MSE News: 'Dysfunctional' motor insurance market pushes up premiums

mikey72

Spiderham wrote: »

.............Regarding the local garages, having an approved repairer network will streamline costs with economies of scale so while the top line cost of the actual repair may be similar or even lower at the local garage the invoicing and administration will work out a lot cheaper. This is precisely why insurers build up approved repairer networks in order to bring cossts down...............

And there was me thinking it was so they could negotiate a better credit against invoice at the month or year end, after they had submitted the original invoices to the third party, wirth the possibly even higher top line as you say it may have.

Spiderham

mikey72 wrote: »

Do you think the point of the enquiry will be just to publish a few figures on the underhanded dealing?. You seem to be more than happy just to let it carry on, it won't matter so long as we're the cheapest, and the customer will belive anything we say? The whole point should be to draft legislation that reigns in the industry, and stops the pointless waste to us and the deception. You're happy in the game, the rest of us want to change it, and deal a new hand all round.

No, I've pointed out general consumer behaviour is to go with the cheapest. This isn't necessarily what I believe is the best attitude. What sort of legislation do we draft? How do we rein in the industry? Remember a lot of the commercially sensitive info that people so want to see in order to see why premiums differ from scenario to scenario can't be released owing to competition legislation precisely to prevent insurers forming a cartel either intenionally or inadvertently.

What do you think the reference to the competion commission will end up doing?

As insurance is a distress purchase (most people don't really want to buy it and only do so because they have to by law), some people are always going to feel ripped off by it. What I think would help is a bit of improved PR for the industry to show the value. Unfortunately I can't see that happening.

StanVanDamn

Why doesnt the non fault insurer contact the fault insurer and give them the opportuinity to deal with the claim? Therefore reduce the costs of the fault insurer.

And vise versa.

Therefore both parties benefit - non fault insurer has reduced costs as does not have to handle claim and recover monies back - and fault insurer has reduced repair/hire costs. Fault insurer will also have chance to deal with possible injury claims direct therefore reducing the huge solictor fees on top.

Such a simple solution and cuts out all the third parties ripping of the customers involved.

mikey72

Spiderham wrote: »

No, I've pointed out general consumer behaviour is to go with the cheapest. This isn't necessarily what I believe is the best attitude. What sort of legislation do we draft? How do we rein in the industry? Remember a lot of the commercially sensitive info that people so want to see in order to see why premiums differ from scenario to scenario can't be released owing to competition legislation precisely to prevent insurers forming a cartel either intenionally or inadvertently.

What do you think the reference to the competion commission will end up doing?

As insurance is a distress purchase (most people don't really want to buy it and only do so because they have to by law), some people are always going to feel ripped off by it. What I think would help is a bit of improved PR for the industry to show the value. Unfortunately I can't see that happening.

I think I said that in another thread today. First line of insurers defence, "the other customers really wants this", I've pointed out we don't want this system. Others appear to agree. A bit more spin won't do anything.

Arg

Spiderham wrote: »

Let the hand wringing begin eh? Anyone fancy a spread bet or over/under on the number of times scam and rip-off are used without foundation on this thread?

I wonder if it's lower or higher than the excuses used by insurance apologists?

rs65

StanVanDamn wrote: »

Why doesnt the non fault insurer contact the fault insurer and give them the opportuinity to deal with the claim? Therefore reduce the costs of the fault insurer.

That's fine in principle but only works where liability is clear cut. Some 'at fault' insurers are proactive in dealing with the other parties repairs just now anyway.

LesterForbes

The report today comes as NO surprise to anybody.... infact like most people, I'm getting rather suspicious about the industry and it's main players and those in Government....

Instead of simply slagging off the insurance companies, the referral !!!!!s and everybody else involved in the most blatant, corrupt mass-scandal in this country today, I've come up with a couple of very simple ideas that the government could (and should) very easily impliment.

1. Cap insurance collections upto £5000 per person per car over a maximum of 5 years to be used as an excess, any costs above this figure to be covered by the insurers.
2. A Mandatory Black box for all new drivers with a new policy. extra discounts for currrent drivers agreeing to using a black box and realistic discounts for the black box.
3. Black box's can be registered with an insurance policy to help prevent uninsured driving via GPS. (Black box info: ww.comparethebox.com/black-box-insurance )
4. No extra costs for using or repairing and replacing the black box. Black box must never be used to restrict personal liberty or freedoms (no extra charges for driving to/from any locations, no extra charges for driving at time of day/night) but should monitor indicators vs turns, speed, cornering speeds, this will help give insurers an accurate view of a persons driving style rather than have a policy based on ancient sexist, racist, ageist snobbery.
5. NO WHIPLASH CLAIMS..... ever, Whiplash is not a serious injury. doctors must prove a regonised injury for a personal injury claim to be succesful.
6. NO REFERRAL FEE's ever.
7. People can shop around for car repair quotes to make sure all parties are getting a good deal and not being ripped off.
8. An end to people and employees being allowed on a companies insurance. This should help make people more consious of their driving as each person would be personally responsible for thier own driving and hopefully lower irresponsible 'white van man' drivers.

Car insurance prices must never driven by the cost of a 'market'
Prices, primiums quotes and renewals must only be based on a persons driving style, habits and consistant safety record. :T

wozearly

Reaper wrote: »

You think the insurers are blameless? There ought to have been an industry wide agreement not to pay referral fees years ago. Instead they will wait until they are compelled to do it.

As for solutions they are not really that hard. No referrals allowed with or without payment. The driver chooses which garage does the work, submitting the quote to the insurer first who can only make them switch to their "approved" choice if it works out cheaper. I would also like to make whiplash un-claimable without medical proof. A bit tough of any with a genuine injury but they are few and far between.

