Car insurance, are they the biggest fraudsters

motorguy

boatman wrote: »

"According to the Association of British Insurers (ABI), for every pound in compensation insurers pay to accident victims, another 87p is paid out to personal injury lawyers, with average legal costs adding £2,100 to the cost of each claim.
But honest drivers are paying the price. According to one leading insurer, if you took an insurance policy of £450 a year, about £220 of the premium is charged to cover the cost of whiplash claims, fraud, legal fees and tax"


So if this practice is bad for insurance companies, why have they not stopped selling accident details to claims companies? Could it be that on a percentage basis, a higher premium, means higher profits?

A higher premium is because of higher risk.

motorguy

boatman wrote: »

Has anyone ever produced the data of the increased risk of insuring someone involved in an accident that was not their fault?

There are accidents that are a close call but there are some that really are clear cut, like a legally parked car being hit, those are the ones I'm thinking of.

This may come as a surprise but I would imagine the insurance companies are acutely aware of risk v likelihood and have the historic stats at hand.

motorguy

Cornucopia wrote: »

In your rush to disprove something you don't agree with, you've not read all the relevant posts, including the tail end of mine.

In my case, ONLY my present insurer bumped up my premium - the rest of the market was unaffected, and I went elsewhere. Admiral are known for this.

Because Admiral didn't want your repeat business and weighted your insurance premium accordingly.


If they're going to have to reinsure you, then its going to be on their terms and at their price.

Car_54

Cornucopia wrote: »

In your rush to disprove something you don't agree with, you've not read all the relevant posts, including the tail end of mine.

In my case, ONLY my present insurer bumped up my premium - the rest of the market was unaffected, and I went elsewhere. Admiral are known for this.

I'm sure that someone "prone" to no-fault claims might overall be a worse risk than someone with no claims at all, however, I fail to see how one isolated no-fault claim can be indicative of much more than bad luck. It's an interesting example of the implied fair play of the Insurers counting for very little at the end of the day.

You fail to see it, and your experience seems to demonstrate that many insurers don't see it either. It pays to shop around.

Different insurers take different views on risk - isn't that a sign of a healthy competitive market?

motorguy

Car_54 wrote: »

Different insurers take different views on risk - isn't that a sign of a healthy competitive market?

Not if you're a conspiracy theorist, no.

Cornucopia

BeenThroughItAll wrote: »

Well, your post wasn't there when I started writing mine, so I'd have been hard pushed to read it.

Okay, fair enough.

The simple fact is that many insurers DO consider those who've been involved in one or more no-fault claims to be a higher risk than those who have not. It's just a fact that they do, and the reason they do is that they have years of evidence of claims made that demonstrates to their satisfaction that, statistically speaking, one or more no-fault claims in a proposer's history increases the likelihood of further claims.


Every case will be different, but I still do not understand why people find it so surprising and/or shocking that once there is a claim in their history some of the market consider that a reason to increase their premium. This isn't news, it's happened for many years.

I'm not sure that that adequately explains what happened with my policy with Admiral.

As I said, ONLY Admiral bumped my premium. I was able to change to Direct Line for slightly less than my previous year's premium with Admiral.

So, I conclude that every other major insurer did not perceive additional risk from my no-cost, no-fault claim.

On which basis, I have to question whether Admiral's £300 hike was a true pricing of additional risk, or whether it was more like a commercial decision to penalise such policyholders so fiercely as to encourage them to leave. I accept that their reasoning might be fundamentally risk-related, but I do not accept that it is fair or rational pricing of that risk.

It seems like a strange way to run a business, but the nature of insurance does seem to be to create perverse financial incentives from time to time.

Cornucopia

Car_54 wrote: »

You fail to see it, and your experience seems to demonstrate that many insurers don't see it either. It pays to shop around.

I think when it's only one insurer - one's current insurer - then that is possibly a little too convenient.

Different insurers take different views on risk - isn't that a sign of a healthy competitive market?

That's an interesting question. I think when I look on a comparison site, I expect to see a healthy range of premiums.

However, if I renew with my existing insurer, and I have made no claims, then I do not expect a near-doubling of my premium. I appreciate that they may well have re-assessed my risk, but I struggle to see the cost of that risk (which must be marginal at best) as being 100%.

As I say, it seems much more plausible that it is an attempt to filter their client-base. Which is fine, but I won't ever be a customer of theirs again, so it could well be their lose.

Cornucopia

motorguy wrote: »

Because Admiral didn't want your repeat business and weighted your insurance premium accordingly.

If they're going to have to reinsure you, then its going to be on their terms and at their price.

I think it would be more honest if they said that.

Car_54

Cornucopia wrote: »

Okay, fair enough.



I'm not sure that that adequately explains what happened with my policy with Admiral.

As I said, ONLY Admiral bumped my premium. I was able to change to Direct Line for slightly less than my previous year's premium with Admiral.

So, I conclude that every other major insurer did not perceive additional risk from my no-cost, no-fault claim.

On which basis, I have to question whether Admiral's £300 hike was a true pricing of additional risk, or whether it was more like a commercial decision to penalise such policyholders so fiercely as to encourage them to leave. I accept that their reasoning might be fundamentally risk-related, but I do not accept that it is fair or rational pricing of that risk.

It seems like a strange way to run a business, but the nature of insurance does seem to be to create perverse financial incentives from time to time.

OK, let's assume Admiral's was a commercial decision to encourage you to leave. Apart from a perception of increased risk, what other reason could they have had to reach tat commercial decision?

motorguy

Cornucopia wrote: »

I think it would be more honest if they said that.

It would, yes.