Car insurance costs: Have your say to the OFT

Former_MSE_Wendy

We're going to meet the Office of Fair Trading this week to give our thoughts on the car insurance market as part of its call for evidence about Motor Insurance (see MSE News Story) and we'd love to take some of your views.

If you have five mins, please tell us your experiences over the past year on how well you think the market is working, and what improvements need to be made? It may help to specifically answer some of the questions below.

We'd especially like to hear from Northern Ireland residents, as the OFT is going to particularly focus on NI:

Comparison sites:

• Do you think comparison sites, buying direct or brokers are the easiest way to get the best price/cover?
• If you use price comparison sites, do you get the level of cover you asked for?
• Have you found that prices different if you go direct to the insurer? Was it cheaper or more expensive?

Renewal quotes

• Have you noticed your existing provider offers a cheaper price to new customers?
• Have you successfully haggled with your existing provider? Did you check prices elsewhere first?
• Has your policy auto renewed at the end of the year? If it did, was it easy to opt out?

Added extras

• Have you found that optional extras such as Legal expenses, Breakdown cover, Key cover or handbag cover are automatically included when you didn't want them or had the cover already?
• Have you ever purchased polices with these extras without knowing full details about them?

Miscellaneous

• How much have you been charged to cancel a policy early? Do you think the fees are fair?
• Have you had your car fixed by an insurer's recommended repairer? How good was the work?
• Would you do/recommend/sacrifice to obtain a lower quotation? Examples could be:
  - Not to drive the car after 7pm, or before 6am.
  - Have a qualified adult next to you at all times.
  - Put a speed limiter, such as up to 50 mph, on your car.
  - Raise your excess.
  - Buy a brand new car to get free Insurance for 12 months.
  - New drivers to take the Pass Plus test.

Thanks

eccles32

Insurance companies take money off you to 'guarantee the no claims bonus' only to increase the basic premium if you make a claim, even if you are not to blame.

So what is the point?

How about introducing a 'no premium increase for a no blame claim'

DigiGuru_2

Comparison sites:

• I generally find comparison sites help to find the cheapest prices, however I generally then re-quote using a different email address to get cashback direct (or use Quidco Compare)
• Usually, however the actual cover offered by "Comprehensive Insurance" can be completely different between providers.
• 99% of the time, prices are the same.

Renewal quotes

• Almost always this has happened to me, let's see this year...
• It is almost impossible with my current provider to haggle as they are online-only
• I had an old policy do this, it was easy enough to get out of, however it was fairly time consuming as I had to send written confirmation.

Added extras

• With many providers, this was the case, however with my current provider it is very clear.
• I have never added cover I did not need and understand

Miscellaneous

• I have never needed to leave a policy early
• My only accident was a complete write off, so unable to comment on repair quality.
• I don't think that we should have to "do certain things" to lower premiums and that they already charge enough for drivers like myself with high-mileage (> 15,000 per year)

On a side note, I would like to add that I belive the whole system needs an overhaul as Insurance is a legal requirement, therefore drivers have to pay whatever they are quoted. This in turn has lead to the insurance providers being able to do the same as the "Big Six" energy providers, where all they actually have to do is set their prices just above or below the "industry standard". I find it absolutely ridiculous that at 29, with 6 points and driving 15,000 per year in a Seat Leon diesel, that I am charged £1,000 per year with a £400 excess!

InsideInsurance

Aggregators are verging on a necessary evil but continue to promote bottom line price over value.

Integration with insurer's at times remains limited as certain circumstances are perfectly acceptable to insurers via their own sites or via the telephone which via the aggregators reject. For example looking at quotes for a lease vehicle and only 5 insurers quote via the aggregators with lowest premium being nearly £5,000. Requote saying I own the vehicle and contact the top 3 insurers, all had no issues with insuring it after saying I would lease not own the vehicle and 2 made no pricing changes and one reduced it. Lowest quote circa £800.

