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MSE News: Record leap in car insurance costs

13

Comments

  • Inactive
    Inactive Posts: 14,509 Forumite
    dunstonh wrote: »
    Yes, they contribute to the Labour party and affiliates.
    I seem to recall that Royal and Sun Alliance ( More Than ) donated to the Tory Party.
  • So presumably this is an average increase across all car insurance premiums over the last year?

    OK so let's look at the reasons for this:

    Inflation .... no as that is no more than 6% (true figure)

    Perhaps then there are more thefts, accidents and costs ... well no actually they fallen.... so no on that..

    under estimates in previous years ... no as there has been a steady increase in premiums for the last 10 years over and above inflation.

    What about the rise in comparison sites.

    Well although they're supposed to bring prices down and in fact have for many for the first 5 years. Now perhaps everyone is using them and the insurance companies have banded together in covert cartel fashion and rigged their prices... yes perhaps a serious possible contributing factor.


    Of course insurance companies insure houses and against floods, burst pipes and snow damage but less people insure property than cars as that is a legal requirement so perhaps the insurance companies have after the bumper payments for flooding and broken pipes etc damage are piling the overspend onto the car insurance fees ... in my humble opinion a very likely explanation coupled the last point above.
  • raskazz
    raskazz Posts: 2,877 Forumite
    edited 23 January 2011 at 1:11PM
    rickbonar wrote: »
    So presumably this is an average increase across all car insurance premiums over the last year?

    OK so let's look at the reasons for this:

    Inflation .... no as that is no more than 6% (true figure)

    General economic inflation has very little relevance to motor insurance. It obviously has an effect on expenses, but expenses are a relatively minor component of an insurer's costs. The rate of inflation applicable to motor insurance is a weighted average of expenses inflation and claims costs inflation. Claims costs inflation has been far higher than expenses inflation in recent years due to increased use of credit hire, an increased proportion of personal injury claims, and an increase in the number of personal injury claimants per accident.
    rickbonar wrote: »
    Perhaps then there are more thefts, accidents and costs ... well no actually they fallen.... so no on that..

    See above. The number of accidents has fallen, however, the increased cost per accident has resulted in overall costs increasing.
    rickbonar wrote: »
    under estimates in previous years ... no as there has been a steady increase in premiums for the last 10 years over and above inflation.

    Again, you are using the wrong inflation rate for comparison. Certainly prior to last year rates were increasing below claims costs inflation. Hence insurers like NIG, HSBC, RBSI and Equity Red Star having serious problems in terms of prior year reserving.
    rickbonar wrote: »
    the insurance companies have banded together in covert cartel fashion and rigged their prices

    Do you have any actual evidence for this?
  • zaffi
    zaffi Posts: 274 Forumite
    i've just renewed with admiral was roughly £200 last year this year it's £230. My renewal pack came in with a figure of £296. popped my details into their site and hey presto it's £230. a quick phone call and they matched it.

    Same thing happens every year, worst was with elephant, paid £222 for 12 months when my renewal pack quoted £345 for 10 months!!
    Everyone has a plan until they get punched in the face - Mike Tyson
  • mikey72
    mikey72 Posts: 14,680 Forumite
    raskazz wrote: »
    General economic inflation has very little relevance to motor insurance. It obviously has an effect on expenses, but expenses are a relatively minor component of an insurer's costs. The rate of inflation applicable to motor insurance is a weighted average of expenses inflation and claims costs inflation. Claims costs inflation has been far higher than expenses inflation in recent years due to increased use of credit hire, an increased proportion of personal injury claims, and an increase in the number of personal injury claimants per accident.

    See above. The number of accidents has fallen, however, the increased cost per accident has resulted in overall costs increasing.

    Again, you are using the wrong inflation rate for comparison. Certainly prior to last year rates were increasing below claims costs inflation. Hence insurers like NIG, HSBC, RBSI and Equity Red Star having serious problems in terms of prior year reserving.

    Do you have any actual evidence for this?

    No. it's mainly apathy from customers, encouraging a high renewal premium.
    Shopping round every renewal and challenging the profiteering should be encouraged.

    There should also be a hefty fine for any insurance company selling customer details to credit hire companies, and subcontracting their own claims to accident management companies should be prohibited.

    That would be a good start to reduce costs.
  • Inactive
    Inactive Posts: 14,509 Forumite
    I firmly believe that the comparison sites are adding to our premiums, not actually saving us anything.

    Clearly they are being paid by the insurers, who in turn must be passing on that cost to us.

    They must be doing nicely at it as well, all of those TV adverts don't come cheap.
  • mikey72
    mikey72 Posts: 14,680 Forumite
    Well Admiral profits from confused.com were £36.6 million in the first half of 2010. (They own confused), so they're not hurting too badly.
    If price comparison sites are paid by insurers, and passing the charge on (which I agree would be the way to do it), why is it not cheaper, or usually even dearer, to go direct?
  • michaels
    michaels Posts: 28,494 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Look at quidco / top cash back rebates to get an idea of the minimum amount per policy that the comparison sites make per referral!
    I think....
  • tgon
    tgon Posts: 710 Forumite
    Part of the Furniture 500 Posts Combo Breaker Mortgage-free Glee!
    My renewal is up 32% with Swiftcover. Have never claimed in 40 years of driving. So discouraging to have to move insurers every year :(
  • mikey72
    mikey72 Posts: 14,680 Forumite
    Think of how good you feel when you "save" 32% though.
    (Usually by threatening to move)
    More to the point though, if you leave Swiftcover, it's not a bad thing.
    :rotfl::rotfl::rotfl:
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