MSE News: Drivers face soaring car insurance costs

raskazz

Arg wrote: »

I don't need to in order to point out a problem.

But you didn't even do that, not in any specific terms. I can only assume that you have no proposed alternative, in which case why would you call for a wholesale change of practice?

Arg wrote: »

Where's the ethnicity catagory?

It is omitted because I know of no UK private motor insurer that either asks for, or rates on, the proposer or drivers' ethnicity.

raskazz

mikey72 wrote: »

"It's not just the amount of accidents young drivers have that illustrates why they are worse than older drivers. Admiral found the average cost of an accident involving a 17 or 18 year old was nearly £3,500. The average cost of an accident for drivers overall is half this; £1,741."

Figures released by Admiral this year
13% of drivers aged 17 and 18 have a crash, as opposed to 6.5 % overall.

http://www.admiral.com/pressReleases/106/Shocking-record-of-young-drivers-revealed

So young drivers are twice as likely to have an accident, and it'll cost twice as much.
So the risk, to clarify what Raskazz has said, is 4x.

From figures quoted on here, the insurance companies appear to be charging every young driver a premium that reflects that they all will make a claim, not 13% of them as stated in the release quoted. So I fail to see how the spreading risk around is working, it still appears to be maximum profit the market will stand, and lots of smoke and mirrors to justify it.

Those figures are only for one insurer, and so will not be representative of the market as Admiral will only target certain profiles within that demographic.

I'm still waiting, I suspect in vain, for anyone to provide any actual evidence that insurers make more profit on young drivers than they do on other segments of the market. Most of the debate is pure hot air and speculation.

You only have to examine the case of Quinn - who were the major player in the young driver market until they were forced to withdraw by the regulator - to see that there is no pot of gold for insurers n the young driver market.

raskazz

Percy1983 wrote: »

'Why should young sensible/safe drivers subsidise young dangerous drivers?'.

Because there is currently no economical way to distinguish between good young driver risks from bad young driver risks with any more accuracy than existing practice.

dacouch

Some data from the Association of British Insurers (I cannot provide a link to it as it's a pdf, however if you google part one of the sentances it should lead you to the pdf).

17-20 year old male drivers are nearly ten times more likely to be killed or seriously injured on the roads than more experienced drivers.
-Eight out of ten accidental deaths involving 15-19 year old males occur on the road.
-The crash risk for young drivers rises threefold when carrying three or more passengers
This increased risk means that young drivers between aged 17-20 are twice as likely to make an insurance claim than other drivers and, on average, their claim costs will be three times higher

One insurer, over three years, identified 27 claims involving young drivers each involving personal injury claims of between £1 - £5 million.

(I'm guessing this is Aviva who do not really target young drivers but have a fair few as additional drivers. The value / volume of these big claims would cause major problems for a smaller Insurer).

Most accidents involving young drivers are caused by driver inexperience – it is a contributory factor in approximately one-third of accidents involving young drivers. Insurers appreciate that many young drivers drive responsibly, but dangerous driving is more likely among younger drivers – young male drivers drive on average 11% faster than other male drivers, committing more Highway Code violations per mile driven.

Some potential solutions the ABI have suggested are

If we can reduce the high accident risk for young drivers, then the cost of motor insurance will fall. So we are campaigning for the Government to introduce:
- A minimum one-year learning period for all drivers. The more supervised driving experience a young person can build up – especially in difficult driving conditions,
such as at night or in bad weather – before they sit their driving test the better equipped they will be to deal with driving, especially as inexperience is the biggest danger to any newly qualified driver.
- Passenger restrictions. The accident risk for young drivers rises sharply when they carry passengers. So we would like to see newly-qualified drivers aged under 20 limited to carrying no more than one passenger under age 20 during their first six months of driving.
- Education to encourage safer driving. While many young people drive responsibly, too many do not. More information needs to be available to help young people drive responsibly.

mikey72

raskazz wrote: »

Those figures are only for one insurer, and so will not be representative of the market as Admiral will only target certain profiles within that demographic.

I'm still waiting, I suspect in vain, for anyone to provide any actual evidence that insurers make more profit on young drivers than they do on other segments of the market. Most of the debate is pure hot air and speculation.

