Car insurance, are they the biggest fraudsters

Cornucopia

Car_54 wrote: »

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?

I've already said that it may well be risk-related, but it seems unlikely that it is a fair and rational pricing of the marginal additional risk.

In fact, in my case, that no-fault accident came right in the middle of a period (still on-going) of over 10 claim-free years. So in my case, Admiral had it wrong - there was no "cluster" of claims.

I think that if that is their approach, they should at least be honest about it. Something like this...

Dear Customer,

In view of the recent no-cost, no-fault claim that you made, we are informing you that your renewal premium will be subject to 100% loading. We are giving you additional notice of this to enable you to find an alternative insurer, who we fully expect will be delighted to insure you at a fair market rate, without this loading.

Our policy is to apply this loading to previous claims for a period of 3 years, and we will be happy to welcome you back after that time period, assuming that your blemish-free driving record remains broadly intact.

You should bear in mind that following a no-fault claim, there is an additional risk of 2.5% of a similar incident occurring within 18 months, and therefore you should take extra care to avoid your vehicle being struck whilst stationary, from behind, etc.

Drive safe,

Love & kisses,

The Admiral

Quentin

We all have the right to change insurer without giving any reason.


So if your insurer decides for whatever reason they don't want you anymore, and increase the price so much you'll go elsewhere, why not just get the hint and move on?

Cornucopia

Quentin wrote: »

We all have the right to change insurer without giving any reason.


So if your insurer decides for whatever reason they don't want you anymore, and increase the price so much you'll go elsewhere, why not just get the hint and move on?

I did.

The question is whether it is a legitimate business practice.

rudekid48

Cornucopia wrote: »

I did.

The question is whether it is a legitimate business practice.

Why is it not legitimate? Insurers are commercial businesses and so are free to choose who they wish to offer a product or service to and at what cost, just as we as consumers are free to choose who we wish to offer our custom to....

Cornucopia

I imagine (don't know for sure) that the reason why they do it using an inflated premium and not by declining, is because if you are declined then you have to inform any other prospective insurer.

Therefore, I conclude it's not just a commercial issue, but has other potential implications, too.

rudekid48

Cornucopia wrote: »

I imagine (don't know for sure) that the reason why they do it using an inflated premium and not by declining, is because if you are declined then you have to inform any other prospective insurer.

Therefore, I conclude it's not just a commercial issue, but has other potential implications, too.

Nope. You do not have to disclose to another insurer if a different insurer cannot/won't offer a price. If you did, then everyone under the age of 50 would have to declare that Saga will not quote a price for their car insurance....

boatman

Cornucopia wrote: »

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.

Its your 2nd year and they probably hoped you were too busy to shop around, and would just accept it.

There will of course be statistics held by insurance companies with regard to future risk for people having being involved in an accident. But I think its just another reason to increase the quote.
If there really is an increased risk, is it a marginal change from year to year, sometimes positive, sometimes negative, or is it represented by a 20% premium increase?

Cornucopia

boatman wrote: »

Its your 2nd year and they probably hoped you were too busy to shop around, and would just accept it.

It wasn't my 2nd year.

There will of course be statistics held by insurance companies with regard to future risk for people having being involved in an accident. But I think its just another reason to increase the quote.
If there really is an increased risk, is it a marginal change from year to year, sometimes positive, sometimes negative, or is it represented by a 20% premium increase?

It was 100% increase - £300 on a previous premium of just over £300.

dacouch

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?

They refer policyholders to Accident Management Companies such as Albany as they AMC pay them a referal fee of circa £300 for a car hire and £300 for each injucy.

In addition it allows them to reduce the amount of claims staff they employ as it reduces the amount of admin for them

The problem is all Insurers do this so they factor in the amount the AMC's pay them when calculating premiums. In effect it subsdises everyone's premiums.

Insurers do not like dealing with AMC's as it forces their claims costs up. However they're in a Catch 22 situation, if one Insurer stopped refering customers to AMCs they would lose the commission they receive. Their competitors would just carry on refering cases to AMC which would give them a price advantage over the company who stopped refering. This would result in a mass exodus of customers which would hit the Insurers bottom line and ultimately mean they have to increase their remaining customers premiums causing even more to leave etc etc.

But why don't the Insurers gang together and all stop refering to AMC's I hear you say. Because they could be accused and potentially prosecuted for acting as a Cartel. In addition it may surprise you to find out, but Insurance is incredibly competitive and Insurers tend not to cooperate with each other.

So they carry on with the Status Quo and lobby the government to try and change the law.

almillar

a legally parked car being hit, those are the ones I'm thinking of.

Keep parking in the same space and if it happens once...
It's just stats. That's how they assess the risk.

Of course, you'll only have one fatal accident, so it would be unfair for them to increase your premium after that...

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?

Massive rise in claims in his post code that year?

The question is whether it is a legitimate business practice.

You get quoted for 365 days of cover. They have no obligation to you (nor you to them) after that.