1 years "no claims" discount - but no discount?

Dangermac

mikey72 wrote: »

No underwriting is a very small part of their business, and makes enough money for them, I don't think they would live well on investments.
Read Admiral's report for an explanation of were all the profit comes from.

"Admiral retains a net 27.5% of UK premiums in 2010 (in line with 2009). 45% of total UK premium is underwritten by the Munich Re Group (specifically Great Lakes Reinsurance (UK) Plc) under a long-term co-insurance agreement (running until at least the end of 2016), whilst 27.5% is proportionally reinsured to Hannover Re (10.0%) New Re (10.0%) and Swiss Re (7.5%).
The nature of the co-insurance is such that 45% of all motor premium and claims for the current year accrues directly to Great Lakes and does not appear in the Group’s income statement.
Similarly, Great Lakes reimburses the Group for its proportional share of expenses incurred in acquiring and administering the motor business.
The profit commission terms in all the agreements allow Admiral to participate to a large extent in the profitability of the total underwriting, and the most recent reinsurance”

Admiral reported profit before tax at £216m for the full year ended 31 December, 7% ahead of 2008, whilst turnover rose 18% to £1.08bn.

It added its customer numbers were up 19% to 2.08 million (2008: 1.75m), profit from UK car insurance was up 15% to £207m (2008: £180m).

Confused profits were up slightly to £25.7m, (2008: £25.6m).

So.
to explain why we don’t need to be upset by the paltry £28.3 million poor profit from underwriting, for a true picture, the profit of £28.3 million pounds is on only 27.5% of the business, as Admiral farm out the other 73.5%. So if they kept it all in house, it would be a massive £100 million +. From Admirals own figures, they made £36.9 million on top of the £28.3 million in profit commission.
So don’t send them a donation yet, they still made £216 million overall.

Quote from Admiral Website

Motor insurance policies purchased on this website are underwritten by the insurance carriers listed on your Certificate of Motor Insurance.
The subscribing insurers' obligations under the contracts of insurance to which they subscribe are several and not joint and are solely limited to the extent of their individual subscriptions. The subscribing insurers are not responsible for the subscribing insurer who for any reason does not satisfy all or part of their obligations.

They are are not a risk carrier (i.e an insurer)

Dangermac

Dangermac wrote: »

Admiral are not an insurer, therefore, the information above is completely irrelavant.

Furthermore, if (as per your comments above) insurers dont make their money from:

- Underwriting (writing cover in return for premium)
- Investment

Where does their income come from?

And Mikey 72 - before you say that it doesnt matter whether Admiral are an insurer or not, let me assure you that it does.

Unless, of course, what you mean is that you dont think that any company (whether insurer / broker / actuary etc) within the insurance sector should be allowed to make a profit.

mikey72

Dangermac wrote: »

Admiral are not an insurer, therefore, the information above is completely irrelavant.

Furthermore, if (as per your comments above) insurers dont make their money from:

- Underwriting (writing cover in return for premium)
- Investment

Where does their income come from?

Now you're being slightly silly.
In a post started about Admiral, who the op's insurer, I don't think there can be a lot of credence in you claiming insurance is going up as it's such bad business and we should all feel sorry for the poor insurance companies, and then when I point out it's actually a very good business, claiming the op's insurer isn't an insurer after all!
(did you miss the bit where they made £28.3 million on underwriting, but only on 27.5% of the premium?)
You really will have to read their annual report for the rest of their record profits though, follow the link.

Dangermac

mikey72 wrote: »

Now you're being slightly silly.
In a post started about Admiral, who the op's insurer, I don't think there can be a lot of credence in you claiming insurance is going up as it's such bad business and we should all feel sorry for the poor insurance companies, and then when I point out it's actually a very good business, claiming the op's insurer isn't an insurer after all!
(did you miss the bit where they made £28.3 million on underwriting, but only on 27.5% of the premium?)
You really will have to read their annual report for the rest of their record profits though, follow the link.

You are missing the point. You dont understand - bless you.

Forget Admiral for a second. It's not a good example.

Try Aviva, Quinn, Allianz, AXA etc. They are actual insurers

The Admiral model is irrelevant as they are effectively a 'service company' who dont carry actual risk. If you are concerned about insurers making too much money, then perhaps start quoting evidence from an actual insurer.

mikey72

Dangermac wrote: »

You are missing the point. You dont understand - bless you.

Forget Admiral for a second. It's not a good example.

Try Aviva, Quinn, Allianz, AXA etc. They are actual insurers

The Admiral model is irrelevant as they are effectively a 'service company' who dont carry actual risk. If you are concerned about insurers making too much money, then perhaps start quoting evidence from an actual insurer.

Ah bless you too,
Sorry I chose an insurer will massive profits, I can see how you'd be a bit thrown by that, it's not a good example for you is it?
Even though they actually are an insurer by your own definition, and make millions on underwriting, but let's skip that too even though they carry 27.5% of their own risk, and make a further £36.9 million in commission from the companies they pass the rest of the risk onto. (not bad profits for the other companies either, if they can make a profit underwriting and still afford to pay out the commissions)

here's some more you can come back to

“Fortis Insurance UK back in the black after strong Q2”
“Groupama UK profits up 30% to £13.7m for H1 2010”
“Co-op boss expects 2010 profits to beat 2009”

With of course Admirals underwriters listed above too.