The other area that is of common issue is modifications, even basic items like metallic paint, can give spurious results.

Whilst they have improved over recent years I think there needs to be a wider education of the public that the best price is not necessarily on aggregators results because of the challenges of integration, assumptions and insurers that dont list.

Renewals - less issues of lower new business quotes than there used to be, but I suspect more a case of better tech identifying returning customers than "fairer" pricing. Certainly shop around beforehand. To date current insurers are happy cutting 25% off of renewal quote with no negotiation or arguing

I think auto-renewal is the correct way due to the bigger issues of the reverse from a personal and general public point of view. Have never wanted to opt out.

Added Extras I buy what I want and never had anything added without my knowledge/ consent. Certainly it is a growing market as top line prices are hammered but ultimately are showing increasingly lower levels of return for customers

Miscellaneous, as usual people want their cake and eat it on cancellation charges. You have to balance initial premium with cost of cancellation and simplicity. Cost of acquisition used to be about £100 for a motor customer and somewhat similar to a loan your initial monthly payments have to go more towards the underwriting risk than paying either operational or marketing costs. You could have a much more complex system which reflects that cooling off period cancellations are cheaper for the insurer than post cooling off but then the fee starts at £105 from week 3 of the policy and decays down to £25 for week 51 but then MSE would be up in arms about it being too complex for people to understand. A flat £X for everyone is at least easy to understand and people can make easier comparisons between providers.

A current increasing issue is the loading of premiums for none fault accidents (in the insurance sense of the phrase). Whilst there is a rationalisation for it in terms of insurers not being able to recover their administration costs and statistically people being more likely to claim the more claims they've had I would question if it is in the best interests of the market for doing this. One, we see an increasing number of posts on here of looking at how to recover this from the at fault party and people struggling as you cannot easily substantiate how much loading your insurer will put on your policy in 4 years time because of an accident today. Secondly it is creating bad sentiment against insurers and creating both more movement and more people trying to conceal claims despite it not having been "their fault" in the first place.

I also agree with the above poster on "tricks of the trade" being a growing issue, not of things out and out contrary to the contract such as fronting but people putting random other people onto their policies as named drivers etc. Either we need to universally adjust premiums to stamp out this activity or place stronger conditions on these sorts of things - rather than a vehicle mileage on the policy an individual driver. Obviously in part difficult to prove at the same time if you say your parent that lives 800 miles away are going to be using the car 40% of the time things arent going to add up.

System

Basic premiums have been artificially reduced by reducing the level of cover and including charges for any change to the policy and including cancellation charges.
e.g.
Back in the day, a basic car insurance policy covered you to drive to / from your normal place of work, many policies now have this as an optional extra.

Since the introduction of the new continuous insurance legislation, auto renewal and cancellation rules have not fully kept pace with the legislation, the rules need to be clarified so that customers do not get caught out either by being uninsured or by having the policy renewed when they do not want it.

The motor insurance industry need to provide policies to cover people whilst they are trying to sell a car privately. In the case where someone has bought a new(er) car and swapped the insurance policy to the new car, their old car must now either be declared SORN and kept on private property, or it must be insured (and taxed). So, insurers need to allow a 2nd car (the old car) to be included on the policy until it has been sold.

roadrunner2011

When I look for insurance, I can get a premium of around (say) £250 BUT then I must take (sometimes compulsory) excess of £250 PLUS £250 voluntary... which seems to be a rip-off....

In effect, this is doubling or trebling the premium..

I understand there needs to be some kind of "safety net" to cover fraudulent (small) claims, but this amount is surely only a small amount considering the number and size(amount) of car insurance premiums collected, and could be "offset" by most companies into the premium, (say £25) .

What about a "Standard Pro-Forma" proposal form throughout the industry, for "basic" insurance cover, (including Comprehensive) and then have a list of "options to include" to be added by the customer...

