MSE News: Third party car insurance could soon be dead

mikey72

raskazz wrote: »

Have you asked yourself why data for 2009 and 2010 would be based on estimates at this point in time? Have you heard of such terms as reserving, IBNR and RITC? If so, the reason would be pretty obvious.

Clearly, firm level data on such issues will not be in the public domain as it is commercially sensitive information. Hence why the report will rely on data collated by various relevant bodies - ie the ABI, Towers Watson, Lloyds, CRU etc.

If you actually read the whole report - no offence but I don't believe that anyone can read and comprehend over 120 A4 pages in 28 minutes - you will see that the issue of claims referral fees is fully explored.

You said page 43 on, and no I can't find the part which addressed the insurers making commission fron referrals.
I did notice males 17 to 25 making costing less in claims in 2009 than 2008 though, and females costing more overall,(not the average claim cost, the actual amount paid out, not the spin put on it)
In fact for all drivers
total claims 2008 number of claims 3,062,898
£6,096,744,619
total claims 2009 number of claims 1,959,743
£4,615,488,774
so, why does it cost more if they're paid out so much less, and had a lot less claims?

raskazz

mikey72 wrote: »

You said page 43 on, and no I can't find the part which addressed the insurers making commission fron referrals.
I did notice males 17 to 25 making costing less in claims in 2009 than 2008 though, and females costing more overall,(not the average claim cost, the actual amount paid out, not the spin put on it)

What I said was:

"Plenty of data in the report - see the written evidence from page Ev43 onwards".

The part that you need to read re: insurers and referrals fees is the verbal evidence provided in the main body of the report.

Have you worked out why data from 2009 and 2010 would be based on estimates yet?

Regarding your edit, do you think all claims from 2009 have been settled yet? Indeed, do you think all claims from 2009 have even been reported yet? When you have the answer to that question, the answer to why claims payments from the 2009 year would at this point be lower than claims payments from the 2008 year will be fairly obvious. Clue: lookup 'reserving' and 'IBNR'.

mikey72

Just edited the post so we have crossed, I would suggest you read the last few lines, these don't appear to be estimates, it's only the spin that appears to be.

mikey72

The insurers appear to recomend leaving the fees alone, now as I look at the rest of the report. Wonder why that is, if it's so troublesome and costly to them?

Good idea?

Insurers should publish on their websites a list of the firms with which they have referral arrangements, an indication of the level of the fees paid, and a clear explanation of how referral arrangements work and their purpose. Policy holders should be sent this information with their insurance documents. When claims are made, insurers should make it clear to claimants that they need not use the solicitor, vehicle repairer or credit hire firm which is recommended by the insurer We look to the insurance industry to implement a more transparent regime for referral fees by the end of next year and to the Government to step in, with legislation if necessary, if the industry is unwilling or unable to agree on this.

raskazz

mikey72 wrote: »

The insurers appear to recomend leaving the fees alone, now as I look at the rest of the report. Wonder why that is, if it's so troublesome and costly to them?

In that case I'm not sure you're reading the right report!

Nick Starling from the ABI in his verbal evidence said:

"We’ve been doing masses on these.
We’ve been campaigning on all of them for a long
time. Rather than going into a long speech, I will say
briefly that we have long advocated the
implementation of the Jackson review, of doing stuff
on personal injury compensation—we’ve been
campaigning on that for about five years. We warmly
welcome the Jackson review."

This is very much the ABI's position - the Jackson review suggested the banning of referral fees.

Regarding your edit, I'm not sure that that publishing such information will really do anything to address the actual root causes of the problem. When searching for a quote on confused.com, does the average consumer suddenly stop and think, hold on, I'd better check the insurer's position on referral fees? Even if they did, would it influence their purchasing decision? A better solution would be to ban referral fees altogether.

mikey72

raskazz wrote: »

What I said was:

"Plenty of data in the report - see the written evidence from page Ev43 onwards".

The part that you need to read re: insurers and referrals fees is the verbal evidence provided in the main body of the report.

Have you worked out why data from 2009 and 2010 would be based on estimates yet?

Regarding your edit, do you think all claims from 2009 have been settled yet? Indeed, do you think all claims from 2009 have even been reported yet? When you have the answer to that question, the answer to why claims payments from the 2009 year would at this point be lower than claims payments from the 2008 year will be fairly obvious. Clue: lookup 'reserving' and 'IBNR'.

So you admit you have no real figures, and everything is just supposition then?

raskazz

mikey72 wrote: »

So you admit you have no real figures, and everything is just supposition then?

I'll ask you again in the hope that this time a light bulb will appear over your head:

Do you think all claims from 2009 have been settled yet? Indeed, do you think all claims from 2009 have even been reported yet? When you have the answer to that question, the answer to why claims payments from the 2009 year would at this point be lower than claims payments from the 2008 year will be fairly obvious. Clue: lookup 'reserving' and 'IBNR'.

There is also, as I would hope a reasonable person would be able to appreciate, a difference between blind "supposition", and estimation ("real figures") based on best actuarial practice.

mikey72

So now you are saying the figures in the report are wrong, and not to be trusted?

patman99

Just a query. As we are part of the EU, would it be legal to obtain EU-wide insurance from an EU-based insurer.
I know 3 three Polish guys I used to work with used to pop home for 2 weeks at Christmas in order to Tax/Test/Insure their cars in Poland before driving back to England for the next 50 weeks.

raskazz

mikey72 wrote: »

So now you are saying the figures in the report are wrong, and not to be trusted?

?!!

No, where have I said that the data in the report is "wrong"?

I'm trying to explain to you why claims data for the years 2008 and 2009 would be based on estimates at this point in time. Clearly the lights are on but nobody's home though.... so I'll spell it out.

There is a lag between a event occurring which incurs a liability and the notification of that event to the insurer, and another lag between the notification of the event and the settlement of that claim.

Not all claims in 2009 (or even 2008) will have been notified to insurers. Those that have been notified will not all have been settled yet, particularly for complex personal injury cases.

Hence the total number of claims for the year 2009, for example, will not just consist of reported claims but claims that are IBNR (incurred but not reported). Unless you have a crystal ball at your disposal then what you do to estimate the total number of claims that will eventually be submitted for that year is to add reported claims to IBNR claims. How do you estimate IBNR claims? Employ actuaries to estimate the numbers based on past trends and all the data at their disposal.

Likewise the total cost of claims for the year 2009 will be not only be settled claims, but also reported but unsettled claims, plus the costs of the IBNR claims.

Thus the reason why the 2009 settled claims figure that you cite is lower than the 2008 figure is because less time has elapsed since 2009 and hence there are more IBNR and reported but unsettled claims at this point in time for 2009 than there are for 2008.

I think you need to read the report with a more open mind, as you appear to be suffering from what an expert in scientific method would call "confirmation bias" - i.e. the tendency to seek out and give undue weight to information which accords with your own predetermined opinion, rather than examining evidence objectively.