'Year you bought car' - Insurance jokers at it again!?

[Deleted User]

Interesting you say one of the only car insurers - do you work in insurance/finance?

I've always been interested as to how cost effective the whole thing is - when one crash can cost tens or hundreds of thousands if not more, e.g. Lane 3 on the M1 can't be cheap! Mine cost the best part of 7k, plus another small one, yet my insurance has hardly gone up compared to last year!

EUI for example seem to insure people who (on the face of it) are 'risky' to say the least.

Nearly everyone I know who is under 25 is with EUI, and they don't seem to be cost effective for older drivers. Fairly limited sample size, but if you consider the "younger drivers are a danger" etc that's always quoted I've always wondered just how they can make money when a lot of their business appears to be younger drivers. Or are the stats actually not as shocking for younger drivers as people want us to believe!?

Also my quote, is approx £1,500 as a new customer. When I add 2 named drivers (both who own another car - so only really going to use mine in emergencies) it cuts it down to £840.

Brilliant for me - but it just doesn't appear to add up. I'd love to get a Finance job with them! Adrian Flux for example who say they use human experts etc have offered me 3 quotes - first year I got a car - EUI £900, Flux "over £1,500... we can't get anywhere near that".

2nd year - 1 non fault (but pending at the time) claim from a numpty that ran a red light. EUI £700 (got a bit back when it was settled too). Flux saying over £1,400.

This year coming - EUI £840 (the non fault on my record plus 2 fault claims last year). Flux "Well over £1,500... with 2 fault claims I'd get your credit card out and pay it as quickly as you can".

All other non-EUI online quotes come back at £2,000+ as a new customer. Also Flux made a point of saying they are only bothered about insuring me, not the named driver stuff as it's not computer generated so my price won't change.

I'm sure they do make money - it's just absolutely fascinating. (Graduate Accountant... should've done my dissertation on car insurance!!)

[Deleted User]

I guess the only 'advantage' for Admiral this year is that they know I'm virtually uninsurable (at a half reasonable price anyway) if I don't get my 1 year's no claims.

As a manager (IT) with business travelling I assume they've worked out I need my car for my job, and so will be extra careful!?!?

As I know some people in IT who have basically been given the boot when they've lost their licence for speeding etc.

I think I'd just about manage stay in my job if I didn't have a car (I had this discussion with my line manager after my last crash incase quotes were too high) but across the board for my occupation I guess they see a car as a necessity to keep a good job = won't be a clown...!?

marlot

Somerset_La_La_La wrote: »

I've always been interested as to how cost effective the whole thing is...

I think I must be subsidizing a fair few drivers. Three cars in the household (was two and a motorbike). No claims in 30 years/1 million miles.

I've managed to avoid a fair few accidents though - mostly by observing, keeping my distance etc. And I don't drive like a granny - I tend to 'make progress'.

I have made mistakes. Fortunately none of them leading to accidents. But I try to learn from them.

[Deleted User]

marlot wrote: »

I think I must be subsidizing a fair few drivers. Three cars in the household (was two and a motorbike). No claims in 30 years/1 million miles.

I've managed to avoid a fair few accidents though - mostly by observing, keeping my distance etc. And I don't drive like a granny - I tend to 'make progress'.

I have made mistakes. Fortunately none of them leading to accidents. But I try to learn from them.

Wow, that is a good record!

Completely see what you mean - for example the red light one I think I'd have noticed something was up/avoided it if I'd been more experienced and not just expected him to stop.

Other 2 are lack of experience too - actually been 9 months without a claim now, nothing to write home about but I think they've helped with my driving knowledge.

Are you with EUI??

My colleague was getting quotes - no accidents etc in over 25 years, top NCB they'd accept. Asked him to look at Admiral for me. They quoted him £400 odd!! It's people like him that I'd expect them to take to balance out people like me!?

rs65

Somerset_La_La_La wrote: »

As a manager (IT) with business travelling I assume they've worked out I need my car for my job, and so will be extra careful!?!?

You are massively overthinking this.

Anyone with business use or commuting on their policy needs their car for their job.

stator

Yes it is quite stunning the massive difference you sometimes get between Admiral Group and other insurers. This year my insurance with them was 30% lower than any other insurer. But then I got a quote for another address I was thinking of moving to and their quote doubled! Direct Line were 30% higher to begin with but with the new address they didn't charge any more.
When I bought my current car it didn't put up my insurance at all so it's not something they always care about.

dacouch

Somerset_La_La_La wrote: »

Interesting you say one of the only car insurers - do you work in insurance/finance?

