Ban insurance companies petition

takman

GingerBob wrote: »

Lies, dammed lies, and statistics. A competent statistician could undoubtedly show that if you've been involved in a no fault accident you are less likely to be involved in an accident again. Of course the insurance companies wouldn't really be interested in that one. They are crooks, on a par with those who commit so called 'application fraud'. The companies may well be committing 'actuary fraud' (lying about the stats) but there's no way of checking because the stuff is not independently audited and is apparently commercially sensitive.

The insurance companies run on very tight profit margins because there is so much competition. So if being involved in an accident made someone a lower risk then a company would take advantage of this and offer a lower premium.

If you really think that insurance companies are effectively scamming people to make money then why do they make such small profits?. Surely if they are inflating premiums they would be making massive profits?.

If what your saying is true and those who had an accident are lower risk then that means those who havnt had an accident are a higher risk. So that means they would be charging the lower premium to the higher risk companies which would be a stupid business model and they wouldn't be around very long!

eddddy

takman wrote: »

The insurance companies run on very tight profit margins because there is so much competition. So if being involved in an accident made someone a lower risk then a company would take advantage of this and offer a lower premium.

If you really think that insurance companies are effectively scamming people to make money then why do they make such small profits?. Surely if they are inflating premiums they would be making massive profits?.

If what your saying is true and those who had an accident are lower risk then that means those who havnt had an accident are a higher risk. So that means they would be charging the lower premium to the higher risk companies which would be a stupid business model and they wouldn't be around very long!

It's still possible that insurance companies are choosing to do some 'cross-subsidising' - i.e. disproportionately high premiums for people with 'non-fault' and/or 'fault' accident histories, to fund cheap headline prices for people with clean histories.


I can see your argument about competition, but banking is also a competitive sector. And many banks cross-subsidise - i.e. disproportionately high charges for people with overdrafts, to fund free banking for people in credit.

paddyandstumpy

GingerBob wrote: »

The companies may well be committing 'actuary fraud' (lying about the stats) but there's no way of checking because the stuff is not independently audited and is apparently commercially sensitive.

Insurers are audited by the FCA, who regulate us.
We have to be able to justify any pricing action we take, so I'm fairly comfortable saying that there will be stats to back this up. But you're right, they won't be shared with Joe Public.

I like the idea mentioned by Takman, if you're a lower risk when you've had a non fault claim you should be paying a higher premium to begin with. Sort of like an inverse no claims bonus.
Gingerbob as this was your inference, I'm sure you'll be the first in line to pay inflated premiums until you've had a crash...?!:rotfl:

mattk_180

If people fully disclosed information to insurers in the first place, there wouldn't be any need for the CUE.

rudekid48

mattk_180 wrote: »

If people fully disclosed information to insurers in the first place, there wouldn't be any need for the CUE.

Careful, that statement could be seen as saying that consumers may be dishonest - the whole point of this thread is to agree with the OP and Gingerbob that it's Insurers that are dishonest....

martinsurrey

eddddy wrote: »

It's still possible that insurance companies are choosing to do some 'cross-subsidising' - i.e. disproportionately high premiums for people with 'non-fault' and/or 'fault' accident histories, to fund cheap headline prices for people with clean histories.


I can see your argument about competition, but banking is also a competitive sector. And many banks cross-subsidise - i.e. disproportionately high charges for people with overdrafts, to fund free banking for people in credit.

Not really the same, if the non fault group were being overcharged to support the clean history folk, a single insurance company could undercut them and ONLY provide insurance to non fault group and make higher profits, which would force the other insurers to act as their cross subsidy model would fall apart.

The banking current account sector is a combined product, they don't offer different products to different people in general (excluding premium banking and basic banking), so the whole product across the market has to be taken into account.

In some countries you do pay for current accounts, and pay fees for using your account, but you also get credit interest and overdraft rates are a bit more competitive, but in the UK the gain to public from forcing bank to follow this model wasnt enough in the 2013 OFT report
OFT Link

GingerBob_3

paddyandstumpy wrote: »

Insurers are audited by the FCA, who regulate us.
We have to be able to justify any pricing action we take, so I'm fairly comfortable saying that there will be stats to back this up. But you're right, they won't be shared with Joe Public.

I like the idea mentioned by Takman, if you're a lower risk when you've had a non fault claim you should be paying a higher premium to begin with. Sort of like an inverse no claims bonus.
Gingerbob as this was your inference, I'm sure you'll be the first in line to pay inflated premiums until you've had a crash...?!:rotfl:

So the statistical models developed by the actuaries are submitted to the FCA for validation? I would have thought not, but I stand corrected if this is the case.

paddyandstumpy

GingerBob wrote: »

So the statistical models developed by the actuaries are submitted to the FCA for validation? I would have thought not, but I stand corrected if this is the case.

No, they aren't; and I didn't say that. Re-read my post.

GingerBob_3

paddyandstumpy wrote: »

No, they aren't; and I didn't say that. Re-read my post.

I read it correctly first time. This was an additional question.

Linton

GingerBob wrote: »

So the statistical models developed by the actuaries are submitted to the FCA for validation? I would have thought not, but I stand corrected if this is the case.

An insurance company's statistical model is the basis for its business. If it isnt accurate the company either goes bust because its income is less than the cost of the accidents or prices its offerings too high and is undercut by the competitors. So there is every reason for the conpanies to get their models accurately reflecting reality. No need for external validation.