MSE News: Third party car insurance could soon be dead

mcjordi

ive never taken just third party.. TPFT for the first 4 years then Comp as it was cheaper than TPFT.
agreed with techspec in that my NCB is worth more than the car to me so wouldnt claim unless someone else was to blame

just done a qoute on confused.com and TP only was double what comp was.. wierd...

raskazz

HairY wrote: »

techspec is dead right. They're trying to spin it as if Comprehensive is now better value when in fact 3rd Party has just gotten worse.

Doesn't this boil down to poor risk-assessment by insurers?

No.

HairY wrote: »

Surely many of the people opting for 3rd Party are just money-savers by nature and don't necessarily pose a higher risk of claim?

The evidence does not bear this out, no.

HairY wrote: »

From what I read, what needs to happen is a crack down on greedy personal injury claims, excessive legal costs, and this EU rubbish about equal premiums for men and women needs to be thrown right out.

And another thing... since a degree of cover is a legal requirement, why are insurers allowed to negotiate deals and discounts and make them available exclusively through price comparison sites? These shenanigans undermine the integrity of both parties and just leads to a situation where the price comparison sites hold a % of the market to ransom so they can get their kickbacks. As much as us money-savers love them, this kind of affiliation is unconventional.

Suppliers of goods and services (insurers) are perfectly at liberty to negotiate different contracts between different retailers (brokers). This does not undermine anyone's integrity - different brokers take different commissions, have different customer bases due to their brand positioning and marketing approach, have different quality of staff and anti-fraud measures, so it makes sense for insurers to offer preferential rates to intermediaries that are more closely aligned with their underwriting strategy and consistently deliver profitable business. Direct Line and Aviva do not offer their products through comparison sites at all; many insurers offer cheaper rates direct than through comparison sites as comparison site business is the worst from the point of view of fraud and renewal retention. So to say that comparison sites hold any part of the market to ransom is not really correct at all.

HairY wrote: »

When premiums have risen up to 40% in a year, a broad review of what's going on here needs to be made.

A review has been made. Search for the Transport Select Committee report of motor insurance published earlier this year.

I wish people would do some basic research before posting stuff like this.

dunstonh

Another insurance scam.

TPFT used to be MUCH cheaper, and has served me well for 20 years.

Its not a scam.

You need sufficient people using TPF&T to make the cross subisidy pool big enough to spread the risk. With every lower numbers using that method, then it is inevitable that it will no longer be cost effective to offer it.

When premiums have risen up to 40% in a year, a broad review of what's going on here needs to be made.

Yes. They need to go up more to make it profitable. Still, at least people are closer to paying what they should be paying now. That gives some hope for future sustainable premiums.

jamesd

HairY wrote: »

They're trying to spin it as if Comprehensive is now better value when in fact 3rd Party has just gotten worse.

Doesn't this boil down to poor risk-assessment by insurers? Surely many of the people opting for 3rd Party are just money-savers by nature and don't necessarily pose a higher risk of claim?

Yes, third party has become worse. No, it's not because of poor risk-assessment, it's because of good risk assessment.

The people who gain most from third party cover are those who are at highest risk. It's natural that over time that can cause the pool of those buying it to become concentrated on those with a poor risk profile that need a higher premium to cover their risk level.

The next reaction is those people moving back into the comprehensive pool. If enough of them do that then third party cover might eventually have a lower risk pool and become cheaper again.

Have a read about adverse selection. This looks like a good example of adverse selection in action, killing a formerly useful product.

patman99

The insurers risk assessors are obviously as thick as two short planks.
I go and buy, say, a new Mitsubushi Warrior at £26000, insure it TPF&T, then on the way home have a sneezing-fit a crash into a tree, the cost to me is whatever it costs to repair the damage, whilst the cost to the insurer is £0. Now, instead of TPF&T, I insure it FC+PNCB, cost to me £0, cost to insurers=whatever it cost to repair.

If insurers made TPF&T around about 60% of the cost of FC, then their annual bill for claims would reduce considerably as they will only be paying for damage done to other property and not the whole lot.

dacouch

The withdrawing from the "knock for knock" agreement about 15 years ago pushed up third party and tpf&t premiums as the agreement meant insurers whose client base was mainly third party / tpf&t were in effect being subsidised by the Insurers (Policyholders) whose clients were mainly (Or even only) comprehensive.

raskazz

patman99 wrote: »

The insurers risk assessors are obviously as thick as two short planks.
I go and buy, say, a new Mitsubushi Warrior at £26000, insure it TPF&T, then on the way home have a sneezing-fit a crash into a tree, the cost to me is whatever it costs to repair the damage, whilst the cost to the insurer is £0. Now, instead of TPF&T, I insure it FC+PNCB, cost to me £0, cost to insurers=whatever it cost to repair.

If insurers made TPF&T around about 60% of the cost of FC, then their annual bill for claims would reduce considerably as they will only be paying for damage done to other property and not the whole lot.

Have you actually read the thread?!!

This is far too simplistic an analysis. You might want to rewind and look up 'adverse selection', as another poster helpfully mentioned.

dacouch

patman99 wrote: »

The insurers risk assessors are obviously as thick as two short planks.
I go and buy, say, a new Mitsubushi Warrior at £26000, insure it TPF&T, then on the way home have a sneezing-fit a crash into a tree, the cost to me is whatever it costs to repair the damage, whilst the cost to the insurer is £0. Now, instead of TPF&T, I insure it FC+PNCB, cost to me £0, cost to insurers=whatever it cost to repair.

If insurers made TPF&T around about 60% of the cost of FC, then their annual bill for claims would reduce considerably as they will only be paying for damage done to other property and not the whole lot.

Unfortunately in that position, a large majority of people would be tempted to put in a claim for the vehicle being stolen so they can get some money. It's why Insurers generally have a limit on the value of vehicles they insure for Third Party Twist and Bust which is typically relatively low eg £3000 to £5000.

TPF&T policies have an amazingly high percentage of theft and even fire claims in relation to comprehensive policies

huckster

I think the time has come for the government to look at Car Insurance ,perhaps working with the industry/regulators to come up with a system of third party cover that is provided with the tax disc. The government would then cover the risk and perhaps be more responsible in looking at risk issues. e.g young/experienced drivers having green P plates for say the first 3 years of driving, with restrictions on engine sizes they are allowed to drive, improvements to way people learn to drive with more education, legislation to limit/control personal injury claims. ( I doubt given the amount of government debt that they would be interested in this, but I think it should be looked at)

Given the losses many Insurers are experiencing, I doubt that they would lose sleep, if governement took the risk on. Insurers could still sell top up Insurance to cover the cars themselves, which most people would choose to do so.

Arg

raskazz wrote: »

A review has been made. Search for the Transport Select Committee report of motor insurance published earlier this year.

I wish people would do some basic research before posting stuff like this.

A report? You mean where insurers were given an easy ride to parrot their excuses? "Oh no it's not our fault, it's all the nasty people claiming whiplash".