The Times - UK (2020-10-14)

the times | Wednesday October 14 2020 2GM 43

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An insurer has fallen into

administration after its buildings

guarantee book was hit by a surge

in claims following an overhaul of

fire-safety rules after the Grenfell

disaster.

East West Insurance, which is

thought to have about 11,000

policyholders, has appointed EY as

its administrator after it was over-

whelmed by rising claims.

The group ran into trouble after

the fire at Grenfell Tower in

Stricter fire rules push insurer into administration

London in 2017, which caused 72

deaths and spurred changes in

regulations on building. This over-

haul led to increased claims and

legal disputes about who is liable

for defects in properties.

East West has been hurt, in

particular, by a Court of Appeal

ruling last December over a resi-

dential building in Manchester

called New Lawrence House,

which meant that the insurer was

liable for a £10.8 million payout to

compensate owners of flats in the

property. The fire brigade had

forced residents to move out

shortly after the Grenfell blaze

over concerns about fire safety.

East West dates back to 1964 and

stopped writing new policies in

1997. It bought Zurich Insurance’s
      portfolio of buildings guarantee
      policies two years ago and this deal
      left it liable for claims arising from
      New Lawrence House. East West
      does not have any exposure or link
      to Grenfell.
      The Financial Conduct Auth-
      ority said tht the Court of Appeal
      ruling had hit “East West’s book of
      UK building defect liability”,
      which led to it being unable to pay

its debts. EY said that in recent

months the insurer had “received a

number of unexpected high-value

new claims, as well as material

increases in the value of existing

claims”.

Simon Edel, joint administrator

at EY, said that East West had

faced “an unprecedented set of

claims that ultimately proved to be

too extensive to remain solvent...

After detailed financial analysis

and full consideration of options,

the company was placed into ad-

ministration, rather than liquida-

tion, in the interest of creditors.”

Ben Martin

Senior City Correspondent

Tax regime

trails rival

countries

NIGEL KILLEEN/GETTY IMAGES

An Aboriginal

welcoming ceremony in

Melbourne. BHP has

agreed a deal with

Aboriginal groups over

mining on heritage sites

Britain is in the bottom half of a

league of developed nations for tax

competitiveness.

Research by the Tax Foundation

has found that the UK ranks 22nd

for offering competitive rates in

the Organisation for Economic

Co-operation and Development, a

club of 36 advanced nations.

The Washington-based think

tank places Britain 33rd out of 36

on property taxes, 17th for corpo-

ration tax and 24th on income

taxes. Estonia, Latvia and New

Zealand topped the index.

In a joint analysis with the Centre

for Policy Studies, the think tank

has found that tax rises being con-

sidered by the Treasury would take

the country from 22nd to 30th in

the headline index.

Rishi Sunak, the chancellor, has

hinted that tax rises will be

required to help to bring down

Britain’s rapidly growing debt.

Treasury officials have indicated

that this could come in the form of

increases in corporation tax and

capital gains tax.

Researchers said that an

increase in corporation tax from

19 per cent to 24 per cent would

take Britain’s ranking in this cate-

gory from 17th to 25th place.

Gurpreet Narwan

Economics Correspondent

resolution demanding

a moratorium on

damaging heritage

sites (Emily Gosden

writes).

BHP had been

facing a motion at its

annual meeting today

after Rio Tinto, its

rival, blew up sacred

caves.

BHP and Rio Tinto

have huge iron ore

mining operations in

the Pilbara region of

Western Australia,

where they routinely

negotiate rights to

destroy sites of

cultural significance.

The Australasian

Centre for Corporate

Responsibility had

proposed a resolution

to commit BHP to not

damaging the sites

while a review of the

law surrounding them

was carried out. It said

yesterday that it had

withdrawn it “on the

request of the First

Nations Heritage

Protection Alliance”, a

coalition of Aboriginal

and other groups.

The centre said the

alliance had “brokered

an outcome” under

which BHP had

agreed to strengthen

“free, prior and

informed consent” in

agreements over sites.

Glass Lewis and ISS,

the main shareholder

advisory groups, had

backed opposition to

the resolution, limiting

its chance of success.

Brynn O’Brien,

executive director at

the ACCR, described

the move as “most

welcome”, adding that

the agreement could

not have been secured

without the interest of

the investment sector.

Klarna has been reported to the

data watchdog for sending unsolic-

ited marketing emails encouraging

people to borrow money to buy

clothes.

The Swedish online buy-now-

pay-later service has more than

8.6 million customers in the UK

and leads the deferred payments

market, which gives shoppers up to

three months to pay for goods they

have bought. The Advertising

Standards Authority is already in-

vestigating Klarna over claims that

its marketing pushes young people

into debt without warning them of

the risks involved.

Klarna sent out an email this

week to people who were not cus-

tomers, encouraging them to hunt

for the perfect piece of clothing

and to download its app.

Some recipients complained

that they had never used Klarna in

the past and did not know how it

Watchdog investigates Klarna emails

had obtained their contact details.

They said that they did not use

buy-now-pay-later products to

avoid falling into debt and were

unhappy about being targeted.

Others who received the email

said that they had used Klarna in

the past but had deliberately opted

out of marketing communications.

The Information Commis-

sioner’s Office said that it was

investigating, and added: “Busi-

nesses should only contact indi-

viduals for electronic mar-

keting purposes where

consent is provided or,

in limited circum-

stances, where they

have an existing re-

lationship.”

Klarna, which

was founded in

Stockholm 15 years

ago and is valued at more than

$10 billion, said that the email had

been sent to some of the addresses

gathered by the payment process-

ing division of its business, which

handles debit and credit card pay-

ments for retailers.

It is discussing the case with the

commissioner’s office and has

apologised to people who received

the email. It said: “At no point has

customer data been compromised

and the data has been used in

line with our terms and

conditions and our

privacy notice.”

Christine

Armstrong, 46,

an author

from Tower

Hamlets, east

London, re-

ceived the

email despite

never having

used Klarna. She

has complained to

Klarna about what she sees as a

misuse of her data.

She said: “The email is evidence

that companies are collecting our

data and they’re not visible to us.

Klarna only revealed themselves

by making a mistake, but it raises a

lot of questions about where our

data is stored and where it goes.”

Chris Woolard, the Financial

Conduct Authority’s interim chief

executive, opened an investigation

into unregulated credit providers

including Klarna last month.

Campaigners have called for

buy-now-pay-later to come under

the remit of the Consumer Credit

Act, which sets out that lenders

must conduct extensive afford-

ability checks on borrowers. Bor-

rowers who take out regulated

products such as credit cards also

have the option of complaining to

the Financial Ombudsman Ser-

vice if something goes wrong, but

they are unable to do so with

Klarna’s product.

Kenza Bryan Money Reporter

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Klarna counts Snoop

Dogg, the rapper, as

one of its investors