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It would seem from a previous comment that they don't make money ! so why do they exist.
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I've heard the 'we make a loss on motor business' line before.
Makes no sense to me, year after year the companies advertise hard for this business.
If they were making a loss, they'd have pulled the plug on it years ago.
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If they were making a loss, they'd have pulled the plug on it years ago.
My very thought. These people don't just make PR claims on behalf of their many large and thriving companies, they lobby the media to get this claim (that they are making a loss and only insure motorists out of the goodness of their hearts) established in the public mind so people will just be pathetically grateful when the premiums go up every year. Or stay the same but only because the NCB has increased.
Wouldn't you like to be the provider of a service, highly negotiable at the point of action, that has to be paid for annually to the tune of hundreds or thousands of pounds, and that a large category of the population is legally obliged to buy?
Has its pitfalls obviously, but basically money for jam.
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>>Wouldn't you like to be the provider of a service, highly negotiable at the point of action, that has to be paid for annually to the tune of hundreds or thousands of pounds, and that a large category of the population is legally obliged to buy<<
And you get to share the info about your customers so their ability to negotiate is impaired and you don't have to reveal how you arrive at your prices.
It's a cartel.
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It would seem from a previous comment that they don't make money ! so why do they exist. >>
They hope to cross-sell you other more profitable policies, such as buildings and contents.
This is a 2008 article, but the basis of it has not changed materially:
www.iii.co.uk/articles/articledisplay.jsp?section=...9
" ... Thursday's report by independent market analysts at Datamonitor - which forecast a £30 million underwriting profit for the sector in 2009 - was immediately contested by AA Insurance, which said it saw no sign of claim costs slowing. To reach a profit by 2009, the AA said, the industry would have to raise premiums by at least 20 percent over the next two years.
In 2007, according to the AA, for every £100 received in premiums, £112 was paid out in claims.
"Online buying means that buyers are much more likely to shop around for car insurance and buy on price. That is keeping premium rises in check," AA Insurance Chief Executive Andrew Strong said.
"So far this year we have not seen industry premiums rise by anything like the amount that would make the industry profitable. It remains a very volatile and competitive market, and we don't see that changing in the immediate future."
Datamonitor said it expected a profit in 2009, as the increase in rates outpaces claims growth. But even its analysts warned that could turn back to a loss in 2010 as consumers continue to focus on price to differentiate between policies. ... "
A more recent report said:
"Friday, 17 Jul 2009 06:09
Car insurance companies are struggling to make a profit as competition forces down premiums.
A study into the car insurance industry by Defaqto reveals car insurers have not been able to match the rising costs of claims with increased premiums, and have been making a loss for the 13 years up to 2007.
It warns as the recession continues, drivers will look to cut costs ? leaving insurers with the dilemma of either increasing car insurance premiums or losing market share. .. "
Edited by jbif on 10/10/2009 at 19:48
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I suggest that people who doubt that there is money being made out of car insurance should google Peter Wood, a multimillionaire whose fortune was made from online car insurance.
He has set up numerous companies, his latest being Esure(Calm down dear).
Loss making ?
I think not.
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@ AE what I might do is irrelevant to the premium which is based on circumstances in the ehre and now. If I add a driver then the policy will change, fair enough. It's the adding to a premium for a driver at fault when the driver is not on the new policy that doesn't make sense.
A driver with 9 points and a string of previous fair enough if the premium shoots up. But increasing the premium for a non-existent driver is bonkers, especially when that driver if he went onto another policy would attract another entorely separate premium hike.
So if it's the person that produces the added risk and the person is no longer on the policy, where is the added risk?
Companies exist to make money but there is making money and there is fleecing you.
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... So if it's the person that produces the added risk and the person is no longer on the policy, where is the added risk? ... >>
In reply to Nsar:
It seems you failed to understand my previous "comprehensive" post.
The added risk is you, the policyholder, who chose to put the au-pair on your policy - and I can only guess that you did it because it was the cheapest option. If you don't want to risk getting a bad record, the solution is to ask your future named main drivers to get their own policy.
[It is possible to get a policy on a car not owned by you and/or not registered in your name, but it won't probably be found on the comparison sites nor direct from the mainstream market. It will cost you and/or your au-pair dear.]
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@ jbif, please tell me what I have failed to understand.
The car is there for the au pair and no other reason. The person who is the main driver now is not the same person who was the main driver (the driver behind the wheel when the tyre blew out).
Again, thanks for taking the time for posting so comprehensively before, but nobody is able to explain how an underwriting decision based on a person can be relevant when the person, for the purposes of this new policy simply doesn't exist.
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@ AE what I might do is irrelevant to the premium which is based on circumstances in the ehre and now.
