Car insurance more expensive for unemployed

whatmichaelsays

Spiderham wrote: »

Cross-subsidising puts you at this risk.

And this is, ultimately, why certain groups have seen greater premium increases than others. In the 'good old days' when investment markets were buoyant enough to subsidise cheap premiums, cross subsidy wasn't such a risk - not it is.

When assessing risk, the insurers are one step behind the customer. After all, the customer is the only one who knows if he drives like an idiot, the only one who knows if he will make a false claim or the only one who knows if he is likely to default on payments - the insurer knows less than the proposer on so many key elements of risk.

Insurers want the "safe bets" and all that they can do to judge who those "safe bets" are is assess on statistics. If the stats show that a certain demographic poses a greater risk, then the price will reflect that. It is impossible to treat the proposer as an individual.

mikey72

lisyloo wrote: »

Why not look for the statistics then?

I am sure you could find some independent stats on these matters.
For example the IAM (institute of Advance Motorists) do some policy and research.
They are a charity who promote road safvety so I don't think they have any commercial axe to grind.

Here is one of their publications although there are more if you want to look
http://www.iam.org.uk/images/stories/Policy_Research/IAM%20Factors%20in%20Accident%20Report.pdf

Here's some info related to age and a table of figures (percentages is in the report).

They do have info on gender but probably not on job type as they aren't commercially orientated.
So I'm sure you could find much of this info independently of the industry from fairly trusted sources.

That is a classic example of exactly what I mean.

The references at the back are a mixture of some old D o T reports from 2004, a few from 2010, and a re-hash of other iam reports.
Regurgitated into yet another report, then quoted yet again.

It's still absolutely nothing to validate any insurers experience of assessing risk.

lisyloo

As already explained, insurance works on statistics not "sense"

The cases mentioned make a lot of sense even though they are based on statistics and not logic.
We all know that inexperience can contribute to accidents - that makes sense.
We all know that old age can lead to poor reactions and poor eyesight etc. - that makes sense.
We also know that as a group people who are under financial duress e.g. the unemployed are more likely to commit financial crimes.
This all makes perfect sense and the statistics can be found if you want to look.

lisyloo

It's still absolutely nothing to validate any insurers experience of assessing risk.

Explain why, as what you have said means nothing to me.
Why does the D o T invalidate the information?

Spiderham

mikey72 wrote: »

I entirely agree with you.
It certainly is in the insurers interests to charge anyone more than they should.
But "should" is subjective. From any commercial viewpoint, "should" is as much as possible to make the greatest profits.

My emphasis is on employed people there. If unemployed are overpaying relative to employed then employed are underpaying relative to unemployed.

The "I've seen no stats to back that up" argument also doesn't convince me. Have you ever seen any stats that back up charging people who have had a fault claim more?

Spiderham

Flying_Tiger wrote: »

how come that a person whom has worked all their days "SUDDENLY" becomes a 30% higher risk in beign made redundant from their job

They don't necessarily, but how does an insurer simply make the distinction.

Flying_Tiger wrote: »

What's reallt to blame here is that the means by which insurance companies CHOOSE to not bother separating out the statistics because if they did use a more "sophisticated" and more detailed split of the stats and figures it would be the case that they would not be able to hike up the policy of a significant number of people whom they can otherwise snare into a trap of charging substantially more money from - and that is just corrupt it and "wear if if the shoe fits" for the insurance industry whom can conveniently charge more when it is inappropriate to do so.

Or maybe the way of splitting it down like this on a question so unverifiable as "How long have you been unemployed?" is so expensive to operate and/or there is so little reliable data it isn't worth them doing it.

If it was so unfair and there were huge profits being made by unemployed loadings, there would be an insurer coming in and picking up this profitable business by offering a lower/no load.

whatmichaelsays

Flying_Tiger wrote: »

and in any case if newly made redundant will have MORE cash to spend on their car not less for maintenance.

Not necessarily. In fact, it's probably a small proportion of people who walk away with a large pay-off and no other pressing financial concerns. Just take "Tremor-88's" example that you 'praised' as proving your point - I'm guessing that a 23-year-old hasn't built up enough time with a single employer to qualify for a sizeable redundancy settlement, especially if he is a graduate.

It's also a fallacy to suggest that the "newly unemployed" have a new car, under warranty and regularly serviced.

I'd even go as far to suggest that the "fewer miles" argument is flawed. After all, many city centre workers leave their cars at home. Suddenly, the car becomes more attractive when you're sat at home all day.

So you can see, all of a sudden, your "flawless" argument that "it is wrong to charge the unemployed less because they suddenly pose less risk" is, actually, full of flaws.....

mikey72

Tremour-88 wrote: »

I tested this last month by getting 2 quotes on my car which is a Ford Focus 2000 1.8, I'm 23-male with 3 years NCB

1st Quote: Me, Fully Comp, 8,000 miles per year, Social only, Unemployed - £1218
2nd Quote: Me, Fully Comp, 18,000 miles per year, Social + business use, Self-Employed - £788

So they would charge me nearly £500 more for LESS miles, car insurance makes no sence.

I had the same sort of experience.

House husband worked for me.

I never could find a definition of "unemployed"

Even if I claimed had claimed JSA, as I had no intention of working, I may well have been a househusband commiting benefit fraud, or even a house husband suddenly employed.

whatmichaelsays

Flying_Tiger wrote: »

That is NOT what I've said!!!

You keep spectacularly missing my point. It is based on IF someone is made redundant that they do not necessarily SUDDENLY become a greater risk. You keep missing the point!!!

My example was IF someone has a new-ish car then they are not SUDDENLY a greater risk and the lack of maintenance angle is flawed - the criteria which ins companies use should be more sophisticated and more detailed to filter out these things rather than just hike it up 30% in situations where there is no actual increase in risk.

But the key issue is one of finances, which does make them a greater risk. Unless insurers start asking questions about assets, redundancy settlements, partner income, other household incomings, etc (which is incredibly intrusive) then it is impossible for an insurer to asses risk on an individual basis - they can only go on group statistics.

whatmichaelsays

Flying_Tiger wrote: »

You still SPECTACULARLY keep missing my point!!!!!

My point is that IN examples where an individual IS newly made redundant and they DO have a new-ish car then it is complete pants to not take account of this fact and to in such an actual instance FAIL to take account of the actual fact(s). The fact is that it is too "convenient" for the insurance companies to rake in and hike the premium.

Likewise - you're missing the point equally as spectacularly.

The age of a car is a very small factor of risk and how recent someone has been made redundant tells the insurer absolutely nothing. Someone made redundant tomorrow could have a small pay-out and large liabilities whilst someone made redundant two years ago could have plenty of assets and be sitting on a big pay-off. The insurer has no way of knowing which is which.

Also, it is not so much the amount of cash available, it is more about the ethics of that individual and which social/ethical group that person belongs to.

And how the hell does an insurer assess the "ethics" of an individual?

A chartered professional does not SUDDENLY become a bad person and do things in unscrupulous ways all of a sudden.

Some of the biggest fraudsters in history were chartered professionals. Kweuku Adoboli, Liam Neeson, Bernie Madoff; they were all respected professionals too at some point.

Where do you draw the line on what occupations are ethical and which are not? That generalisation is no more sweeping than insurers saying "the unemployed pose a greater risk" - and it has less of a statistical basis.

In my case, I am a chartered professional and my car is under warranty. So why should I SUDDENLY be a greater risk - I'm not. The insurance companies should be using stats in a more sophisticated and detailed way to isolate real risk from no real change in risk.

Which requires asking every proposer a series of intrusive questions about their finances, their morals and their ethics, their assets and those of their family.