Tip - Admiral - definitely don't just accept their renewal quote!

InsideInsurance

nobbysn*ts wrote: »

Again, more smoke and mirrors, 'If the ratio is above 100% it means that the premium alone doesnt cover their claims and operating costs' - operating costs including the building of assets. So having to invest capital, and putting away £750t in case of a bad claim is actually a loss, so the more business, the more revenue, the most capital, the more loss. On paper. wind the company up, there's a pot with £750t waiting to be shared out. It's like saying you made a loss this year, as you only earned £50k, but saved £60 in the bank.

An insurer will always make their biggest profit the year they stop writing business, assuming their claims experience remains constant. Again, this is not an insurers choosing but simply the law of how insurers are required to account from a regulatory perspective.

If you have an issue with insurers having to hold capital to ensure they can afford to pay their claims or how insurers have to calculate their underwriting profit/loss then you need to lobby the PRA or to be honest, really the european council as they are the ones that now dictate these things and it will get worse when Solvency II comes into effect (which insurers were fighting against)

The biggest operating cost tends to be the cost of acquisition for a policy be it fees to brokers, aggregators, tv adverts etc and then followed by staffing and their associated costs. There is a cost of capital but it is broadly theoretical and so doesnt form part of the ratios beyond the staff required to manage the portfolio

nobbysn*ts

InsideInsurance wrote: »

.......The biggest operating cost tends to be the cost of acquisition for a policy be it fees to brokers, aggregators, tv adverts etc and then followed by staffing and their associated costs. There is a cost of capital but it is broadly theoretical and so doesnt form part of the ratios beyond the staff required to manage the portfolio

So we agree that the renewal should be substantially cheaper than the original policy, as these costs only occur the once?

InsideInsurance

nobbysn*ts wrote: »

So we agree that the renewal should be substantially cheaper than the original policy, as these costs only occur the once?

No, a lot of these costs are reoccurring. Brokers get their 15% every year not just year 1. Brand awareness advertising/ sponsorship etc apply to both new business and renewal.

Insurance is a highly unusual service business in that for the majority of customers they only have 1 piece of contact a year which is their annual quote and the service provided is invisible. They therefore spend more on indirect contact to reinforce in customers minds that they are a good brand, product features etc.

With a gym, your bank, your mobile provider you often see the business you are using by going to the gym or by logging into your online banking and you can judge their service - how often are you in mobile black spots? Does the gym have convenient opening hours?

For the majority of insurance customers they dont get that because they dont make claims etc hence why insurers invest more in advertising and hence why the costs are attributed across both class of customers.

Plus if you are talking about renewal price, claims costs are by far the devils share of the premium and not operational costs. Claims in theory is equal no matter if the customer is new or returning

nobbysn*ts

InsideInsurance wrote: »

No, a lot of these costs are reoccurring. Brokers get their 15% every year not just year 1. Brand awareness advertising/ sponsorship etc apply to both new business and renewal.

Insurance is a highly unusual service business in that for the majority of customers they only have 1 piece of contact a year which is their annual quote and the service provided is invisible. They therefore spend more on indirect contact to reinforce in customers minds that they are a good brand, product features etc.

With a gym, your bank, your mobile provider you often see the business you are using by going to the gym or by logging into your online banking and you can judge their service - how often are you in mobile black spots? Does the gym have convenient opening hours?

For the majority of insurance customers they dont get that because they dont make claims etc hence why insurers invest more in advertising and hence why the costs are attributed across both class of customers.

Plus if you are talking about renewal price, claims costs are by far the devils share of the premium and not operational costs. Claims in theory is equal no matter if the customer is new or returning

We're discussing Admiral, who don't use a broker. It costs as much for an advert as to whether or not you're a new or returning customer. And I think you've said what we have all been saying so far 'Plus if you are talking about renewal price, claims costs are by far the devils share of the premium and not operational costs.' So why the vastly inflated renewal price, as they still obviously make a very good margin when they sell it for a fair price?

