Basic nationalised third-party car insurance policy

Lit_Up

As third party car insurance is a legal requirement, why doesn't the government create a basic, nationalised, third party cover scheme which all drivers much register with by default - and then, if they wanted to insure their vehicle for fire, theft, breakdown, windscreen, EU use, legal cover, courtesy cars based on their personal circumstances etc then they could go private if they wished?

Mandating private citizens to purchase expensive car insurance from private corporations (sometimes more than the value of the car) just lines the pockets of these suits and gives them an open goal to charge whatever they wish. I appreciate the necessity of car insurance, but the current system is a scam and the consumer is the ultimate loser. A basic nationalised scheme of third-party cover would actually make private companies more competitive with their comprehensive policies.

OnanTheBarbarian

Because the government are as afraid of the insurers as they are of the banks - i.e. they are too intertwined into our economy and essentially the government and therefore this country has become the biatch of large financial corporations.

InsideInsurance

There is the argument that nationalised services cost more than the private sector and so would ultimately end up costing more for motorists.

You would then have the question of how to fund it, a new vehicle/road tax? More fuel duty? A policy you buy in the same way as current Motor insurance?

How do you then deal with uninsured drivers? Currently insurers fund this via the MIB which hits their bottom line. If the government is funding it for both insured and uninsured will you see a spike in uninsured drivers?

How do you deal with foreign vehicles? Do you claim from the government and they reclaim from the foreign insurer? Do you have to claim directly from the foreign insurer?

How do you deal with hit and runs? Uninsured drivers? Untraced drivers?

Do non-fault Comp people still claim off their own policy and their insurers reclaim from the government?

I can understand a desire to push both Motor and Employers Liability into a public sector space but not convinced it would benefit anyone in the long term

antrobus

Lit_Up wrote: »

As third party car insurance is a legal requirement, why doesn't the government create a basic, nationalised, third party cover scheme which all drivers much register with by default - and then, if they wanted to insure their vehicle for fire, theft, breakdown, windscreen, EU use, legal cover, courtesy cars based on their personal circumstances etc then they could go private if they wished?....

Because a lot of people would end up paying more for their motor insurance?

Counter logically lesser third-party policies often cost more than fully-comp.
http://www.moneysavingexpert.com/car-insurance/cheap-insurance-tips

InsideInsurance

antrobus wrote: »

Counter logically lesser third-party policies often cost more than fully-comp.
http://www.moneysavingexpert.com/car-insurance/cheap-insurance-tips

That is for different reasons.

If you stripped out TPO as a standalone thing it would be priced differently to as TPO/TPFT is as you lose marketing costs, negative selection, commercial considerations etc

Lit_Up

antrobus wrote: »

Because a lot of people would end up paying more for their motor insurance?

Counter logically lesser third-party policies often cost more than fully-comp.
http://www.moneysavingexpert.com/car-insurance/cheap-insurance-tips

That's because private companies don't want to give you the choice of paying less for your insurance, so they price the third party only as the same or even higher as fully comp. It's a scam, and it's funny how you're so willing to take it on face value

Lit_Up

InsideInsurance wrote: »

There is the argument that nationalised services cost more than the private sector and so would ultimately end up costing more for motorists.

You would then have the question of how to fund it, a new vehicle/road tax? More fuel duty? A policy you buy in the same way as current Motor insurance?

How do you then deal with uninsured drivers? Currently insurers fund this via the MIB which hits their bottom line. If the government is funding it for both insured and uninsured will you see a spike in uninsured drivers?

How do you deal with foreign vehicles? Do you claim from the government and they reclaim from the foreign insurer? Do you have to claim directly from the foreign insurer?

How do you deal with hit and runs? Uninsured drivers? Untraced drivers?

Do non-fault Comp people still claim off their own policy and their insurers reclaim from the government?

I can understand a desire to push both Motor and Employers Liability into a public sector space but not convinced it would benefit anyone in the long term

What "nationalised services" are you referring to?

All you have done in this post is raise a bunch of questions but haven't said why nationalising would be impractical for the situations you specify.

One thing's for sure - the insurance industry wouldn't like a switch to a national system, and that more than anything else would motivate them to talk down any change.

They're crooks, the bunch of them.

InsideInsurance

Lit_Up wrote: »

One thing's for sure - the insurance industry wouldn't like a switch to a national system, and that more than anything else would motivate them to talk down any change.

Why wouldnt they?

The overwhelming majority of people have cover above TPO insurance so would still be buying from them. TP losses are one of the areas that they have the least control over as they are governed by law and so these can now be farmed out to the State to pay.

Assuming the State is as poor and inefficient as it always is you will find insurers finding many more revenue streams from its own non-fault customers having lost the slight reservation of "what happens when they do it to us"

If the State pays out on all claims then insurers instantly lose one of their big areas of complaint on loss of NCD etc for uninsured drivers/ hit and runs etc

You would need to propose how this will be funded but assuming it didnt come directly from insurers pockets you may well find that many do support the idea

vaio

I can see advantages...

Funded via an increase in fuel duty it would be universal, largely based on miles covered & speed & sort of indirectly on ability to pay, be impossible to evade, apply to all vehicles on the road and not just UK registered ones, remove the need for the current enforcement mechanisms etc etc

Possible downsides....wouldn't reflect age and locational added risk and would only partially reflect driving style added risk. Wouldn't penalise accidents.

No doubt there are others I haven't thought of, overall it seems like a good idea, in reality, as Onan says, government is too tied up with financial services for it to go ahead.

InsideInsurance

New Zealand have something part the way there already with injury claims being dealt with by a public body which is funded in part from fuel tax and in part from motor vehicle registration fee but it doesnt cover property damage. TPO is not compulsory in NZ because of the injury cover being state provided but that can leave people with damaged cars and an at fault TP without any insurance to cover the cost of repairs

Location in theory wouldnt have the greatest of differences as this more affects theft, hit and run or other first party risks rather than fault accident rates

Age and to a lesser degree vehicle performance is the only missing bits of making it "fair". Performance arguably is in part covered as a faster car uses more fuel but in practice modern cars are more efficient than their predecessors so my old 1.1l 50bhp Saxo had the same 35mpg as I currently get with my 3.5l 335bhp car


Of cause the problem is that this will significantly increase fuel prices and you may see a jump in those using "illegal"/ blackmarket fuels without paying the appropriate taxes/ duties

vaio

yep, I'd have thought location would figure more highly than you seem to think...the difference between TP risks in inner city london when compared to rural sussex.

Age is the big one that's not covered although some would think that's not altogether a bad thing.

In theory whilst fuel prices will go up insurance will go down, I'd loose (50's, 15k pa 265 bhp and <£200 insurance), my dad (80's, 1k pa, 80 bhp and >£250insurance) would win. He's on a pension, I have a job so maybe that's no bad thing either

Can't really see any increase in the use of illegal/blackmarket fuels all fuel goes through the duty stage at some time and veg oil/smuggled fuels is likely to be insignificant in the scheme of things