Insurance premium same or higher every year

raskazz

mikey72 wrote: »

You'll have to look at the new definition that is being used.

Follow Selden's link, to the respected Ernst and Young report

the report recently published by the Chartered Insurance Institute and Ernst & Young (click here). This is based on the 2009 motor returns to the Financial Services Authority.

The report demonstrates that the unadjusted net combined ratio for personal lines motor insurance written by UK based insurers was 122.7%.

Indeed the 122.7% was created using the following definition, from their own report.

"*The net combined ratio is calculated by taking the sum of net incurred losses and expenses and dividing them by net written premium. A figure below 100% indicates that the company is making underwriting profit while a ratio above 100% means that it is paying out more money in expenses than it is receiving from premiums."

So just premiums, not all income received from other source, to manage the 122.7% headline grabbing figure nowadays.

Unless you claim Ernst and Young are using the wrong figures for some reason?

No but which "income received from other sources" are you referring to and what specific figures (links please to verifiable evidence) are you using to argue that this profit from other income (as income does not equal profit) outweighs the losses from motor insurance underwriting?

raskazz

mikey72 wrote: »

Seroiously, even you admit we shouldn't look at the dividends and bonuses paid out by monoline motor insurers, as they are higher than other insurers that aren't only motor.
You're excluding motor insurers from the discussion because they're doing too well compared to others?

What are you going on about? I'm not excluding motor insurers from the discussion at all - I was saying quite the opposite?! :rotfl:

The point I was making was that when we are discussing MOTOR insurance, looking at dividends/bonuses in relation to composite insurers is pointless as those dividends/bonuses are issued in light of aggregate results from all insurance lines. Hence why the only relevant dividends/bonuses would be in relation to monoline motor insurers.

raskazz

mikey72 wrote: »

At the risk of posting as many times as Raskazz, I answer this for him.

In business, it's very common to negotiate a discount, quite often based on volume of business.
It's then paid back as a single payment back to you at the end of the year, as one lump sum, rather than a discount when you pay the bill.


So say an insurer gets a premium in of £100.
They negotiate a discount of 40% on retail prices with their approved repairer (even more if business is good, 40% is an average trade discount)

So, you have an accident, the bill is £120, which they pay.
So the insurer has paid out £120 for £100 premium.

Then at the year end, the rebate of 40% comes in, so that's £48 back in the bank.
But not as premium, it's a referral fee, or other income, or whatever it's down on the accounts as. But not as premium.

So now we have two sets of figures,

the £120 paid out for £100 premium that we all see quoted,
(Loss of £20, so sob sob, premiums must go up by £20 to cover it)

or the actual company profits, which is in reality £28 in the bank. (The £100 premium, less the £120 paid out, then the £48 returned)

(Have you never wondered why insurers get such high quotes from their "approved suppliers", instead of expecting them to be the lowest quote, and why the same company can do it a lot lot cheaper for cash? Do you think insurers haven't been to a garage themselves, or they really are that gullible?

Well, that's all very nice but that is not how motor insurance is transacted in relation to approved repairs and it is not how accounts are prepared either (claims payments in relation to, for example, accidental damage claims are NET payments which would account for any subsequent rebates - not that they happen in this fashion in any case. Even if they did then any rebated discount would still be in the accounts, albeit as a credit of some form).

You still go on and on on these threads without ever linking to any actual verifiable evidence of the guff that you are spouting.

mikey72 wrote: »

Or is that that they like the "loss" they've had on paper, for enough years to bankrupt any other company, and not wanted to do anything about, because that headline figure looks good to their sympathisers.)

This has been explained to you ad infinitum so I'm not sure why it still hasn't sunk in.

(i) The motor insurance market as a market has made losses for at least the last 3 years. Within that market some insurers have made a profit or broke even. Some have made a loss but only turned a profit due to prior year reserve releases in earlier years.

(ii) As we have mentioned in this thread, many motor insurers are subdivisions of composite insurers. Where those compoites turn a profit in, for example, commercial lines of insurance they have been happy to make certain losses on motor in the short-term as they expect the market to harden and make profits in the future.

(iii) Some insurers have been placed into run-off or exited motor insurance as they have taken the commercial decision that motor insurance will either not turn a profit for them in the forseeable future and/or the short-term losses for them are unsustainable. See HSBC, NIG, Brit, QBE etc. Equity Red Star and KGM would also be in run-off were it not for generous backers.

mikey72

raskazz wrote: »

Well, that's all very nice but that is not how motor insurance is transacted in relation to approved repairs and it is not how accounts are prepared either (claims payments in relation to, for example, accidental damage claims are NET payments which would account for any subsequent rebates - not that they happen in this fashion in any case. Even if they did then any rebated discount would still be in the accounts, albeit as a credit of some form).

You still go on and on on these threads without ever linking to any actual verifiable evidence of the guff that you are spouting.



This has been explained to you ad infinitum so I'm not sure why it still hasn't sunk in.

(i) The motor insurance market as a market has made losses for at least the last 3 years. Within that market some insurers have made a profit or broke even. Some have made a loss but only turned a profit due to prior year reserve releases in earlier years.

(ii) As we have mentioned in this thread, many motor insurers are subdivisions of composite insurers. Where those compoites turn a profit in, for example, commercial lines of insurance they have been happy to make certain losses on motor in the short-term as they expect the market to harden and make profits in the future.

