Insurance costs go up during a recession

dunstonh

helpupay who i have my mortgage protection policy with wrote to me on friday to say my policy was going up from £17 a month to £22, how can they do this? I bet it never comes down again either.. not impressed.

Of course it comes down and it has done. During the last recession, the rates were around 6.5-7%. They fell as low as 1.5% during the good years.

Please dont make assumptions which are not based on fact.

mattymoo

In addition to the above points made by Dacouch, the increase in layoffs and redundancies also increases the number of employers liability claims for workplace accidents. Employees no longer they feel they have any loyalty to their employer and will claim for any incident occuring during the last 3 years.

Deliberate arson claims are also likely to rise as well. Certain sectors are more prone to it - entertainment being among the worst, e.g. night clubs.

Finally, it is quite possible an insurer will fail in a recession, the last big name being the Independent. That was partly down to fraud by 3 directors who are now serving time, but also as a result of them being unable to obtain reinsurance at reasonable rates. If an insurer fails, market capacity declines and those remaining will push the premiums up - again basic supply and demand economics.

Oscar_The_Grouch

One additional item to consider for this recession is that it has happened just after 2 major storms in the USA.

I know you will all read that and think "what does that have to do with insurance in the UK?", but believe me it will have an effect.

Many of the insurers in the UK have interests overseas. Lloyd's of London is one of the major providers of reinsurance and also has significant amounts invested in the USA to cover storms, tornadoes and hurricanes. Reinsurance has gone up because of the UK floods and has now been hit again by the USA hurricanes. This means that all UK insurers are paying more to "spread the load", but it goes deeper than that:

The theory is that you should only get 2 bad years every 10 or so in the USA for hurricanes. They had New Orleans a few years ago and then last year too, so the prices are going to go through the roof in this area. Many insurers are expecting a "good" year for 2009 and investing heavily in the USA storm market. This reduces the funds they have to cover UK losses, so they don't look to increase their market share. This reduces the competition in the UK market place. Reduced competition means increased prices.

Economics an Insurance; I certainly know how to live life in the fast lane!! Now excuse me whilst I think long and hard about actually getting a life....

3plus1

Well, I've been struggling to find anyone who will insure us for contents this year, let alone at a reasonable price.

Our current insurers, who we didn't claim from, have offered us a renewal price of twice as much. This includes a no-claims discount(!):rolleyes:

Problems we are facing:
- we live near water (there is no history of flooding ever and it would be impossible because we live at the top of a big slope);
- we live in a listed building (I would have thought we were a safer bet as the property has stood the test of time without anything going wrong!); and
- I was born abroad. (Is it just me, or is this a bloody stupid exclusion?)

Anyway, rant over. I've certainly noticed prices going up. I think because of what happened down south we're now considered a 'flood risk', even though we're really not. Insurers do seem to be overcautious at the moment.

dacouch

3plus1 wrote: »

Well, I've been struggling to find anyone who will insure us for contents this year, let alone at a reasonable price.

Our current insurers, who we didn't claim from, have offered us a renewal price of twice as much. This includes a no-claims discount(!):rolleyes:

Problems we are facing:
- we live near water (there is no history of flooding ever and it would be impossible because we live at the top of a big slope);
- we live in a listed building (I would have thought we were a safer bet as the property has stood the test of time without anything going wrong!); and
- I was born abroad. (Is it just me, or is this a bloody stupid exclusion?)

Anyway, rant over. I've certainly noticed prices going up. I think because of what happened down south we're now considered a 'flood risk', even though we're really not. Insurers do seem to be overcautious at the moment.

Try Norwich Union they will have no problem offering you cover if your property is genuinly half way up a slope and in theory of low risk of flooding

You coming to the country recently should not affect your premium although if you went with your current company for the first time last year you probably had a new customers discount which they will not have included in the renewal

mattymoo

dacouch wrote: »

Try Norwich Union they will have no problem offering you cover if your property is genuinly half way up a slope and in theory of low risk of flooding

To elaborate, NU rate flood risk to full postcode level and then down to individual houses in that postcode. Most insurers just do full outward postcode (ie LE12) and part of the inward code, usually only the first one or two digits IIRC. This would be LE12 1R? if you see what I mean.

So in your case 3plus1 (can I call you 4?) the NU system should see that some of the houses in your postcode will be at the bottom of the hill and exclude flood, whereas your house is at the top of the hill and should therefore be okay.

NU achieved this by overflying all of England and Wales (not sure about Scotland) in the early part of this decade using aircraft equipped with downward looking Radar and LIDAR systems to produce very accurate terrain maps. They then overlaid this with flow readings from all major watercourses to produce a map that at the time, was far better than anything the Environment Agency had. Not sure if this is still the case. Needless to say this was an expensive exercise and afaik, they have not shared the data with other insurers.

dacouch

mattymoo wrote: »

To elaborate, NU rate flood risk to full postcode level and then down to individual houses in that postcode. Most insurers just do full outward postcode (ie LE12) and part of the inward code, usually only the first one or two digits IIRC. This would be LE12 1R? if you see what I mean.

So in your case 3plus1 (can I call you 4?) the NU system should see that some of the houses in your postcode will be at the bottom of the hill and exclude flood, whereas your house is at the top of the hill and should therefore be okay.

NU achieved this by overflying all of England and Wales (not sure about Scotland) in the early part of this decade using aircraft equipped with downward looking Radar and LIDAR systems to produce very accurate terrain maps. They then overlaid this with flow readings from all major watercourses to produce a map that at the time, was far better than anything the Environment Agency had. Not sure if this is still the case. Needless to say this was an expensive exercise and afaik, they have not shared the data with other insurers.

They have licenced the data to a few other companies, obviously for a fee

JonBoy_SCFC

Dacouch: just to explain, when i said costs of claim payments for cars would go down, i was talking about totasl loss settlements rather than repairs

if the demand for cars drops, then so will the retail price of cars, then so does the settlement costs for total loss claims. or at least that was my logic! please correct me if i got anything wrong in this area:beer:

3plus1

Thanks dacouch and mattymoo, but no joy.

I gave NU a call to check if they could quote me for contents, but because I live in a listed building, they won't.

I've not actually come to UK recently - I moved here when I was a few months old. But technically, even though I'm a British citizen and always have been, those few months abroad mean that companies like Congregational won't insure me. Well, they won't anyway, because of the listed status of my building, but even if that wasn't an issue, my birthplace apparently is. I can't fathom why being born abroad means I'm uninsurable - strikes me of racism, but perhaps I'm being sensitive.

I think you were right about the new customer discount, dacouch - I'm sure the sales guy was talking about some sort of discount I was no longer eligible for when he explained why the price had jumped. Apparently everyone he'd spoken to had complained about the prices this year too.

Sorry for hijacking the thread!

Has anyone actually managed to renew their contents insurance this year at a reasonable price or are you all also finding that it's either dramatically increased or you're uninsurable?

dacouch

3plus1 go to a local broker, they can insure you with Norwich Union whether its a listed building or not. Do not waste time ringing Norwich Union Direct, go to a broker and explain your circumstances and ask them to get you a quote from NU.

If you do it that way it should not be a problem