What's the reason different insurers charge different prices?

Lime2014

For exactly the same thing ? - i.e. car insurance ? - or maybe any other kind of insurance?

You'll type in exactly the same answers for all of them but some will come back cheaper and some won't.

Any particular reason(s) why ?

Thanks in advance.

wearethedogs

I think its all to do with risk. Some insurers will accept a higher risk at a lower cost than others whilst some will be very risk averse and charge higher prices to people they see as risky customers.

Similarly its hard to define how risky someone is. Different insurers will use different models and therefore come up with a different price. For example insurer A may charge a higher price for all under 25s whilst insurer B may only charger a higher price for under 25s with less than 2 years experience.

InsideInsurance

Price is made up of three components:

1) Claims costs - the amount they think they need to cover the average amount of claims you are going to cost the company

2) Operating costs - unfortunately staff dont work for the love and TV adverts cost money

3) Commercial considerations - insurers may choose they want to intentionally load or reduce premiums for strategic reasons, such as wanting to target certain customer types and push away those that dont meet it.

Claims cost varies massively between providers, in part due to differing policy terms but also a certain amount of "luck" (or lack of)

Operating costs vary, some are cheap and cheerful, offshore everything, discourage people from phoning etc. Others want to give a good service in the hope people are willing to pay more for it. Likewise some have partners to pay and others dont etc.

Commercial considerations purely their own and depends on the company/ groups strategy.



At the end of the day there is also the personal opinion of the underwriters. Take this situation, an expensive 2 seater sports car, owned by a chap in his mid 30s. Calls to add his mid 30 year old wife (2 young kids) to the policy but she has only recently passed her test.

Do you think she is a mature woman, not going to be a boy racer, premiums already high and so just add a modest amount on?

Do you think she is a mature woman, isnt really going to be racing or doing intentionally daft things but ultimately isnt very experienced and the car will be expensive to repair any mistakes so you'll add a moderate amount on?

Do you think its lunacy to give the keys of a 4.5L turbo sports car to a newly qualified drive and no matter the age they're going to be tempted to floor it and so you dont want to touch it at all? Decline to quote or £5k+ additional premium?


Ask 100 people and you'd get a split across the range (probably most in the last camp)

dacouch

InsideInsurance wrote: »

Price is made up of three components:

1) Claims costs - the amount they think they need to cover the average amount of claims you are going to cost the company

2) Operating costs - unfortunately staff dont work for the love and TV adverts cost money

3) Commercial considerations - insurers may choose they want to intentionally load or reduce premiums for strategic reasons, such as wanting to target certain customer types and push away those that dont meet it.

Claims cost varies massively between providers, in part due to differing policy terms but also a certain amount of "luck" (or lack of)

Operating costs vary, some are cheap and cheerful, offshore everything, discourage people from phoning etc. Others want to give a good service in the hope people are willing to pay more for it. Likewise some have partners to pay and others dont etc.

Commercial considerations purely their own and depends on the company/ groups strategy.



At the end of the day there is also the personal opinion of the underwriters. Take this situation, an expensive 2 seater sports car, owned by a chap in his mid 30s. Calls to add his mid 30 year old wife (2 young kids) to the policy but she has only recently passed her test.

Do you think she is a mature woman, not going to be a boy racer, premiums already high and so just add a modest amount on?

Do you think she is a mature woman, isnt really going to be racing or doing intentionally daft things but ultimately isnt very experienced and the car will be expensive to repair any mistakes so you'll add a moderate amount on?

Do you think its lunacy to give the keys of a 4.5L turbo sports car to a newly qualified drive and no matter the age they're going to be tempted to floor it and so you dont want to touch it at all? Decline to quote or £5k+ additional premium?


Ask 100 people and you'd get a split across the range (probably most in the last camp)

This ^

Plus if an Insurer has on it's books lots of say young male drivers driving say fords they may want to price themselves out of this market to spread their risk or into the market if they find the statistics are good. Also if they had a lot of young males in Fords they may have received a high amount of claims from them in the past so maybe loathe to accept them so price themselves out of the market