MSE News: Record leap in car insurance costs

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mikey72 wrote: »

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?

Possibly because many of them don't reduce service standards in order to get top billing on the comparison sites.

raskazz

michaels wrote: »

Look at quidco / top cash back rebates to get an idea of the minimum amount per policy that the comparison sites make per referral!

That's not a valid assumption. Insurers will alter commission rates according to source, i.e. channels that derive them profitable repeat business will earn more commission. I don't see why one would assume that cashback sites would create identical business to aggregators.

rickbonar

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?

Thanks for the reply!

On your last point about evidence – my explanation is: only the noticeable rises in costs each year.
Considering everyone’s premiums appear to be rising I don't think it's adequately explained by more personal injury claims especially as less people are being injured.


As for the "correct" inflation rate.

Just what inflation rate should we take into account?

Percy1983

Just another thought but with economic downturn surely less cars are being sold so the combined vaue of cars driving around must be reducing.

Will get my renewal pack from admiral in the next few weeks so will so what happens.

I will wish they would list the 'having a penis premium tax' as a seperate line, would make it easier to compare premiums with my other half who doesn't pay such tax of course.

dunstonh

Just another thought but with economic downturn surely less cars are being sold so the combined vaue of cars driving around must be reducing.

Depends on the dealers. A number of the higher value car dealers have had record years.

Also, in the scheme of things, the cost of the car is very small. If you kill/injure someone in a £500 car or a £50,000 car then the main cost if the death or injury. Also, the older the car, the more likely it is to suffer mechanical failure and suffer a shortage of spare parts or not be economical enough to repair.

PNPSUKNET

Its all these people that false claim and every one else on the personal injury so we only have ourself to blame really

Percy1983

PNPSUKNET wrote: »

Its all these people that false claim and every one else on the personal injury so we only have ourself to blame really

Its a bit chicken and egg, I have paid so much in insurance over the years I would consider 'whiplash' to recoupe some money and cover the next 5 years premiums.

rev_henry

Percy1983 wrote: »

Its a bit chicken and egg, I have paid so much in insurance over the years I would consider 'whiplash' to recoupe some money and cover the next 5 years premiums.

Exactly. Or to recoupe some of the money from them giving you a rubbish settlement for your write off.

I suppose a similar argument could be used to justify going without insurance. Although I still think uninsured drivers should be shot and their cars given to me for safekeeping.