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MSE News: Jobless get walloped when buying insurance

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  • mikey72
    mikey72 Forumite Posts: 14,680 Forumite
    dacouch wrote: »
    A homemaker is not drawing JOB SEEKERS Allowance

    I did. No intention of working for the 6 months I got contribution based JSA. The job centre played the game, I was strictly a house husband.
  • vaio
    vaio Forumite Posts: 12,287
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    JuicyJesus wrote: »
    .......I am not saying all unemployed people will commit fraud; just that statistically they are more likely, as a group, to do so........

    Don't suppose you have a link to these statistics?

    I ask because the ABI looked into this (http://www.abi.org.uk/Publications/55680.pdf) and among the highlights was........
    ....

    The ABI results show that a potential fraudster is more likely to be:
    • Be male.
    • Be in full-time employment.
    • Be between 18 and 34 years old.
    • Have a gross household income over £30,000.
    • Have non-pension savings and investments worth less than £5,000.
    • Have non-mortgage debt of more than £5,000.
    • Be living in the North-East or London......
    they went on to look at the relationship between fraud & unemployment and came up with the graphs at the bottom of page 15 top of 16 which don't show any relationship between fraud/theft & unemployment, if anything the show the opposite is true.

    based on this it seems, if anything, that unemployed people are less likely as a group to commit fraud
  • mikey72
    mikey72 Forumite Posts: 14,680 Forumite
    vaio wrote: »
    Don't suppose you have a link to these statistics?

    I ask because the ABI looked into this (http://www.abi.org.uk/Publications/55680.pdf) and among the highlights was........

    they went on to look at the relationship between fraud & unemployment and came up with the graphs at the bottom of page 15 top of 16 which don't show any relationship between fraud/theft & unemployment, if anything the show the opposite is true.

    based on this it seems, if anything, that unemployed people are less likely as a group to commit fraud

    This is why I have a deep mistrust of insurance apologists. They are always quick to justify the insurer, witout any evidence, even when it's relatively easy to find reliable information proving the opposite.
  • vaio
    vaio Forumite Posts: 12,287
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    not that easy, I had to type "unemployed motor insurance fraud statistics" into google and then open and read the first result
  • wouldbeqaulitymoneysaver
    wouldbeqaulitymoneysaver Forumite Posts: 6,150 Forumite
    Key key key. They get walloped with insurance but also many myriads of other ways too. Excellent thread title @MSEAdmin/Editorial.
    #TY[/B] Would be Qaulity MSE Challenge Queen.
    Reading whatever books I want to the rescue!:money::beer[/B
    WannabeBarrister, WannabeWife, Wannabe Campaign Girl Wannabe MSE Girl #wannnabeALLmyFamilygirl
    #notbackyetIamfightingfortherighttobeMSEandFREE
  • Stephen_Leak
    Stephen_Leak Posts: 8,762
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    edited 26 May 2012 at 4:16AM
    I'm 57. I got an occupational pension from a previous employer in June 2010. I lost my job with my last employer in September 2011.

    Because of my pension & savings, I'm not due JSA. Fair enough. Thanks in no small part to this site, I'm surviving.

    So, am I retired or unemployed?

    Retired gets lower car insurance quotes than unemployed.

    Volunteer also increases your car insurance premium, even if it doesn't involve the use of your car.
    The acquisition of wealth is no longer the driving force in my life. :)
  • 50Twuncle
    50Twuncle Forumite Posts: 10,763
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    On what grounds do they charge more ?
    Surely if someone is unemployed - they are more likely to be at home more of the time - hence less chance of burglery ??
    Dooooh !!
    And what about someone who has been "medically retired" - in their late 40's - claiming a works ill health pension / no benefits - are they "pensioners" ?
  • dunstonh
    dunstonh Forumite Posts: 114,262
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    I'm 57. I got an occupational pension from a previous employer in June 2010. I lost my job with my last employer in September 2011.

    Because of my pension & savings, I'm not due JSA. Fair enough. Thanks in no small part to this site, I'm surviving.

    So, am I retired or unemployed?

    Are you actively seeking work or have you called it a day?
    Surely if someone is unemployed - they are more likely to be at home more of the time - hence less chance of burglery ??

    Its mainly fraud. The unemployed, as a collective average, commit more fraud than the employed.
    And what about someone who has been "medically retired" - in their late 40's - claiming a works ill health pension / no benefits - are they "pensioners" ?

    Age does not matter. It is intention. If you are 30 or 40 and retired then you are retired.

