No Fault accident claim

greco_2

MarkyMarkD wrote: »

It is definitely a great explanation, N79.

Greco's comment is, honestly, very silly. Insurers are in a very competitive market. They set premiums at the level they believe is appropriate for the risk, using very sophisticated modelling on huge amounts of data. They aren't going to randomly increase a premium by £25 if there is no additional risk, because then they would lose a good customer for no reason.

I’ve worked in the insurance industry for more than 40 years and experience on a daily basis the sort of nonsense that the OP has to put up with. In theory, insurance is a competitive business but in practice it isn’t.

Insurers are in business to use their capital to secure the best result for their shareholders. They are in business to sell just as many policies as they need to to meet their objectives. They can turn the supply on or off like turning a tap. On the way to achieving their objective, they will charge as much as they can get away with and if they can get another £25 from a policyholder on some spurious pretext that a driver who has had an accident that isn’t his fault is a higher risk, they will do so. If that particular policyholder doesn’t like it, so what? What’s one policyholder among, say, half a million? They just don’t care.

They don’t even underwrite these days. They have acceptance criteria and if you meet them, they will sell you a policy. The price you pay today is not necessarily the price you would have paid yesterday or even tomorrow. They have fluid pricing down to an art that Ryanair can only dream of.

They will happily ramp up the price at renewal because despite the existence of websites like this, there is still a huge amount of customer inertia and they know that 80% of their customers will renew the policy anyway.

raskazz

greco wrote: »

I’ve worked in the insurance industry for more than 40 years and experience on a daily basis the sort of nonsense that the OP has to put up with. In theory, insurance is a competitive business but in practice it isn’t.

Yes it is, it's one of the most competitive markets in the UK economy, to the extent that most motor insurers are burning up claims reserves at an unsustainable rate in order to attract new business. Many make a loss.

greco wrote: »

On the way to achieving their objective, they will charge as much as they can get away with

Er, that is what happens in a competitive market. How else do you think they should price their products? To charge below what they can 'get away with'?

greco wrote: »

and if they can get another £25 from a policyholder on some spurious pretext that a driver who has had an accident that isn’t his fault is a higher risk, they will do so.

It's not spurious though, I suggest you consult an experienced actuary who will happily correct you on this point.

greco wrote: »

If that particular policyholder doesn’t like it, so what? What’s one policyholder among, say, half a million? They just don’t care.

It's not about 'caring', it's about charging an appropriate premium to cover the risk. If the policyholder doesn't like it then they will lose the customer's business. This is another indicator of a competitive market.

greco wrote: »

They don’t even underwrite these days.

Yes they do. It is perhaps not what you would describe as 'classical' underwriting, but it is still underwriting, even if it is a more process-orientated technique.

greco wrote: »

They have acceptance criteria and if you meet them, they will sell you a policy. The price you pay today is not necessarily the price you would have paid yesterday or even tomorrow. They have fluid pricing down to an art that Ryanair can only dream of.

Again, this is a feature of a competitive market. Why are prices so volatile? Because there are many insurers in the market, all of whom are constantly reviewing their rates in order to maintain or increase their market share.

greco wrote: »

They will happily ramp up the price at renewal because despite the existence of websites like this, there is still a huge amount of customer inertia and they know that 80% of their customers will renew the policy anyway.

And?

greco_2

most motor insurers are burning up claims reserves at an unsustainable rate in order to attract new business.

And it won't be long before one of the major insurers stops to ask themselves the question 'why are we doing this?'. At that point, they will increase prices to encourage customers to insure elsewhere and those insurers will then ask themselves the same question.

Many make a loss.

Probably although they're mostly reporting combined ratios close on 100%. The trouble is that insurance company profits are often a matter of opinion rather than fact. Independent Insurance Co. anyone?

greco_2

For instance:

http://www.insurancetimes.co.uk/story.asp?storycode=373541

before_hollywood

greco wrote: »

On the way to achieving their objective, they will charge as much as they can get away with and if they can get another £25 from a policyholder on some spurious pretext that a driver who has had an accident that isn’t his fault is a higher risk, they will do so. If that particular policyholder doesn’t like it, so what? What’s one policyholder among, say, half a million? They just don’t care.

