The Earl of Kinnoull (CB)

My Lords, in moving Amendment 127, I shall speak also to Amendments 128, 129 and 130. I remind the Committee of some different interests this time, in that I am a director of Alpha Insurance Analysts, which operates around £1 billion of premiums at Lloyd’s, and I have share ownership in Hiscox Group. The thrust of everything in this bit of the Bill is all about pets. I am very keen on pets in general being in houses. As I pointed out, pets are usually allowed in my Scottish interest. When I looked at the insurance provisions, I was looking very carefully with a professional eye, and I wanted to try to tweak four separate areas that all needed something. First, there was the proposition that the tenant would buy insurance, then that would be all right. Secondly, there was the proposition that the landlord could buy insurance and bill that back to the tenant. Thirdly, there was the possibility of aligning the England and Wales law with what happens in Scotland, where, of course, I have a lot of experience. Fourthly, there was the knotty issue of the definition of “premium”, over which I have had many arguments in many jurisdictions over many years—and I apologise in advance for disagreeing with counsel on that. Amendment 127 is on the first of those things in my list. There is no market today for insurance where a tenant goes out privately to buy insurance. There certainly will not have been a single cent of premium written in the UK market up to 31 December last year nor in any of the continental European non-life insurance markets, with which I am extremely familiar. One or two products have appeared on the market that provide some sort of partial cover—and I shall try to describe some of that. I am very grateful, in saying this, to the department and the people supporting the Minister, because we have had a funny tour around this issue. We even had one exciting moment when an insurer that I had never heard of, which turned out to be an insurance company based in Anguilla, of recent formation, was keen to sell insurance to British people, although of course there would have been no protection under the Financial Services Compensation Scheme or from the insurance ombudsman, let alone all the tax and regulatory problems with an Anguilla insurer trying to settle a claim in the UK. Leaving aside that exciting insurer, one or two insurers have come along, but they want to insure only against accidental damage, however it is dressed up. When talking about insurers, it is important to understand the difference between the insurance carrier, which takes the bet, and the insurance intermediary, which puts exciting things on the web to try to entice you. These are all insurance intermediaries, and there is only one carrier that is identified at the moment, which is under half the size of the legal minimum for an insurance carrier, if you are forming a new one, and does not appear at all on any of the lists of allowed insurers that major brokers have. It is exceptionally small and very weak. The problem with the cover of the three policies that appear online at the moment is that they are limited to accidental damage. In one of them, accidental damage is defined as “unexpected damage which happens suddenly and has not been caused on purpose or inevitably”. I immediate think that that does not sound like very good cover. The other one goes a lot further. It says that the policy is “not for damage caused by everyday wear and tear. For example, if a dog scratches at your door every day, this is not covered, while if a pet pulls down curtains that causes damage to a wall this would be covered”. Of course, that is a vanishingly small percentage of the loss costs likely to be caused by a pet. Most of the losses from pets will be to do with chewing or infestations—I look at my noble friend Lord Trees in the hope that he will tell us all a bit more about infestations later on. The difficulty of trying to legislate so that a landlord can say to someone, “You can have a pet as long as you buy an insurance policy”, and there being no actual policy of insurance that exists, or no reasonable one, is that it is what is sometimes called an Italian torpedo—a legal trick whereby you started a case in a different jurisdiction to slow everything down, and the initial case never gets decided. It would mean that the landlord could ask the tenant to find insurance that he knew did not exist and the pet would never be allowed into the property. That is not the intention of this Bill, so it would be quite wrong to let this option go forward. That is why Amendment 127 seeks to get rid of that option. It is not a probing amendment—it is a real amendment. I turn to Amendment 129 next, only because the amendments have appeared a bit out of order. It is a probing amendment, and it covers the second issue on insurance, which is whether the landlord could buy insurance. Here I am much more hopeful. I should point out that this type of insurance also does not exist at the moment, but I have spoken to the underwriting managers of at least two of the big players in the UK markets and left those conversations feeling that it was quite possible that this type of insurance could come into existence—in fact, in reviewing the internet, there is some evidence that it might. It will start with this accidental damage problem, so it is not a complete cover; therefore, landlords might not choose to exercise that option because it does not really exist. Therefore, I feel it is unfair to ask landlords to go to the market to buy insurance, and they might not want to. The insurance would therefore be a terrible situation, where a landlord is being asked about a pet and the tenant cannot buy the insurance because it does not exist—at least not in a reasonable form—and nor can the landlord because it is at a very early stage. But I felt that should stay on the statute book because I believe that something helpful might come along. I believe also that the type of insurance that will come along will be a small layer just above the deposit that people pay anyway; at the moment, it is a five-week deposit.