, bike retailers need to be more involved. If they can sell helmets and locks, they can diversify into insurance. The regulatory hurdles in selling financial services cannot be insurmountable if supermarkets can offer pet protection.

As a quick start, the trade should do more to encourage buyers to list new bikes immediately on the police-backed national BikeRegister scheme, which makes stolen cycles easier to trace. Cyclists who think about registering may be more likely to consider insurance.

Finally, the government could offer a modest incentive. A temporary VAT cut on new bikes for those buying insurance could be added to the pandemic response package. It might sound arbitrary, but so was the Eat Out to Help Out discount scheme. And cycling would do more than trips to McDonald’s to encourage healthier lifestyles, a key policy goal.

Stefan Wagstyl is editor of FT Money. Email: Twitter: @stefanwagstyl

Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *


FC Barcelona and Real Madrid will be forced to pay back illegal state aid




FC Barcelona and Real Madrid will be forced to pay back millions of euros in illegal state aid after the EU’s highest court ruled Brussels was right to declare that beneficial tax arrangements they enjoyed for a quarter of a century were illegal.

The decision by the European Court of Justice upholds previous rulings by the European Commission and comes as Barcelona, the world’s highest-earning football club, is enduring one of the biggest crises in its history. 

This week police arrested the club’s former president, its current chief executive and its general counsel, in connection with a separate legal case ahead of a vote on Sunday to decide its next president. Barcelona, which recorded a loss of €100m last year, also has to contend with a debt pile of more than €1bn.

In 2016 Margrethe Vestager, the EU’s competition chief supremo, ordered four Spanish football clubs to pay back tens of millions of euros received since the 1990s in the form of sweetheart property deals, tax breaks and soft loans.

FC Barcelona subsequently contested the decision before the General Court, the EU’s second-highest tribunal, which annulled the commission’s judgment. However, after a final appeal from Brussels the ECJ ruled in favour of the EU.

In its decision on Thursday — which is final — the ECJ deemed the tax scheme “liable to favour clubs operating as non-profit entities over clubs operating in the form of public limited sports companies”, holding that it could therefore qualify as illegal state aid under EU rules.

The General Court had previously annulled Brussels’ decision over what it said was lack of sufficient evidence that the tax arrangements offered to the four football clubs, which also include CA Osasuna and Athletic Bilbao, were illegal.

But the commission had questioned the court’s “heavy burden of proof” on regulators in its appeal, arguing that a lower tax rate was obviously more favourable than a higher one.

The ECJ argued that the difficulty in assessing the extent of state aid — because of the complexity of tax deductions — did not preclude the commission from banning government practices that it considered gave sports clubs unfair advantages. 

It said: “The impossibility of determining, at the time of the adoption of an aid scheme, the exact amount, per tax year, of the advantage actually conferred on each of its beneficiaries, cannot prevent the commission from finding that scheme was capable, from that moment, of conferring an advantage on those beneficiaries.”

The Spanish government said on Thursday it had “absolute respect” for the court’s decision. FC Barcelona and Real Madrid did not immediately respond to requests for comment.

The judgment will be seen as a big win for regulators in Brussels who have for years been trying to stop highly successful commercial clubs from freeriding on the back of taxpayers.

The European Commission said on Thursday it noted “the judgment by the Court of Justice to follow the Commission’s arguments”.

Thursday’s ruling is the second time Brussels has won an appeal of its state aid decisions in recent weeks. Last month judges at the General Court rejected a legal challenge by budget airline Ryanair to state aid given to rivals on discriminatory grounds.

At present Barcelona is dealing with the fallout of what the Spanish media dubs Barçagate — allegations, denied by the club, that it corruptly hired outside groups to defame former president Josep Maria Bartomeu’s adversaries on Facebook.

Bartomeu was temporarily detained by the Catalan police earlier this week. He, the club, and other individuals in the case, which is being investigated by a Barcelona court, have all denied any wrongdoing.

Source link

Continue Reading


Italy raises €8.5bn in Europe’s biggest-ever green bond debut




Investors flocked to Italy’s inaugural environment-focused government bond offering on Wednesday, allowing the country to raise more than €8bn.

The banks running the issuance chalked up around €80bn in orders for €8.5bn of debt. It was the biggest debut sovereign green bond from a European issuer to date, according to Intesa Sanpaolo, which worked on the deal.

Other recent Italian bond sales have also attracted strong demand, after former European Central Bank president Mario Draghi became prime minister last month.

Demand for the debt highlights the popularity of green bonds, which provide funding for environmental projects and require borrowers to report to investors on how the funds are used. 

Tanguy Claquin, head of sustainable banking at Crédit Agricole, which was a co-manager on the transaction, said the sale was met with “very strong support” from investors, particularly those that are required to consider environmental factors in their portfolios.

The bond, which matures in 2045, was issued with a yield of 1.547 per cent. The underwriters were able to reduce the premium against a normal Italian government bond maturing in 2041 to 0.12 percentage points, a slimmer premium than the 0.15 points initially mooted.

Italy follows several European countries, including Poland, Ireland, Sweden and the Netherlands, into the green debt market. France has issued 11 green bonds since 2017, totalling $30.6bn according to Moody’s Investors Service. Germany joined the market last year with two green Bunds. In its budget on Wednesday, the UK announced plans to sell at least £15bn of green bonds in two offerings this year. 

