Car insurance costs: Have your say to the OFT

portlandboy

Ahh this will run and run. So I'll get in early...
Some years ago I was stopped from driving due to poor health. My insurance company at the time were amazingly fair in allowing my wife (a named driver on the policy) to take ALL of my 15+ years No Claims Discount into her sole name, even though she had only been on the policy for the last few years!
How things have changed.
My son passed his test about 6 months ago and the insurance quotes are now dearer than they were when he had a provisional licence (due, apparently, to the fact that he can now drive alone!). But surely, now he has proved his ability to drive, he should be an equal or lesser risk than when he was learning. He is now looking at a minimum of £2000 for insuring even the cheapest vehicle. One company quoted £21,000 for fully comprehensive cover on a £600 Kia saloon (hardly a favourite amongst boy racers). The excuse here is that he can still cause equal damage to 3rd parties no matter what car he drives. He has now resigned himself to using the bus for another year or two, but is it any wonder that so many people drive without insurance? Even when caught, the fines are minute in comparison to the premiums.
The thing that really surprises me is the fact that actually using a car is now seen as an added extra by insurance companies. Using the comparison sites and adjusting the answers, the cheapest quote can only be found if you state that the vehicle is kept in a locked garage at night and at home during the day! So wanting to use the thing is going to add to the premium one way or another. Yet the quote is based on comprehensive cover in the first place. Surely that word must encompass the use of the vehicle in the first place?
My wife is 45 and has a part-time supervisors job. She walks to work leaving the car on our drive, with me at home all day. The fact that she does this adds £60 per year to her car insurance. How can that possibly be seen as an increased risk? One insurance company tried to increase our renewal premium following an accident. The "accident" that they believe made my wife more of a risk was having a large bulldog run into our car while we were stationary. The dog broke a headlight and the owner paid for the damage, but the insurance company saw a chance of more profit! I truly believe that the insurance companies all have software designed to ensure that ANY premium has to be loaded for something, simply to increase their profit. They are part of a regulated profession yet they are running amok, using ridiculous excuses and nobody has the guts to pull them up and sort them out. Insurance company=licence to print your own cash.

ACG

Car insurance is far too complicated.

There are SO many things that make a difference to the cost that seem irrelevant.

Also like Critical Illness insruance why not have car insurance companies release their claims statistics?

crittertog

Do you think comparison sites, buying direct or brokers are the easiest way to get the best price/cover?
Comparison sites to get an idea of where they all sit, examine the cover levels/policy terms, get direct prices & buy.

Have you noticed your existing provider offers a cheaper price to new customers?
Nope - mine is cheaper for renewal than new business.

Have you successfully haggled with your existing provider? Did you check prices elsewhere first?
Not tried, but my relatives have.

Has your policy auto renewed at the end of the year? If it did, was it easy to opt out?
Mine has (didn't need to cancel)

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?
My current insurer includes legal expenses by default on their quotes. It was automatically selected on renewal, but I did manually add it last year.

Have you ever purchased polices with these extras without knowing full details about them?
No

How much have you been charged to cancel a policy early? Do you think the fees are fair?
Haven't cancelled. My current insurer waives admin fees once the policy has been renewed.

Have you had your car fixed by an insurer's recommended repairer? How good was the work?
No, and I wouldn't really consider it - it's not exactly near to me (> 20 miles away). Plus, the manufacturer's anti-corrosion warranty requires any repainting/repairs be done by a workshop that is accredited with them.

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.
Perhaps the increased excess (but see below). I found that PassPlus made no difference to my premiums.

Personally, I've found an increasing number of companies want to levy a compulsory excess in the region of £250-700 in addition to a voluntary excess of around £200 - this actually takes the excess close to or over the cost of the actual premium.

Also, the cost of insurance for new/young drivers is ... problematic. When I passed my test, the difference in insurance between a 1.2 Corsa and a 2.4 A4 was negligible - in essence, a minimum premium of £1,000 was being levied.

InsideInsurance wrote: »

it is not a "No Fault Discount".

And there's the problem. If it's to encourage sensible driving (and therefore reduce claims), it should be a "no blame" discount. As it is, it's simply encouraging people to both not claim for, and not report, an accident. Works like this in Holland, apparently.

vision2009

Car insurance is like most other things in Britain, ONE BIG RIP-OFF.
Anything that they know we must have is seen as a opportunity to make quick, vast profits as we have no option. Similar to gas and electricity.
My renewal has just come in, £230 last year £350 now!!!!! Told them what to do. Best i can find is £300. Anything to do with cars is seen and exploited to the max by government and insurers as an easy way to make money.
Don't even get me started on the extortionate tax on fuel imposed by our greed fueled government.

DeskBob

Regarding policy excess, I've found that reducing the voluntary excess to zero makes little difference to the saving made, and a big difference if you have to claim.

I had to make a claim in 2004, and had my no-claims knocked back to 3 years (from 9 years). I've not made a claim since, so in theory I should have at least got my 9 years back. Wrong - a number of insurance companies are only giving a max of 7 years, which means when I get quotes I have no proof of my no claims as the renewal notices all say 7 years! This to me sounds like unfair trading?

And yes, the admin fees are ridiculous, £35 charge for telling them I'd changed address, I asked if they would deduct the cost of the call and my time from the charge, but they declined...I wonder what they'd do if they thought there was a chance they'd be forced to pay it all back?