No its not, you completely fail to realise your future risk is based on what you have done in the past. And you have had a claim. It makes you a higher risk than those who havent.
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A tyre burst on a motorway.
Could not this be classed as "An act of God" which is a random event and cannot mean that a person is prone to tyre blowouts and therefore of a higher risk.
The fact is, insurance companies just hate to pay out. They have staff whose job it is to try and weasel out of paying and when they cannot, they just claw back monies paid out from increases premiums in the future.
And straying off topic.
The Moneybox program tonight. Headline
"A former PPI claims manager has confessed to Money Box the guilt he feels at how many people's claims he had to turn down."
Edited by Mr.Tee43 on 10/10/2009 at 21:27
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@ AE I understand that the insurers are trying to apply this reasoning, but answer this: what is the risk of you getting a blow out over the next 12 months? What is the risk of me getting a blow out over the next 12 months? How does someone not associated with either your car or mine affect either probability?
If you can answer those questions with some certainty then you are on your way to making a meaningful decision.
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Nsar.
Now this is not an attack on you, and I know you described it as is.
But
\\\\\\Supposed I am working for an insurance company. YOu could be lying. it might not have happened the way you described. In fact I have discovered ( but no proof ) 50% of my claims are from liars. A large proportion of my claimants go on to make further claims.
So given all this, what makes you different from all the rest?
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But that's just a recipe for chaos, if every premium is based on the assumption that the proposer is simply lying.
Whilst I increasingly regard insurers as barely competent administrators of crude systems that act against the consumer interest, I think that actuaries do have some role to play and it's not completely pin the tail on the donkey.
The control mechanism is that when you come to make a claim, your lies are discovered. Now, you might get away with it forever if you never have to claim, but once you have had insurance refused, you are in deep do-do.
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... I think that actuaries do have some role to play and it's not completely pin the tail on the donkey ... >>
in reply to Nsar:
Simple fact is you made a "fault" claim [note - fault is not same as blame] on your policy because the cost could not be recovered from a 3rd party. Statistically, that makes you a higher risk.
Another example of "fault but not blame" claim: a theft is typically classed as a fault claim because although you may have taken all reasonable precautions and are not to be blamed for the theft - the thief is -, the insurance company had no third party to claim the costs from.
I just did a quick search on the actuaries web site, but unfortunately the only document I can find there available for public download is from 1968. So the systems will have changed somewhat, but the basic thinking probably still stands:
Actuaries | Quick search
1 results found Motor insurance statistics
Journal of the Institute of Actuaries Students" Society [JSS] (1968) 18(3): 207-236 Scurfield, H. H. 31 Dec 1968
www.actuaries.org.uk/__data/assets/pdf_file/0005/2...f
It may answer your question "Risk: An Alien Concept to Underwriters?"
I repeat, it was your policy, it was you who claimed, you take the pain for X years on all motor insurance policies you take out even if you do not name any other driver for X years. If you wish to avoid this happening in future, do not ever have any other drivers on your policy. But even so, you will be assessed as higher risk for the X remaining years before your slate is wiped clean.
Not au-pair's policy, not au-pair's claim, au-pair does not take pain until his/her own policy taken out within X years.
Edited by jbif on 10/10/2009 at 23:02
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Thanks jbif, I appreciate you taking time to find that paper. I will read it
I think you probably understand that the thread title was tongue in cheek.
I also think that we are grinding to a halt and that we will never agree on the 'logic' of infering risk from circumstances which do not exist.
Maybe an actuary with time on his hands may stumble across this thread and shed some light.
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Not perhaps relevent to this case, but the article a couple of weeks ago about drivers being peanilized when renewing for"not at fault " claims made.
seems the insurers are saying if you claim you are more likely to reclaim.
at 50 years old i unfortunately suspect that there is more than a grain of truth to this.
n ireland being apparently full of scamsters. but i understand liverpool is as bad.
hire car and hire minibus and an engineered rear ender resulting in 15 not at fault personal injury claims. hmmmmm??????
i therefore have a certain sympathy with the insurers cheers
m
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Is there something to be said for staying put with a good insurance company once you've found one.
Then you build a mutual trust over the years, this obviously can't apply to impersonal internet/yellow pages etc found cheapest price insurance.
I have got to know the staff at my local office, and made a claim following a too close for comfort lightning strike that took out some of our electrical equipment (home policy with the same), they didn't visit, just allowed me to replace the items and send them the receipts...no crafty upgrade's and i searched out the best prices too..insurance companies can be honourable if their customers are.
I could get cheaper cover no doubt, however cheapest isn't always best and as said above, you only really find out when something goes awry.
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