InsideInsurance

Why do companies sell things at full price, put them in the sales and after the sales they return to selling at full price after the sales?

New business is discounted to attract customers. At renewal those discounts are taken off, sometimes at renewal 1 sometimes in steps over a couple of years.

Like ALL business, prices are just an invitation and you are always free to negotiate. Some companies easily give all customers that ask the discount price again and others arent. You will often find their willingness is linked to how easy it is to find the new customer price.

If I go into Sevenoaks Sound and Vision the day after their sales they will most likely give me the sale price - actually in my experience they give me below the sales price but then I negotiate everywhere on big ticket items. If I go into Tescos and ask them to give me the 3 cokes for £3 offer that finished yesterday I recon there is a fair chance they'll say no.

Presumably both companies were still making profits on their sales prices so why is one willing to give them to those not technically eligible and the other isnt? Simply different business practices.

Now, if we were to talk about compulsory classes of insurance and should they be in the hands of commercial organisations then that is actually an interesting discussion and possibly not a 100% clear cut answer.

This discussion of if insurers are bottom feeders etc is all rather pointless as all the muck you are trying to throw would equally stick to all commercial enterprises and the few pieces that are unique to insurers are regulatory requirements and not the choice of insurers.

notanewuser

shazzablue wrote: »

My policy with admiral is for a multicar insurance,myself o/h and daughter.due to her age(22) quotes for just herself where expensive,admiral insured us for just over £800 in our first year.at renewal i got separate quotes,mines and o/h was £230.daughters £460.phoned admiral who had sent a renewal of nearly £900 in!.they asked me the companies who had quoted and matched the price for the separate quotes, a saving of over £200 pounds.

My multicar renewal was £1600. 10 minute phonecall brought it down to less than £600.

nobbysn*ts

InsideInsurance wrote: »

..............This discussion of if insurers are bottom feeders etc is all rather pointless as all the muck you are trying to throw would equally stick to all commercial enterprises and the few pieces that are unique to insurers are regulatory requirements and not the choice of insurers.

notanewuser wrote: »

My multicar renewal was £1600. 10 minute phonecall brought it down to less than £600.

I don't need to throw muck. They're more than capable of kicking it themselves from around their own trough.

InsideInsurance

nobbysn*ts wrote: »

I don't need to throw muck. They're more than capable of kicking it themselves from around their own trough.

Where do you see in the posters comment that they are unhappy/ annoyed/ disappointed/ think badly of the insurer? The smilie face to me suggests they are pleased that they are able to negotiate

Of cause we are not privy to what negotiations actually went on, Admiral will routinely cut c25% off the price just for asking but over 60% suggests changes were made in the negotiations.

Managed to get 35% off my speakers a couple of months ago just for asking - just after the person in the front of me bought the same speakers for full price. Guess hifi shops must live in that same trough in your book.

nobbysn*ts

InsideInsurance wrote: »

Where do you see in the posters comment that they are unhappy/ annoyed/ disappointed/ think badly of the insurer? The smilie face to me suggests they are pleased that they are able to negotiate

Of cause we are not privy to what negotiations actually went on, Admiral will routinely cut c25% off the price just for asking but over 60% suggests changes were made in the negotiations.

Managed to get 35% off my speakers a couple of months ago just for asking - just after the person in the front of me bought the same speakers for full price. Guess hifi shops must live in that same trough in your book.

I agree with you, insurers are now a very similar sort of transaction to one I'd expect from Arkwright's corner shop. A city institution they certainly aren't anymore.

InsideInsurance

nobbysn*ts wrote: »

I agree with you, insurers are now a very similar sort of transaction to one I'd expect from Arkwright's corner shop. A city institution they certainly aren't anymore.

Since when were they ever any different to any other commercial organisation?

They are a regulated industry and so their practices are not the same as Arkwrights Corner Shop but their pricing has never been any more or less regulated than a corner shop