InsideInsurance

crittertog wrote: »

If it's to encourage sensible driving (and therefore reduce claims), it should be a "no blame" discount. As it is, it's simply encouraging people to both not claim for, and not report, an accident. Works like this in Holland, apparently.

Not sure it has ever been stated as to encourage sensible driving?

The only thing is that the sort of incidents that are "no blame" (eg vandalism, theft, fire, hit and run) tend not to have anything to do with driving.

There really are only two that potentially does, being hit by an uninsured driver and a hit & run, and the former of these is increasingly not impacting on the NCD anyway.

I believe you'd find your second point, that it is to discourage claiming is more accurate than saying it is to encourage good driving.

eddddy

Comparison sites:

• I have always found comparison sites to be the cheapest - possibly because I'm their typical target customer (middle aged, low risk area, good claims history, standard family car etc)
• My previous insurer (not this year) admitted that they will give lower a quote if you use a comparison site, than if you go straight to their own website.

Renewal quotes

• Many of my previous insurers have quoted lower rates on comparison websites, than my renewal quote. When I phone them, they always drop the renewal quote to the same as the comparison site.
• However, my current insurer's renewal quote was about the same as on the comparison sites - and it was still competitive. So I let it auto renew.
• I have never had a problem with stopping an auto renew in the past - although I was happy for the auto renew to happen this year. (On one occassion, I left the auto renew cancellation very late. So the direct debit for a full year's premium was taken, and then returned about 5 days later. I guess this could have caused a financial problem in some circumstances.)

Added extras

• Typically, I find that optional extras are excluded, in order to keep the headline price low. I have to add them in - so I usually end up with a quote that's higher than the comparison site amount.
• I tend to read all the details of optional extras before committing to them, I don't think I have ever bought extras that I did not understand or want.

Miscellaneous

• I have no problem with cancellation fees or admin fees of any amount, as long as they are clearly displayed at purchase time. Ideally, alongside the quotes in the comparison sites. The customer can then choose between lower premium + higher cancellation/admin fees; or higher premium + lower canc/admin fees.
• I have had my car fixed by an insurer's recommended repairer (but not this year). Their work was very poor. On a second occassion, my car was taken to an insurer's recommended repairer - after speaking to them on the phone, I lost all confidence in them, and removed the car to a main dealer for repair instead.
• I am very much in favour of 'creative' ways to reduce the cost of insurance, including curfews, speed limiters, 'spy boxes', 'accident cameras' in cars (that provide evidence should an accident occur, to help prevent subsequent inflated claims).
• I don't believe that free insurance for new cars really exists (just like interest free credit doesn't really exist). The cost is rolled into the price of the car.
• I can believe that somebody who has bought a shiny brand new car may be statistically less likely to have an accident than somebody who buys a old banger. I would prefer it if the insurance companies offered a special lower-cost policy for 'Shiny New Car Drivers', which was not tied into the purchase of the car. i.e. the consumer can shop around for the best deal on the new car, then shop around for the best deal on 'new car' insurance.
• Regarding Pass Plus (in relation to my son) - expensive (uncompetitive) quotes got a bit cheaper, cheap quotes stayed the same. So no overall benefit.

cavim

The outsourcing of legal work on a claim must bump up the costs to policyholders by a ridiculous amount. My partner paid an extra premium to have legal cover included, which has been used to get compensation for injuries suffered in a no-fault accident, however the company concerned seem to have done everything they can to get more and more money out of the insurance company by delaying resolving the claim.
It has taken over 2 years to get to settlement (pretty common timescale) and the legal company concerned have sent my partner back for the same medical examination 3 times with different medical practitioners (totally unnecessary as the first practitioner was an expert in his field). The company has also almost weekly sent my partner a standard letter saying "I am chasing the ...." when, in practice, the individual handling the claim appears to have been doing nothing apart from raking in money for his employer.
Hopefully the insurance company has paid a one-off fee to the legal company but if they're paying by the hour/by the letter, then they are being ripped off and policyholders are footing the bill for these delaying tactics.

InsideInsurance

cavim wrote: »

Hopefully the insurance company has paid a one-off fee to the legal company but if they're paying by the hour/by the letter, then they are being ripped off and policyholders are footing the bill for these delaying tactics.

Obviously commercial arrangements differ between insurers but in general the motor insurance company will have been paid by the solicitor to get the case not the insurance company paying the solicitor. So the insurer is paid by you for the policy and paid by the solicitor for taking on the case. Home insurance is different and the insurer does pay a fee to the provider.

Assuming it is bigger than a small track case then the solicitor will actually be paid by the other party's insurance company if they win and play by the rules. If they lose or take a gamble and don't win then the solicitor will absorb their time costs themselves and only dispersements may be covered by the claimants insurance - in some cases the solicitors absorb these too.

This is why the solicitor is the one that ultimately judges the "reasonable chance of success" aspect of the policy and not the insurer.

savinglikemad

Young drivers cost. Crazy pricing. My son passed at 17 and 3 months, that was 3 and half years ago, and still cant afford the insurance - cheapest we have found is £2000 plus!!!!! If we had realised cost he would not have bothered to pass test. He has freinds that drive unisured and when caught get fined less than his insurance would be for the year. Either raise the pass age or raise the fine for uninsured drivers. It makes a mockery of the system.