Italy is the first riskier southern-European government to tap the green market. The spreads on Italian debt relative to the eurozone benchmark German bonds fell to a six-year low of less than 0.9 percentage points in early February in a sign of investors confidence in Draghi’s leadership of the EU’s third-largest economy. The spread widened during last week’s volatile bond market trading but remains low by recent standards.

Spain plans to follow Italy with a green bond offering in the second half of 2021. Analysts expect an initial €5-10bn sale at a 20-year maturity. Johann Plé, senior portfolio manager at AXA Investment Managers said the demand for Italy’s sale “should reinforce the willingness of Spain and others to follow suit.”

Plé said the price investors paid for the Italian green bond “remained fair” and that this “highlights that strong demand does not necessarily mean investors have to pay a larger premium”.

Green bonds often command higher prices, and therefore lower yields, than their conventional equivalents from the same issuer. The German green Bund currently trades with a “greenium” around 0.04 to 0.05 percentage points, roughly double the gap when it was initially issued, according to UniCredit analysis, while French government green debt is roughly 0.01 percentage points lower in yield than conventional bonds.

Italy’s pitch on the environmental impact and reporting of its green projects drew positive reactions from some investors. Saida Eggerstedt, head of sustainable credit at Schroders, which invested in the bond, said the details provided on projects including low-carbon transport, power generation, and biodiversity were “really impressive”.

Source link

Continue Reading


German regulator steps in as Greensill warns of threat to 50,000 jobs




Germany’s financial watchdog has taken direct oversight of day-to-day operations at Greensill Bank, as the lender’s ailing parent company warned that its loss of $4.6bn of credit insurance could cause a wave of defaults and 50,000 job losses.

BaFin appointed a special representative to oversee Greensill Bank’s activities in recent weeks, according to three people familiar with the matter, as concern mounted about the state of the lender’s balance sheet.

The German-based lender is one part of a group — advised by former UK prime minister David Cameron and backed by SoftBank — that extends from Australia to the UK and is now fighting for its survival.

On Monday night Greensill was denied an injunction by an Australian court after the finance group tried to prevent its insurers pulling coverage.

Greensill’s lawyers said that if the policies covering loans to 40 companies were not renewed, Greensill Bank would be “unable to provide further funding for working capital of Greensill’s clients”, some of whom were “likely to become insolvent, defaulting on their existing facilities”.

In turn that may “trigger further adverse consequences”, putting over 50,000 jobs around the world at risk, including more than 7,000 in Australia, the company’s lawyers told the court.

A judge ruled Greensill had delayed its application “despite the fact that the underwriters’ position was made clear eight months ago” and denied the injunction.

Greensill Capital is locked in talks with Apollo about a potential rescue deal, involving the sale of certain assets and operations. It has also sought protection from Australia’s insolvency regime.

Greensill was dealt a severe blow on Monday when Credit Suisse suspended $10bn of funds linked to the supply-chain finance firm, citing “considerable uncertainties” about the valuation of the funds’ assets. A second Swiss fund manager, GAM, also severed ties on Tuesday. Credit Suisse’s decision came after credit insurance expired, according to people familiar with the matter.

While the bulk of Greensill’s business is based in London, its parent company is registered in the Australian city of Bundaberg, the hometown of its founder Lex Greensill.

In Germany, where Greensill has owned a bank since 2014, BaFin, the financial watchdog, is drawing on a section of the German banking act that entitles the regulator to parachute in a special representative entrusted “with the performance of activities at an institution and assign [them] the requisite powers”.

The regulator has been conducting a special audit of Greensill Bank for the past six months and may soon impose a moratorium on the lender’s operations, these people said.

Concern is growing among regulators about the quality of some of the receivables that Greensill Bank is holding on its balance sheet, two people said. Regulators are also scrutinising the insurance that the lender has said is in place for its receivables.

Greensill Bank has provided much of the funding to GFG Alliance, a sprawling empire controlled by industrialist Sanjeev Gupta.

“There has been an ongoing regulatory audit of the bank since autumn,” said a spokesman for Greensill. “This regulatory audit report has specifically not revealed any malfeasance at the bank. We have constructive ongoing dialogue with all regulators in all jurisdictions where we operate.”

The spokesman added that all of the banks assets are “unequivocally” covered by insurance.

Greensill, a 44-year-old former investment banker, has said that the idea for his company was shaped by his experiences growing up on a watermelon farm in Bundaberg, where his family endured financial hardships when large corporations delayed payments.

Greensill Capital’s main financial product — supply-chain finance — is controversial, however, as critics have said it can be used to disguise mounting corporate borrowings.

Even if an agreement is struck with Apollo, it could still effectively wipe out shareholders such as SoftBank’s Vision Fund, which poured $1.5bn into the firm in 2019. SoftBank’s $100bn technology fund has already substantially written down the value of its stake.

Gupta, a British industrialist who is one of Greensill’s main clients, separately saw an attempt to borrow hundreds of millions of dollars from Canadian asset manager Brookfield collapse.

Executives at Credit Suisse are particularly nervous about the supply-chain finance funds’ exposure to Gupta’s opaque web of ageing industrial assets, said people familiar with the matter.

The FT reported earlier on Tuesday that Credit Suisse has larger and broader exposure to Greensill Capital than previously known, with a $160m loan, according to two people familiar with the matter.

Additional reporting by Laurence Fletcher and Kaye Wiggins in London

Source link

Continue Reading