I've always been interested as to how cost effective the whole thing is - when one crash can cost tens or hundreds of thousands if not more, e.g. Lane 3 on the M1 can't be cheap! Mine cost the best part of 7k, plus another small one, yet my insurance has hardly gone up compared to last year!

EUI for example seem to insure people who (on the face of it) are 'risky' to say the least.

Nearly everyone I know who is under 25 is with EUI, and they don't seem to be cost effective for older drivers.

Insurance is a very complicated but very basically Admiral have an advantage over many other Insurers due to them coming to the market relatively recently.

Legacy Insurers were stuck with old IT systems that rather than implementing new systems they bodge their old systems.

Admiral used the power of computers to reduce their cost base of the actual admin side eg issue of new business and adjustments. They're also exceptionally good at using the data their IT system holds to price their premiums so they can accurately target the type of customers they can make money on. This included being able to adjust their prices literally every hour whereas there competitors at the time were stuck adjusting their premiums maybe once a month.

Because of the way Insurance works in that a collective pool of overall premiums is used to pay out everyone's claims having real time adjustment of premiums is a huge advantage. If your pricing means you're the cheapest on young drivers driving a particular car you will naturally attract the majority of this business. However if your book of business is top heavy with these types of drivers who may be a higher risk of a claim you would normally want to adjust your prices to reduce the amount of these types of customers. You may also decide to reduce your prices to attract more customers such as Marlot who are a safer risk but have a much lower premium to offset the risk of the large amount of higher risk drivers you took on.

Obviously if your premiums are very low for a particular group, it can also mean you can increase this groups premiums and still attract them as you're still competitive but are taking them on at a more profitable premium.

They also use their IT do do things such as automatically comparing their recently taken on customers with previous policies held in their whole group eg Diamond etc and even previous untaken up quotes they've provided. If this throws up an undisclosed conviction, accident or modification they send out a bill for the extra premium due plus an administration fee

Admiral are a budget brand, they've traditionally offered a policy with a lot of restrictions in cover which has the knock on effect they pay out less in claims and thus make more money. They've also tended to lead the rest of that end of the market by being the first to introduce restrictions in cover eg they were one of the first to exclude cover for their clients own damage if they were convicted of drink driving.

If you think of Ryan Air as an example of pricing and using IT etc it's a fairly good comparison to Admiral.

Most other Insurers payout more in claims than they collect in premiums for motor insurance. They rely on making a profit investing the large amounts of money they collect in shares, property etc. Obviously in periods such as now where the interest rates are so low these returns are much lower. This is why when a recession hits insurance premiums tend to rise as their investments are hit. The last recession also coincided with the regulators requiring Insurers to carry much lower risk with their investments (Due to the banking crisis) so they had to reduce their exposure to riskier and more profitable investments and hold more liquid cash and invest in lower risk investments such as gilts.

Even after investment returns most Insurers still make a loss on motor Insurance. They stick with the business due to a traditional hope they will eventually make money and also due to motor insurance tends to give them a foot into business where the returns have always been higher eg Home Insurance etc.

Admiral consistently make a profit on after paying claims against premiums collected and also on their investments.

If you look at other Insurers, you would see they tend to make a loss of circa 15% on claims paid against premiums collected and then close this to an overall loss of nearer 5% overall.

The market goes in periods of Hard and Soft which is the cycle between Insurers losing and making money which is generally caused by major catastrophes eg 9/11 and / or recessions and / or changes in law (That affect the amount they pay in claims). It's often a combination of all three.

If you look at Insurers results, most are doing OK at the moment, if you look back five years or so you will see they were losing large amounts. The cycle has been going for hundreds of years and will no doubt continue.

Basically Admiral make money due to their Business model, in a similar way if you compare Ryan Air to Aer Lingus, one makes money due to a stripped out modern business, whereas the other loses money due to an outdated business model.

You may find these report from Admiral about young drivers claims. Note this is only from Admiral's own data and does not necessarily apply to other Insurers. The data is six years old so the amounts will now be higher

http://www.admiral.com/press-releases/106/shocking-record-of-young-drivers-revealed/