    I just thought of another reason why the quotes may have gone up like they did. Many of the quote comparison sites and providers have anti-fraud checking. So, if all details were input one way and then entered the same but with unemployed then this would flag up on the anti-fraud checks and increase the premiums or even refusal of cover.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • raskazz
    raskazz Forumite Posts: 2,877 Forumite
    edited 26 May 2012 at 9:31AM
    mikey72 wrote: »
    This is why I have a deep mistrust of insurance apologists. They are always quick to justify the insurer, witout any evidence, even when it's relatively easy to find reliable information proving the opposite.

    The thing is though, the "most likely" data above is not inconsistent with the statement "unemployed people are more likely to commit insurance fraud than employed people".

    To illustrate:

    Take a population of 1000 people. 20% are males aged 18-34. 8% are unemployed. The males aged 18-34 are 5% likely to commit insurance fraud and the unemployed are 8% likely to commit insurance fraud. For simplicity there is no overlap between the two - i.e. all males aged 18-34 are in employment; and assume that no fraud is prevented.

    What is the net result:

    Total number of frauds for males aged 18-34: 1000 x 0.2 x 0.05 = 10 frauds.

    Total number of frauds for the unemployed: 1000 x 0.08 x 0.08 = 6.4 frauds.

    Hence in the population fraudsters are most likely to be males aged 18-34 in employment; however, the unemployed are more likely as a group to commit fraud. Hence why in this example it would be entirely justified for insurers to raise premiums for the unemployed on grounds of increased fraud risk.

    The secondary point is that insurance risk depends on not only probability of loss but also severity of loss. Using the example above, if the average fraudulent claim is of magnitude £1000 for males aged 18-34 and is of magnitude £2000 for unemployed you have a multiplier effect on the risk, as below:

    Average expected fraudulent claim value for a male aged 18-34: 0.05 x £1000 = £50

    Average expected fraudulent claim value for an unemployed person: 0.08 x £2000 = £160.

    Lastly, you'd have to add in the "genuine claim" probability and severity of loss, and more advanced things like propensity to renew/default on payments, in order to come to the final decision of how to define acceptance criteria/pricing for the unemployed.

    I'd just point also in terms of the graphics used in the link - specifically "fraud and forgery offences v unemployment rate", it's a very crude assessment of the relationship. Why? Well as a simple thought experiment you'd naturally expect forgery offences to reduce over time as it is much more diffult to forge, for example, currency than it was in the 1970s, so people are less likely to attempt it. So you have to eliminate the effects of all other explanatory variables - technological, social, and legal change etc - for the graph to be used as a tool for linking fraud and forgery with unemployment. You'd also probably have account for a lag between the two as in my experience fraud is more likely to be committed by those in long-term unemployment.

    This is why I have a deep mistrust of those who have an ingrained loathing of insurers. They are always quick to criticise the insurer, without actually taking the time to apply some critical thinking to the available evidence :). You're clearly, er, "not uneducated" so I'm not sure why you only ever take notice of the superficial elements of any "evidence" you find - for example the news story you once linked to in order to claim that the motor insurance market was profitable, which was actually a news story concerning all general insurance results.

    In my field of insurance - motor - all the data that I have seen points towards the unemployed - especially long-term unemployed in certain areas of the country and with poor credit worthiness - being some of the worst risks out there. As an underwriter, if our data implied that the market rates for the unemployed were well above our technical insurance rates, I would pitch our commercial rate somewhere in between the two and make underwriting profit. Unfortunately my employer's data does not support that decision.
  • TraderDJ
    TraderDJ Forumite Posts: 258 Forumite
    dunstonh wrote: »
    I just thought of another reason why the quotes may have gone up like they did. Many of the quote comparison sites and providers have anti-fraud checking. So, if all details were input one way and then entered the same but with unemployed then this would flag up on the anti-fraud checks and increase the premiums or even refusal of cover.
    The fraud system should only apply to fully submitted applications though? I.e. ones that have been paid for. I know when I've clicked through to 'buy now' it warns my details will be submitted to fraud databases and gives me a chance to back out, that should mean it hasn't happened yet?

    I've messed a round a lot with my quotes (but not brought one). Including going from student to unemployed to company director to volunteer to internet trader!

    I'm still able to return to student (new quote) for the same price as the first quote was.

    I've also gone back through and entered my age but a year older and with (and without) 1 years NCD etc, to try and figure out what the renewal price would be if I do/don't claim (to calculate whether it's worth paying £40~ for an accelerated policy or not).

    I guess it flags up with the company they'd had a lot of quotes from 1 address, even if the individual has had varying info. I don't agree with giving my named driver details until I apply, so I use Mrs A AAAAA etc with DOBs of 1/1/19xx - that way I can get a price which has been scored the same, but not be passing their info round.

    When I actually apply I'd use actual details (and as the 'fake' data isn't much different, only the 1 company will need it). I guess they may ask for proof of what I state when I finally apply, if they can see I've changed my status a lot etc in quotes, but as long as it's truthful that's no problem.
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