(iii) Some insurers have been placed into run-off or exited motor insurance as they have taken the commercial decision that motor insurance will either not turn a profit for them in the forseeable future and/or the short-term losses for them are unsustainable. See HSBC, NIG, Brit, QBE etc. Equity Red Star and KGM would also be in run-off were it not for generous backers.

I keep explaning to you how it's only a paper loss, why do you keep focusing only on underwriting losses, and ignoring how overall profits are increasing, and dividends and bonuses are better year on year?

As for leaving the market, they should be careful they're not caught in the stampede of those coming back into the direct sales, such as the likes of Axa and others.

raskazz

mikey72 wrote: »

I keep explaning to you how it's only a paper loss

They are not just "paper losses" and can you please explain why you keep referring to them as "paper losses"? Unless the conversation is going down the route of tying ourselves up in some bizzarre semantic/philosophical argument around all business losses being "paper losses" because accounts are "on paper" I genuinely have no idea what you are going on about here.

mikey72 wrote: »

why do you keep focusing only on underwriting losses, and ignoring how overall profits are increasing, and dividends and bonuses are better year on year?

Because if we are discussing motor insurance pricing then the key statistic is the underwriting loss i.e. COR. Added to this will be investment returns, however, investment returns being currently below 5%, they do not even come close to covering the underwriting losses.

Please provide links to back up your assertion that overall profits of motor insurance, dividends arising from motor insurance and bonuses relating to motor insurance are better year on year.

mikey72

I keep explaining to you how insurers are making a profit, and keep linking to companies that only sell car insurance. You don't appear to like these examples, so I suggest you provide the links that show the overall profits from car insurance aren't correct, and not just keep stating the underwriting losses, which I keep explaining to you are only paper losses, not real business losses.

raskazz

mikey72 wrote: »

and keep linking to companies that only sell car insurance. You don't appear to like these examples

I must have missed these. Please link to them again or link to the post where you did this.

mikey72 wrote: »

so I suggest you provide the links that show the overall profits from car insurance aren't correct, and not just keep stating the underwriting losses, which I keep explaining to you are only paper losses, not real business losses.

I asked you to clarify why you keep dismissing these verifiable losses as "paper losses" but you haven't. So, again, why do you say that the reported motor insurance market losses of the last 3 years are only "paper losses"? What - specifically - differentiates them from the reported losses of any other business?

mikey72

raskazz wrote: »

I must have missed these. Please link to them again or link to the post where you did this.



I asked you to clarify why you keep dismissing these verifiable losses as "paper losses" but you haven't. So, again, why do you say that the reported motor insurance market losses of the last 3 years are only "paper losses"? What - specifically - differentiates them from the reported losses of any other business?

It's obvious you'll argue all night.
The losses you always refer to are underwriting losses, ie one small part of the business, and a paper loss as explained quite clearly.
The overall company profits, usually very good, are the ones that the companies themselves publish, so your smoke and mirrors are wearing thin.
But I'll leave you to it now, and you can try to convince everyone else that the insurers own figures should be ignored, and just the underwriting should be the focus as you would like.

raskazz

mikey72 wrote: »

It's obvious you'll argue all night.

I just want you to provide some evidence to back up the ridiculous assertions that you are making.

mikey72 wrote: »

The losses you always refer to are underwriting losses, ie one small part of the business, and a paper loss as explained quite clearly.

Well, no, for insurance business the COR is the key indicator as it is the operation of the whole business excluding investment returns. That you seem to deny this betrays the fact that you don't really know what you are talking about at all. You didn't even know what a COR was a few weeks ago and nothing really indicates that you know what it is now.

But I'm in the mood to humour you, therefore, can you please link to verifiable evidence which shows which other "parts of the business" - motor insurance business only as other commercial lines and property are irrelevant to motor insurance rating - make profit and also link to evidence which shows that these profits cover the losses made on motor insurance underwriting?

You have not explained at all how motor insurance losses are "paper losses" so, once again, I put to you:

Why do you say that the reported motor insurance market losses of the last 3 years are only "paper losses"? What - specifically - differentiates them from the reported losses of any other business?

mikey72 wrote: »

The overall company profits, usually very good, are the ones that the companies themselves publish, so your smoke and mirrors are wearing thin.

The only smoke and mirrors are coming from you and your refusal (i.e. inability) to provide any evidence to support the absolute BS that you are trotting out.

Once again, please link to verifiable evidence that insurers are making supernormal profits (or even profits) out of motor insurance specifically. Forget Admiral as they are unrepresentative of the market.

We keep covering this over and over again and yet you show no inclination twards actually learning what you are talking about. I linked you weeks ago to the contact to request a copy of Deloitte's motor insurance report - have you got a copy yet? Where is your critical examination of their analysis?

mikey72

mikey72 wrote: »

I keep explaining to you how insurers are making a profit, and keep linking to companies that only sell car insurance. You don't appear to like these examples, so I suggest you provide the links that show the overall profits from car insurance aren't correct, and not just keep stating the underwriting losses, which I keep explaining to you are only paper losses, not real business losses.

So no links off you, just more smoke and mirrors.
Guress I'm not alone in exposing the car insurance hidden profits.

http://www.thisismoney.co.uk/money/cars/article-2034356/Hidden-fees-boost-insurers-profits-drivers-face-record-premiums.html