Bless again.

Dangermac

mikey72 wrote: »

Ah bless you too,
Sorry I chose an insurer will massive profits, I can see how you'd be a bit thrown by that, it's not a good example for you is it?
Even though they actually are an insurer by your own definition, and make millions on underwriting, but let's skip that too even though they carry 27.5% of their own risk, and make a further £36.9 million in commission from the companies they pass the rest of the risk onto. (not bad profits for the other companies either, if they can make a profit underwriting and still afford to pay out the commissions)

here's some more you can come back to

“Fortis Insurance UK back in the black after strong Q2”
“Groupama UK profits up 30% to £13.7m for H1 2010”
“Co-op boss expects 2010 profits to beat 2009”

With of course Admirals underwriters listed above too.

Bless again.

You didnt choose an insurer. Admiral are not an insurer.

dacouch

One of the effects of a recession is investment returns fall and property investment values reduce, insurance depends on insurers having sufficient solvency to pay their claims. A recession generally coincides with an increase in premiums which are influenced by the above, the current one is compounded by the FSA increasing solvency requirements of Insurers.

What basically happens is say an Insurers investments reduce in value from say £1billion to £700m the requirements of Insurance are their ability to accept customers has reduced. They have two choices, they can either keep their premiums the same and shed customers with a reduction in their profitibility. Or they can increase premiums and still shed customers but retain some or all of their profitibility.

Insurance goes in cycles, it tends to be a soft market when the economy is going well and the investments subsidise the underwriting (We have just come out of a soft market) and a hard market often triggered by an unusual event such as 9/11, introduction of ambulance chasing laws and / or a recession. A soft market brings in lots of new Insurers which has the effect of reducing premiums and a hard market generally sees some Insurers leaving the market which contributes to the effect of premiums increasing.

Insurance has always gone in cycles and Insurers pray for a hard market period as premiums go up to what they perceive to be a profitable mark.

Hard markets tend to last a couple to a few years and soft markets for much longer, so it it's any consilation a soft market should return and premiums will start falling again and you will go back to the fierce competition where your premium tends to reduce every year.

For the record the last Hard Market was shortly after 9/11, I had a business customer is a specialised field whose premiums had been reducing by thousands every year during the previous soft market. After the 9/11 his premium increased from £10k to £35k, the following year was £45k and then peaked at £65k. This was because he was in a high risk field and all of the companies that had entered the market during the soft period (Who had forced the premium down) with drew literally overnight leaving just one Insurer offering cover. When the soft market returned the Insurers returned and the premium dropped down to £20k which was about right for risk as he received a few injury claims a year totalling circa £13k and the Insurer also had the further risk of approximately £2.5m should there be a total loss such as a fire

Dangermac

mikey72 wrote: »

Ah bless you too,
Sorry I chose an insurer will massive profits, I can see how you'd be a bit thrown by that, it's not a good example for you is it?
Even though they actually are an insurer by your own definition, and make millions on underwriting, but let's skip that too even though they carry 27.5% of their own risk, and make a further £36.9 million in commission from the companies they pass the rest of the risk onto. (not bad profits for the other companies either, if they can make a profit underwriting and still afford to pay out the commissions)

here's some more you can come back to

“Fortis Insurance UK back in the black after strong Q2”
“Groupama UK profits up 30% to £13.7m for H1 2010”
“Co-op boss expects 2010 profits to beat 2009”

With of course Admirals underwriters listed above too.

Bless again.

The above insurers probably did make good profits, although unlikely from car insurance.

That's why many insurers are pulling out of motor insurance.

They will look to be active in areas that they can be profitable in.

Your theory of rip-off insurers is way off beam.

mikey72

Dangermac wrote: »

You didnt choose an insurer. Admiral are not an insurer.

I would suggest they are.
They keep 27.5% of premium, they made £28.3 million on underwriting.
Why do you imagine they are not insurers?
I know you keep saying it, but I would like to know why you believe it is true?

Axa are a good example as well, they own 100% of Swiftcover, and the market is so lucrative they have just come back in with a direct online Axa branded car insurance.

But I would like the answer on why Admiral who still underwrite, aren't an insurer by your definition.
(And don't claim insurers have to keep 100% of risk, as we all know they offset risk, otherwise a major claim would finish them, or maybe you didn't?)

Dangermac

mikey72 wrote: »

I would suggest they are.
They keep 27.5% of premium, they made £28.3 million on underwriting.
Why do you imagine they are not insurers?
I know you keep saying it, but I would like to know why you believe it is true?

Axa are a good example as well, they own 100% of Swiftcover, and the market is so lucrative they have just come back in with a direct online Axa branded car insurance.

But I would like the answer on why Admiral who still underwrite, aren't an insurer by your definition.
(And don't claim insurers have to keep 100% of risk, as we all know they offset risk, otherwise a major claim would finish them, or maybe you didn't?)

I can assure you that Admital are not an insurer

Have a look at their web site


Admiral is the trading name of EUI Limited. Insurance is effected between EUI Limited and certain insurers as listed on your Certificate of Motor Insurance. Its registered number is 2686904 and its registered address is:
Capital Tower
Greyfriars Road
Cardiff
CF10 3AZ