That's just off the top of my head. I'm sure I could refine them with more thought.

You seem to think nobody is to blame and we should carry on as we are. I don't share that view.

I'm not sure its that simple, to be honest.

At least one insurer (I've not been following the issue so closely recently, so others may have joined them) has asked for an industry-wide ban and has stopped paying referral fees for injuries unilaterally - albeit with a warning that if there isn't a change in the industry, they'll probably have to go back to getting referral income because its a substantial financial hit that they're taking.

Even though most insurers agree that its a problem, anyone continuing to get referral fees when the others don't is able to gain additional income and would be able, in principle, to pass some of that on to customers in the form of lower prices. So without a legislative ban, the temptation will always be there - they're waiting for a good reason.

In terms of referrals / approved repairers, would that be cheaper for the insurer or cheaper for the customer? As has been stated, its not just the price that the customer sees, but also the administration costs and potential concerns around charging for unnecessary repairs, etc.

In addition to the economies of scale point mentioned earlier, a classic way for insurers to gain discounts on price from approved repairers is by guaranteeing access to a significant volume of customers to garages they bring on board - its intentionally exclusive, in order to offer a clear incentive to garages to sign-up to offering a lower price, as the individual garage profits from the deal overall. If customers can go anywhere, that volume guarantee evaporates along with the key rationale for garages to sign up in the first place.

Finally, on the whiplash point, there is no recognised medical method of proving that someone is suffering from a whiplash injury - although there is no doubt that the injury does exist. The problem with this inability to prove or disprove the existence of whiplash is that it makes it a goldmine for claims fraud and/or opportunistic claims for minor injuries, precisely because it comes down to the word of the claimant and his/her doctor against the insurer.

It also makes it impossible to say with any confidence what proportion of whiplash claims are genuine and fair, what proportion are genuine but exaggerated, and what proportion are completely bogus. Stating, as you did, that real claims are "few and far between" can only be a statement of opinion, not fact.

Again, the insurers are somewhat shafted. As individual companies, they stand to benefit from getting a slice of the various dysfunctional elements of the market via referral fees in their various forms - and bear in mind that this means they can, in principle, pass on part of those savings to customers in the form of lower premiums. But if all of the insurers do it, everyone's costs rise and premiums have to go up - but the first to walk away would suffer commercially unless the others swiftly followed suit.

The insurers are not blameless and I think everyone would agree that the current situation is a mess, and just carrying on is not the right answer.However, if the insurers can't mutually agree some form of solution (bear in mind that they have to tread very carefully because any kind of collusive behaviour is illegal under competition law), then legislation is the most sensible approach.

dacouch

LesterForbes wrote: »

The report today comes as NO surprise to anybody.... infact like most people, I'm getting rather suspicious about the industry and it's main players and those in Government....

Instead of simply slagging off the insurance companies, the referral !!!!!s and everybody else involved in the most blatant, corrupt mass-scandal in this country today, I've come up with a couple of very simple ideas that the government could (and should) very easily impliment.

1. Cap insurance collections upto £5000 per person per car over a maximum of 5 years to be used as an excess, any costs above this figure to be covered by the insurers. Not sure what this means
   
2. A Mandatory Black box for all new drivers with a new policy. extra discounts for currrent drivers agreeing to using a black box and realistic discounts for the black box.
   
   How will this be economical for lower risk / lower premium drivers when to supply and fit the box must cost circa £200
   
3. Black box's can be registered with an insurance policy to help prevent uninsured driving via GPS. (Black box info: ww.comparethebox.com/black-box-insurance )
4. No extra costs for using or repairing and replacing the black box. Black box must never be used to restrict personal liberty or freedoms (no extra charges for driving to/from any locations, no extra charges for driving at time of day/night) but should monitor indicators vs turns, speed, cornering speeds, this will help give insurers an accurate view of a persons driving style rather than have a policy based on ancient sexist, racist, ageist snobbery.
   
   The idea of the black boxes for young driers is they have their very expensive claims generally at night time, hence why black box insurers charge high rates for any night time driving
   
5. NO WHIPLASH CLAIMS..... ever, Whiplash is not a serious injury. doctors must prove a regonised injury for a personal injury claim to be succesful
   
   A good idea however some whiplash claims can be life changing
   
6. NO REFERRAL FEE's ever.
   
   Good idea
   
7. People can shop around for car repair quotes to make sure all parties are getting a good deal and not being ripped off.
   
   Might add costs to the claim as approved repairers act as an engineer to validate and quantify the claim. The Insurers might revert to the old method of sending out an engineer at a cost of circa £120 who often only visited areas once a week
   
8. An end to people and employees being allowed on a companies insurance. This should help make people more consious of their driving as each person would be personally responsible for thier own driving and hopefully lower irresponsible 'white van man' drivers.
   
   Have you thought how this would work in reality
   
   Car insurance prices must never driven by the cost of a 'market'
   Prices, primiums quotes and renewals must only be based on a persons driving style, habits and consistant safety record. :T

The "market" will normally have the effect of driving premiums down as insurance is a competitive area

Pincher

Dysfunctional? It's a feeding frenzy.

Years agos, I reported a wing mirror clipping, because I thought you should. Before I knew it, a lawyer was appointed by my insurers. They rang me up, asked for photos of the scene, and quite detailed stuff. Then I got a letter from the lawyers to start legal proceedings against the other driver. God knows what they were going to claim, since there was no damage. Put a stop to it by refusing to sign anything.