Rant: Why is Car Insurance so expensive and forms so intrusive these days?

GingerBob_3

Aretnap wrote: »

I don't doubt that's part of it - the same reason why you get a better deal on flights and train tickets if you book weeks in advance than you do if you just turn up at the airport/station.

But someone in a position to know said on another board that many insurers also use it as a rating criterion in its own right - they have different claims experiences for immediate cover than they do for people who arrange cover well in advance. Which sort of makes sense - off the top of my head I can think of at least three reasons why that might be the case...

(1) Fraud risk. If you are uninsured and you have an accident, or your car catches fire, there must be a strong temptation to arrange some cover for immediate start, then phone up the insurer fifteen minutes later and say "you'll never guess what's just happened..." Depending on the circumstances, it won't always be easy for the insurer to prove that your claim is fraudulent. I was sorely tempted to do something similar when my car wouldn't start one morning and I realised that my breakdown cover had lapsed. In the end I was too honest (or maybe scared of being caught), but not everyone is...

(2) General attitude to paperwork. If you're the sort of person who doesn't get round to sorting out your renewal until the day it's due (or worse still, the day after it's due) then there's a fair chance that you'll also be the sort of person who takes three days to tell your insurer when you've had an accident, or to return their calls when they try to ask you about the accident. And there's little insurers hate more than customers who don't inform them of accidents promptly. It means when you drive into the back of someone they miss out on the chance to keep their costs down by contacting the third party and offering to arrange his repairs/hire car themselves, and the first thing they know about the accident is when they get a massively inflated bill from a credit hire company.

(3) General personality types - if you arrange your car insurance a month before it's due you're probably a fairly forward thinking, organised person, and maybe that feeds through into other aspects of your behaviour, like your driving style.

So it pays to get your insurance sorted out in advance.

I wonder how they assess people with auto-renewal? "Here's a sucker. Let's take him for all we can get". I guess they've got some 'statistics' somewhere for that one as well.

GTE_Boy

GingerBob wrote: »

I wonder how they assess people with auto-renewal? "Here's a sucker. Let's take him for all we can get". I guess they've got some 'statistics' somewhere for that one as well.

Same as they did the year before unless something's been reported during the last year.

takman

LiveOnce wrote: »

That's a distraction.

I feel the insurance premiums are way too high.

It seems to me they are price fixing and these comparison websites are nothing but a monopoly for them.

I refer you to my comment on the previous page:

The proof that the market is so competitive is that all insurance companies either make a loss or a very small profit each year of only a few %.

If there was any kind of deception to push the price up then why arnt they making large profits?

Joe_Horner

GTE_Boy wrote: »

Same as they did the year before unless something's been reported during the last year.

That's doubtful given the huge price hikes many people (me included) regularly see on their renewal quotes, which they often drop to something more competitive if challenged. Lancaster for classics policies are the only company I haven't experienced that with!

Joe_Horner

takman wrote: »

It's pretty much irrelevant that so many of the companies are grouped together. The proof that the market is so competitive is that all insurance companies either make a loss or a very small profit each year of only a few %.

If there was any kind of deception to push the price up then why arnt they making large profits?.

I fully admit this is speculation as I've never been bothered to look too closely at their corporate structures but the cynic in me would suggest that the reason is the same reason the oil companies manage to claim they "make a loss" at the pumps - because it allows them to make greater profits in other areas of their business.

Since they are businesses, if that's not the case then they either wouldn't be doing it or they'd be going bust.

paddyandstumpy

GingerBob wrote: »

There will be some bogus statistics somewhere that suggest home owners are less of a risk than the great unwashed who can't afford a house. Also, they'll ask questions to the maximum level of intrusiveness they think they can get away with, for various purposes, including marketing. I wonder, if you lied about home ownership and then had an accident, if your policy would be voided if they found out?

I can't say I'm a fan of the unjustified bashing of insurers here - when it's justified fair play, but...

The above poster is usually one of the worse conspirators of this bashing. He's so anti establishment he must be Farage's lovechild.

JUST TO CLARIFY... the quote above is tosh. An insurer wouldn't void your car insurance because the ownership of your property was incorrectly disclosed. If it's irrelevant to the loss and unless the insurer wouldn't have otherwise accepted you they can't void your cover. And I'd be surprised if there was any insurer out there that wouldn't accept only tennants or only homeonwers. They'd instantly be cutting off a large proportion of the market!

I'm still not sure what's intrusive about the questions asked when applying for car insurance.

Fundamentally the less that's asked the cruder the price which will negatively effect all those but the worst risks (who would get that price anyway).

Imagine not having to disclose claims history, NCD, address or car details and just having a blanket price attached to your risk. How do you think the insurers would price that, other than at the 'worst case' rate?

paddyandstumpy

Joe_Horner wrote: »

I fully admit this is speculation as I've never been bothered to look too closely at their corporate structures but the cynic in me would suggest that the reason is the same reason the oil companies manage to claim they "make a loss" at the pumps - because it allows them to make greater profits in other areas of their business.

Since they are businesses, if that's not the case then they either wouldn't be doing it or they'd be going bust.

Insurers cross subsidise the loss they make in Motor with profits elsewhere.

Historically that's been the Home market, however the last few years have been fraught with weather events and a reduction in rates (due to increased competitiveness and a reduction in the market rate). Perversely; everyone shopping round for the cheapest deal (and I'm not suggesting don't do it) forces the insurer to look to break even in one/two years; which ultimately increases rate. Do you know how much the likes of MSM, Confused or Go Compare charge as an aqusition fee?! It's a lot compared to the average rate in the market.

Insurers also make money by investment returns. And who can begrudge that; given that the same percentage returns can be made by Joe Public themselves if they applied themselves.

Joe_Horner

paddyandstumpy wrote: »

Insurers also make money by investment returns. And who can begrudge that; given that the same percentage returns can be made by Joe Public themselves if they applied themselves.

Personally i don't begrudge them anything. As I say, they're a business and if they don't make money sooner or later they cease to exist.


But saying that "their losses show how competitive the market is" is a logical disconnect. It would be valid if motor policies was their only business but that's not the situation.

Whether they're a direct lead to other business such as accident management or a necessary cost of being in the insurance market (although I'm not aware of any regulations anywhere that say all insurers must offer motor policies), any losses are simply a cost of their wider business activities and say no more about the level of competition in the industry than their phone bills do.

takman

Joe_Horner wrote: »

Personally i don't begrudge them anything. As I say, they're a business and if they don't make money sooner or later they cease to exist.


But saying that "their losses show how competitive the market is" is a logical disconnect. It would be valid if motor policies was their only business but that's not the situation.

Whether they're a direct lead to other business such as accident management or a necessary cost of being in the insurance market (although I'm not aware of any regulations anywhere that say all insurers must offer motor policies), any losses are simply a cost of their wider business activities and say no more about the level of competition in the industry than their phone bills do.

Competition causes lower and lower prices which means lower profit margins on their insurance premiums. Car insurance companies do go out of business with a few recent examples. If they could have been charging higher premiums to make more profit then they would but the competition of comparison sites means more and more people are choosing insurance based on the price.

They obviously plan their business around the low margins, but if they could make a higher profit they obviously would!.

Joe_Horner

BeenThroughItAll wrote: »

Easily avoided by getting them involved too

I did suggest it but she took it as agreement to buy two chihuahuas