MSE News: OFT to investigate rising car insurance costs

This is the discussion thread for the following MSE News Story:

"The Office of Fair Trading is to probe the private car insurance industry, after reports of rising premiums ..."
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Comments

  • We had our renewal notice in and it was £80 more than last year (£420) - we rang and said we weren't happy and they knocked £90 straight off - well worth a phone call but makes you wonder how much the insurance companies make from peoples apathy.
  • Reaper
    Reaper Posts: 7,279 Forumite
    First Anniversary First Post Photogenic
    edited 8 September 2011 at 10:48AM
    There is a simple reason for it. After an accident your insurance company will sell details to injury lawyers who then bombard you with messages telling you to sue, which pushes up the cost of premiums.

    The answer is to put a stop to the practice by banning referral payments and/or limit the fees personal injury lawyers can charge to make it less profitable for them.
    http://www.telegraph.co.uk/finance/personalfinance/insurance/motorinsurance/8615501/Dirty-secret-of-car-insurers-selling-accident-victims-details-to-no-win-no-fee-lawyers.html
    According to one leading insurer, if you took an insurance policy of £450 a year, about £220 of the premium is charged to cover the cost of whiplash claims, fraud, legal fees and tax.
  • dunstonh
    dunstonh Posts: 116,320 Forumite
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    well worth a phone call but makes you wonder how much the insurance companies make from peoples apathy.

    Not enough. Car insurance in general is loss making. It needs add on products and other areas to make it profitable.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • mikey72
    mikey72 Posts: 14,680 Forumite
    Guess we'll see in December how badly off they are.

    By add-ons, I assume you're not counting the £1000 referral fees, from the hire companies, the solicitors, and the claim management companies?
  • Ok, so I got my renewal notice from Elephant.co.uk in February of this year. I was paying £89 per month and they wanted £115 per month. That's right, a massive £260 per year more (I just have a ten month policy). I was gutted, it almost pushed driving in to an unaffordable bracket for me. So I called them and said what's happening? They said well despite your no claims bonus reaching 1 year, there's been an increase overall in all insurance premiums not just car insurance because of the current financial climate. I said I couldn't afford it, so they kindly offered to remove my extras like personal injury / uninsured driver cover / motor legal, etc and put my excess up to £500 which they said would knock my monthly premium down to £104 - woohoo a huge saving of £11 per month - load of rubbish. I said I can't afford a penny more than I'm paying they said tough luck basically that was the absolute best deal they could offer me, they even spoke to a supervisor who confirmed no more discount could possibly be applied. The phone call lasted about a half hour...

    I went on all the comparison websites and on MSE and on forums, etc - I spent a good couple hours looking about. I eventually got a quote for £75 per month (ten month policy) with £0 excess, which was obviously £14 less than I was already paying a month AND £40 (£400 a year!!!!!) less than my renewal.

    I called Elephant.co.uk to tell them and they said great, off you go - but before you do tell us who that's with please. So I did, Admiral, and they said, well that's part of our group so we can just match that and you can stay with us!?!?!? I mean !!!!!!?!?!?!

    If they could 'just match it' why not offer it in the first place?! It's all one big rip off con. It's nothing to do with accidents, young drivers and so on, it's all to do with greedy insurers (like greedy bankers) squeezing every penny out of this poor unsuspecting society.
  • JimmyTheWig
    JimmyTheWig Posts: 12,199 Forumite
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    neilmayo wrote: »
    makes you wonder how much the insurance companies make from peoples apathy.
    dunstonh wrote: »
    Not enough.

    I disagree. I don't think they should be making any money from people's apathy.
    If you want to argue the increase in premiums is valid then that's a fair point. [I'm not convinced that I agree, but I understand.]
    If you want to argue that personal injury claims should be clamped down on then fair enough.
    But to argue they should be making more money from people's apathy is, in my book, just plain wrong.
  • I've just been through the process of renewing my insurance. I couldn't believe it when my renewal came through for £525 an increase of £150, even with 13 years NCD.

    I did some searching only to find £525 was fairly cheap most quotes were over £600 and I even got one from a well know insurer of £910.

    I suggest you keep searching though as I did finally manage to get a more realistic price of £425 this was still an increase on last year though.
  • mikey72
    mikey72 Posts: 14,680 Forumite
    I disagree. I don't think they should be making any money from people's apathy.
    If you want to argue the increase in premiums is valid then that's a fair point. [I'm not convinced that I agree, but I understand.]
    If you want to argue that personal injury claims should be clamped down on then fair enough.
    But to argue they should be making more money from people's apathy is, in my book, just plain wrong.

    I think that's the main problem.
    Insurers are now happy to haggle, so you know the pricing structure allows for it, and they are happy with the lower premium they will eventually agree on.

    To select one small part of the business model to claim they don't make profits on is unrealistic.
    And the losses are paper losses, due to moving money around inside the company.
    But again, I've posted enough examples where insurers even make a profit on paper.

    I think the best guide is to look at the bonuses, and the payment to shareholders for indication they're not going to go bankrupt tomorrow.
  • mikey72
    mikey72 Posts: 14,680 Forumite
    katyboo123 wrote: »
    Ok, so I got my renewal notice from Elephant.co.uk in February of this year. I was paying £89 per month and they wanted £115 per month. That's right, a massive £260 per year more (I just have a ten month policy). I was gutted, it almost pushed driving in to an unaffordable bracket for me. So I called them and said what's happening? They said well despite your no claims bonus reaching 1 year, there's been an increase overall in all insurance premiums not just car insurance because of the current financial climate. I said I couldn't afford it, so they kindly offered to remove my extras like personal injury / uninsured driver cover / motor legal, etc and put my excess up to £500 which they said would knock my monthly premium down to £104 - woohoo a huge saving of £11 per month - load of rubbish. I said I can't afford a penny more than I'm paying they said tough luck basically that was the absolute best deal they could offer me, they even spoke to a supervisor who confirmed no more discount could possibly be applied. The phone call lasted about a half hour...

    I went on all the comparison websites and on MSE and on forums, etc - I spent a good couple hours looking about. I eventually got a quote for £75 per month (ten month policy) with £0 excess, which was obviously £14 less than I was already paying a month AND £40 (£400 a year!!!!!) less than my renewal.

    I called Elephant.co.uk to tell them and they said great, off you go - but before you do tell us who that's with please. So I did, Admiral, and they said, well that's part of our group so we can just match that and you can stay with us!?!?!? I mean !!!!!!?!?!?!

    If they could 'just match it' why not offer it in the first place?! It's all one big rip off con. It's nothing to do with accidents, young drivers and so on, it's all to do with greedy insurers (like greedy bankers) squeezing every penny out of this poor unsuspecting society.


    I hope you still moved, even if it was within the same company.
  • michaels
    michaels Posts: 27,993 Forumite
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    Latest renewal was same as last year but the cashback on offer was reduced from 40 quid to 10 so in effect a 12% increase.

    DS had a similar experience with Elephant, also had 1 year ncb from a 10 month policy, was offered a 10% reduction in premium but price comparison for elephant came up with a 30% reduction which they then matched on the phone.

    Certainly they are trading on apathy but I don't see that as a problem - after all do we object when Sainsbury's or Tesco are 50p more on some products than Asda or Morrison's depending on what promotions are running or just understand that to get the keenest prices it is necessary to shop around?
    I think....
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