Car insurance, are they the biggest fraudsters

boatman

There are lots of stories of 'crash for cash', claiming it is costing millions, I'm sure it is, but equally so is the way insurance companies deal with vehicle repairs after an accident.
From my experience the insurance companies, the repair companies, the car hire companies and the legal teams are are all in bed together to hike the price of every claim. After all it's in their interest as it maximises profit, and it's all paid for by us motorists.
Provided they all play along and no one steps out of line, it's a nice earner worth millions.
Anyone else have the same experience?

Car_54

Please explain how paying out more money increases an insurance company's profits. Most businesses work in the opposite way.

force_ten

the problem is not with the insurance companies as such the problem is with the claims management companies that are milking the insurance companies

the biggest cost is the credit hire car companies they are costing the insurance companies millions every month, you could buy a new car for the amount that theese companies charge for a few weeks vehicle hire, I was talking to a guy whose van was involved in an accident and he had a VW transporter from a credit hire company that was costing £400.00 a day because he needed a van with a tow bar

boatman

Who owns the claim management companies, I would suggest the insurance companies.
The insurance companies make the money in increased premiums. Many of the repair businesses are 'recommended' by the insurance companies, I don't suppose they get on that list from goodness of the insurance companies heart.
As far as car hire goes there are daily rates they are supposed to agree to, but in many cases the hire company will take the person hiring to court for the difference between what the insurance company pay and the final bill. The agreement is based on the fact that the person needing it does not have the money to hand to hire one themselves, but they hide this small fact..

force_ten

insurance companies may have a relationship with the claims management companies and if you ring your insurer to report an no fault accident they may pass you over to a claims management company and in return they may take a referral fee

the reason for this is the claims management company will do all the leg work and your insurer knows they are not picking up the bill so are not interested in how much it costs to settle the claim

insurance company approved repairers are where the insurance companies would like your car to go as they will have their costs nailed to the floor by guaranteeing a steady stream of work for the repairer but they will be paying rock bottom prices, you as the policy holder have the option to have your car repaired at any repairer and if you take it to your main dealer you may have to pay a non approved repairer excess because chances are the final bill will be higher than if the car went to their approved repairer

insurance companies will do everything in their power to minimize the cost of a claim that they are footing the bill for

a friend of mine had his car damaged by a local authority lorry that hit his car whilst parked, within 15 minutes of the accident being reported he had a call from the local authorities insurance company who were keen to self manage the claim rather than him going to his insurer and being passed to a claims management company which would ultimately cost them more than self managing the claim

insurance companies are in the business to make money and they wont make money by leaving themselves open to massively inflated claims submitted by claims management companies hence the reason if they are actually footing the bill they prefer to self manage the claim so they can control the costs

boatman

This article from 2010 explains some of it.

https://www.theguardian.com/money/2010/feb/06/beware-claims-management-companies

peter_the_piper

Car_54 wrote: »

Please explain how paying out more money increases an insurance company's profits. Most businesses work in the opposite way.

As I understand it the repair companies charges are way more than the average repairer and its no stretch of the imagination to think the extra is paid to the insurance co.
Example.
Windscreen for my old Volvo was about £400 from the insurers and £100 from a local company.

Car_54

peter_the_piper wrote: »

As I understand it the repair companies charges are way more than the average repairer and its no stretch of the imagination to think the extra is paid to the insurance co.
Example.
Windscreen for my old Volvo was about £400 from the insurers and £100 from a local company.

OK. The insurers pay £400 instead of £100. That means their profits will be £300 lower (or their £300 losses greater) than otherwise.

Yet the OP claimed their profits increase. I'm stil awaiting his explanation.

dannyrst

Car_54 wrote: »

OK. The insurers pay £400 instead of £100. That means their profits will be £300 lower (or their £300 losses greater) than otherwise.

Yet the OP claimed their profits increase. I'm stil awaiting his explanation.

Because the policy price increases...

Car_54

dannyrst wrote: »

Because the policy price increases...

So the insurer knowingly throws away money today, in the vague hope that they'll be able to increase premiums next year by enough to recover it, while at the same time not losing business because of the increased prices in a very competitive market?

I suspect you're not a financial director by trade.

Anyway, how does this theory explain the fact that premiums actually substantially fell over the period 2011-2014?

peter_the_piper

Car_54 wrote: »

OK. The insurers pay £400 instead of £100. That means their profits will be £300 lower (or their £300 losses greater) than otherwise.

Yet the OP claimed their profits increase. I'm stil awaiting his explanation.

I suspect that they may charge me £400 but I doubt the windscreen company get that. I work on the maxim, Insurers never lose out.