Why are British insurance companies so much more expensive than elsewhere?

COF

In the US its not uncommon for young drivers to drive cars like Mustangs, and big 2-3 litre SUVS. Clearly insurance is not a problem over there.

Insurance companies really seem to have this country under the thumb. Sometimes I wonder if it's all some global warming conspiracy to get young drivers out of cars and onto public transport.

InsideInsurance

I'm not sure where you are getting your information from?

Firstly, UK policies cover up to £20,000,000 of property damage and unlimited personal injury claim per third party claimant where as in the US (it varies by state) you are typically looking at a maximum of us$25,000 to us$100,000 per incident. So the liability the insurer is taking on is much much less.

Secondly, the prices in the US are high, looking at insuring your Mustang in CA with only us$25,000 of property and us$25,000 of injury cover comes out at $3,410.73 for 6 months cover with a 21 year old driver.

Of cause if you have an accident in the US and the third party claims exceed your coverage you are personally liable for the short fall.

The key difference with the US is that you can choose to have very low cover and risk having to settle TP claims yourself - in CA you only need to deposit us$35,000 to avoid needing insurance at all - where as in Europe (not just the UK) there are massively higher minimum requirements.

vaio

Either….

We are a lot more litigious than the Americans (doesn’t sound likely)

Or

Financial services generally have got such a strangle hold on the country generally that they are running out of control and governments are too scared to bring them back under control in any meaningful manner.

Insurance/banking etc used to be the tail helping the dog that was the real economy/the country to balance but since the late 80s it seems to have become an end in it’s own right hence credit explosion, casino type gambling and the assorted too big to fail bail outs (with much more to come I’m sure).

Forget the States, a while ago someone (Mikey?) posted equivalent rates for France and the UK for a young new driver. I can’t remember exact figures but the French price was about a quarter of the UK price despite France having a worse accident rate.

lisyloo

but the French price was about a quarter of the UK price

That doesn't necessarily mean their system is better/fairer.
It might be that they have a higher level of subsidy between low risk and high risk drivers, which could actually be unfair.

I'm not making any judgements/assertions as I haven't seen the figures, but I'm just saying that lower prices for one group, doesn't necessarily mean their system overall is better and fairer.
Insurance for low risk drivers in the UK is very cheap indeed.
Whether that's justified or not I couldn't say, but it is not universally expensive in the UK.

Soubrette

Fraud and litigation risks.

Andy_L

In (some parts of) the States insurance isn't mandatory
Parents may be paying
Higher disposable income becasue of lower living costs?

lisyloo

Fraud and litigation risks.

Surely litigation costs are massively higher in the US.

Nine_Lives

As you mentioned motor insurance, i'll keep on the topic...

It's no wonder so many people now drive without insurance. The high prices will stop some, but many others will just ignore it & say why should i pay such a fee - and they'll drive without insurance.

And i know that comment will get the challenging nature of MSE into overdrive with replies of "how can you prove that". Well i don't NEED to prove it. From personal experience - i know of more & more people nowadays that are driving without insurance purely based on the prices they've shot to.

And yes, i have shopped them & they have been stopped.

My brother got a quote at the start of 2010 on a car for £1800. 9 months later he was looking at £3600 with nothing else changing other than 9 months.

lisyloo

It's no wonder so many people now drive without insurance.

I am shocked that people have such a sense of entitlement that they think they can do whatever they like with no regard for others simply to have to what they want.
I guess that's broken society rather than big society.
But I don't doubt what you are saying.
It is very difficult when you can't afford something you have had before but with declining incomes and higher living costs, many of use are going to have to adjust our expectations.

dunstonh

Surely litigation costs are massively higher in the US.

Almost certainly. However, look at the "massive" difference in liability between the UK and US.

Anecdotally, the premiums in the UK are very low unless you live in a pocket of criminality or are a high risk driver.

mikey72

lisyloo wrote: »

I am shocked that people have such a sense of entitlement that they think they can do whatever they like with no regard for others simply to have to what they want.
I guess that's broken society rather than big society.
But I don't doubt what you are saying.
It is very difficult when you can't afford something you have had before but with declining incomes and higher living costs, many of use are going to have to adjust our expectations.

I'm more shocked there appears to be an attitude that because I can afford it, it doesn't matter if everyone else is priced out.

The british public is happy to have become car dependant, acccept any cut in public transport, remove infrastructure, or simply let it decay if they can save a penny in tax
I expect the facilities to be available to all, if required.
I want 17 year olds to be able to work, not sit at home in their parents house taking jsa as they can't apply for any jobs they can't get to.
I agree the "me, me, me" attitude is certainly a broken britain.

Maybe the opposite approach could become the norm.
No compulsory insurance for anyone, then those that can afford it take out their own, and claim off that if someone hits them, either as a pedestrian, cyclist, or motorist.
If you can't afford it, don't go out, or move to car free zones, and let the other areas become a free for all.