.

thats exactly the experience i have had, their customer retention effort is less than 0, seriously i have only stayed with one company for more than 1 year, they don't even try to get you to stay- £100 more than last year despite more ncb sir? yes the system is correct, £200 cheaper somewhere else? £150 cheaper for a new customer? yes sir, we know sir and whats more we don't care sir

thank god for the price comparison sites

dunstonh

And it won't be long before one of the major insurers stops to ask themselves the question 'why are we doing this?'. At that point, they will increase prices to encourage customers to insure elsewhere and those insurers will then ask themselves the same question.

Norwich Union have tried a number of times but no-one else seems to follow and they have to revert to buying business and market share again.

Car insurance is loss making for most and house insurance is going that way.

thank god for the price comparison sites

In some areas yes but in others they are potentially quite dangerous if used by people that really dont have a clue. They focus too much on price and the pressure they put on insurers to lower the price comes at a cost. That cost generally being less staff, lower standards, farming out to cheaper countries etc. The policies are often cut down versions or have more exclusions or clauses put in to help shave a few more pence off.

You get the service you pay for most of the time. There appears to be an increasing market for quality again though as exampled by Hiscox who have started advertising to the mainstream.

shelly

chriscroz wrote: »

Some advise please, i had a "no fault accident " in my car on 6/8/08, the car is going to be repaired at no cost to myselft and my no claims bonus will not be effected - great.... However, hubby's car is now due for car insurance renewal and when he mentions me as an additonal driver who has just had a "no fault claim" his premium is automatically increase by £25 because i am now considered a RISK!!!!!!!!!!!! I am furious, how can we be penalised and have to pay more money for something that is not my fault and to which my own insurance company also agrees is not my fault. I am ranting here:mad: :mad: :mad: ....Has Anyone had any similar experience or any advice that would help

My advice would be to shop around. Use not only screenscrapers but actually phone ins co's too ( I get some of my best results by phoning)
As a named driver I had a 100% fault claim a couple of years ago and our renewal went up but quotes from other co's were even cheaper than the premium we paid before I had the claim.

before_hollywood

dunstonh wrote: »

In some areas yes but in others they are potentially quite dangerous if used by people that really dont have a clue. They focus too much on price and the pressure they put on insurers to lower the price comes at a cost. That cost generally being less staff, lower standards, farming out to cheaper countries etc. The policies are often cut down versions or have more exclusions or clauses put in to help shave a few more pence off.

You get the service you pay for most of the time. There appears to be an increasing market for quality again though as exampled by Hiscox who have started advertising to the mainstream.

i was forced to reasses what i was paying after a price hike of nearly £100 for no good reason, if anything my renewal should have been drastically lower, and surely if my insurers realised my renewal was not competitive (i had to phone to stop automatic renewal) surely they should have made an effort to keep me as a customer?

example sky/cable operators, mobile phone companies, even banks will offer to go through things with you if they think you are about to clear off elsewhere and they have a terrible reputation

dunstonh

i was forced to reasses what i was paying after a price hike of nearly £100 for no good reason, if anything my renewal should have been drastically lower, and surely if my insurers realised my renewal was not competitive (i had to phone to stop automatic renewal) surely they should have made an effort to keep me as a customer?

Why should they make any attempt to keep you if you are not profitable to them?

MarkyMarkD

Insurance pricing is becoming very like mortgage pricing.

Mortgages make the lenders no money whilst you are on the incentivised rate - say the first two years on a fix or discount - and then make them serious money thereafter if (and only if) you stay with them on the standard variable rate.

Similarly, insurers offer discounted premiums to new customers, and then gradually crank up the premiums over time. Fortunately for them, many customers don't notice, particularly if the increase in the basic premium is offset by them getting older - as we all do - or increasing their level of NCD.

But for both mortgage lenders and car insurers, there is almost no point trying to keep anyone who challenges the increase in price. Because, precisely by issuing that challenge, you are proving to them that you are a customer who will always shop around on price, and that they will therefore never make any money out of you.

So it's better to let you walk away, than to attempt to compete with another insurer (or mortgage lender) who is offering you an unrealistic, loss-making, new customer discount.