This way, the customer will know from one company to the next, what the "extra options" cost and can decide if they are getting value for money, when choosing the "options" AND the Insurance Company.

e.g. company A may include certain options, and company B may include different options, The customer can choose which company to use, if they have the options the customer requires. Not everyone wants "continental caravan cover", but most companies include it, in one form or another,.... I will NEVER be going abroad with my car, and do not have a caravan, but my premium is calculated as if I would . With the above "options" choices, my premium should be lower , and tailored to MY requirements..... NOT the Insurance Company.

grnw

Recently, a lot of car insurance companies are charging very high administrative charges for basic changes such as changes of address.
For example, my company charged £35 for changing an address.
Clearly, it does not cost £35 to change an address so these practices need to be investigade because it clealy is not good value to any customer even if you have found a cheaper quote online.

imranbashir_uk

The real problem with any insurance quote is that the original price (before any discount) is based on a fictional person and not a price that is paid by anyone. The best way to understand this is by using two extreme examples.

30 year old, with 10 years no claim discount, same car, same postcode, same job, same mileage.

Quoted £2000 with 75% discount brings it down to £500.

30 year old, with 0 years no claim discount, same car, same postcode, same job, same mileage.

Quoted £2000 with 15% introductory discount brings it down to £1700.

Therefore no one will ever pay the £2000 from which all discounts are applied.

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The next problem is that NCB protection is added to your premium as a percentage i.e. including NCB protection increases your premium by 10% so two people with the same number of years protection are charged different amounts based on their premium.

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Finally, prices for any added extras such as legal cover vary wildly between insurance companies, as it seems they are reducing their premiums and supplementing this by bumping up the price of add-ons, this is unfair.

llpllp

Car insurance in the UK is ridiculous in many ways:

1. I'm obliged to update the insurer if anything has changed. This may increase the premium (maybe unreasonably), but I cannot disagree and go to another insurer without loosing money because the amount of refund is not proportional to the time left on the policy.

Personally I was insured with foreign driving license (£900 premium), but after I passed the driving test in the UK I had to pay £600 more. Proportional amount of refund at that time was about £650, but I was offered only £350.


2. Adding someone to the policy who does not really drive the car will often decrease the premium.

3. Insurance companies do not accept foreign NCB (many of them), but they want to know foreign convictions etc.

4. Next year I will be tempted to buy an insurance claiming that I have 10 years foreign license rather than 1 year UK license because it's twice cheaper. No insurer takes into account foreign experience if you also have UK license.

5. I'm going to lose NCB if someone crashes into my legally parked car while I was sleeping.

InsideInsurance

llpllp wrote: »

3. Insurance companies do not accept foreign NCB (many of them), but they want to know foreign convictions etc.

They do take into consideration how many years you have been claim free. Claim free and NCD are two separate things as you can have made a number of claims but not lost NCD. The challenge of accepting foreign NCDs is keeping track of how different countries systems work.

llpllp wrote: »

5. I'm going to lose NCB if someone crashes into my legally parked car while I was sleeping.

No, you lose your No Claims Discount if you make a claim. If a car crashes into yours you dont lose it unless you Claim, in which case you evident cannot really a No Claims Discount as you've made a Claim - it is not a "No Fault Discount".

Scotty1.7

Car Insurance is simply a rip off

It is a compulsery requirment- Yet it is handed out by private compaines

I do less the 4000 miles a year, I have full no cliams, I'm 26 and it cost me other £1000 a year!!! The same as when I was 17 with no no claims!!!

The issue is the use of the post code- Why give a car a Insurance group if you just use it to times by the post code and pluck a figure from fresh air???

Car Insurance should be done by a public sector company- not a private company out for profit

Claims managment comapnies and no win, no fee sociliters should be banned.

Claims proccess should be made alot more stringent and and traffic accident or car accident should have be reported to the police. No claim should be accepted with out a crime number.