You only have to examine the case of Quinn - who were the major player in the young driver market until they were forced to withdraw by the regulator - to see that there is no pot of gold for insurers n the young driver market.

Fair enough, so the bottom line is do we believe the insurance company publishing figures from market reasearch on 2 million motorists, or some bloke on the internet who appears to make up figures at random, and have never referenced any source to prove them.
MSE members can decide.

As for profit.
1000 young drivers at £3500 each equals £3.5 million income
13% have claims at £3500 equals £455,000 paid out.
Profit equals £3.million

1000 older drivers at £500 equals £500,000 income
6.5% claims equals £113165 paid out
Profit equals £386835

mikey72

dacouch wrote: »

One insurer, over three years, identified 27 claims involving young drivers each involving personal injury claims of between £1 - £5 million.

Gary Hart age 37, cost tens if not hundreds, of millions with the Selby crash. And that was just one example. My insurance hasn't rocketed because of it.
Bet the same insurer above could identify a lot more expensive claims involving older drivers too.

dacouch

mikey72 wrote: »

Gary Hart age 37, cost tens if not hundreds, of millions with the Selby crash. And that was just one example. My insurance hasn't rocketed because of it.
Bet the same insurer above could identify a lot more expensive claims involving older drivers too.

The Insurer of Gary Hart was Fortis now know as Ageas.

The result of that claim was previously Insurers offered unlimited cover for property claims and injury claims. Subsequently most Insurers started limiting property claims to £5m (Injury claims remained unlimited as per the Road Traffic Act).

It is worth noting the 9/11 attacks also hastened Insurers bringing in the above.

Railtrack have very recently issue a writ for £11m damages for the selby crash (Im guessing the total claim including the injuries and deaths will be between £15m an £30m).

Fortis will not pay all of this claim, they will hold reinsurance cover, this is basically them taking out Insurance cover with a specialist Insurer to cover claims over a certain size. Typcially £500k, £1m or £5m.

Insurance premiums went up around the end of 2001 due to reinsurance premiums going up which was mainly due to the terrorist attacks

Arg

raskazz wrote: »

But you didn't even do that, not in any specific terms. I can only assume that you have no proposed alternative, in which case why would you call for a wholesale change of practice?

You're just going round in circles now.

It is omitted because I know of no UK private motor insurer that either asks for, or rates on, the proposer or drivers' ethnicity.

Doesn't that fly in the face of the current discriminatory practices insurance companies engage in.

raskazz

Er mikey72:

I think you need to do you GCSE maths again as you are absolutely mangling the figures which you have found!

From your own figures:

"13% of drivers aged 17 and 18 have a crash as opposed to 6.5% overall"

Note the part in bold. If the 6.5% figure includes drivers aged 17 and 18 (which it does as it is an overall figure), then the actual frequency for people who are not 17 or 18 (or even 19, 20 and 21) will be much lower than 6.5%. You seem to have misread the piece and assumed that 6.5% is the claim frequency for drivers who are not 17 or 18. That is incorrect.

You have made exactly the same mistake with the claim severity figures! And a further obfuscation is revealed when you consider that the claim severity for 'overall' will be inflated by not only young drivers but also old drivers; the segment in the middle will experience a substantially lower claim severity than the one you claim.

You have also totally made up the average premiums that you have used in your calculations.

Not to mention your bizarrre fixation with Admiral, it's pretty clear that you prefer to refer to them on all occasions whilst ignoring the wider market, merely because they are in the minority of private motor insurers who make a profit.

mikey72 wrote: »

some bloke on the internet who appears to [STRIKE]make up[/STRIKE] misinterpet figures at random

:rotfl:

raskazz

Arg wrote: »

You're just going round in circles now.

So in other words, you suggest abolishing system A despite having no idea whether there is any better system, say system B, to replace it? Odd.

Arg wrote: »

Doesn't that fly in the face of the current discriminatory practices insurance companies engage in.

You need to re-read the thread. You appear to have fallen into the classic trap of using 'discrimination' in the perjorative sense of the word, which is not relevant to this discussion.