A few questions on car insurance (for a couple)

BeenThroughItAll

SouthLondonUser wrote: »

May I humbly ask how you have reached this conclusion?

A combination of spending months working with the data, and something I call 'education'.

The mathematician in the book I mentioned (weapons of math destruction) has very explicit examples of how American motor insurers do NOT use sound statistical principles. Yes, I am aware UK <> USA – the point is that statistical analyses can be, and are, done in non-robust, non-sound ways.
If you torture the data long enough, nature will confess…
Just saying that a statistical analysis was conducted does not guarantee it was sound.

Yes, I am aware of that. I haven't read the book. It sounds like something Darkmatter101 would recommend though.

As a banal example, a statistical algorithm to select job candidates might easily conclude that the best candidates are white upper-class males who went to posh public (as in, expensive non-State) schools and then to Oxbridge. Guess what? The data shows that most business leaders fit this description. It’s sound statistical analysis! Or maybe not…

Yes, yes. Statistics are the wrong way of doing everything because you've read a book that says so and you don't like insurance companies. Fair enough. I really cannot be bothered trying to argue with you. You're not going to be persuaded and I have next year's budget to write by the end of the day.

I'd also be interested in understanding what on earth causes insurance quotes to vary so wildly from one day to the next. I cannot honestly think of many other sectors where prices vary so wildly. Like I said, what would you think if a mortgage lender offered you a mortgage at 1% today, at 1.5% tonight and at 1.3% tomorrow?

I don't recognise this at all. I've never once noticed a quotation changing 'wildly' from one day to the next. Here is an example taken from my email inbox:


My bike insurance, cheapest result from The Bike Insurer comparison:


April 6th quotation - 162/1277/T096/WEB - £295.58
April 12th quotation - 162/10212/T107/WEB - £295.58
April 22nd quotation - 162/15221/T112/WEB - £295.58


Hardly changing wildly, is it?

SouthLondonUser

@Bennthroughitall, if you base your inference on a single case without worrying about how representative it may or may not be, well, allow me to say I have some reservations about your understanding of the most basic concepts of statistics!
My experience is radically different. I have had quotes from the same providers changing from 5 to 15% in the same day. Note I do not know if/how representative this is – I am simply saying it can happen because it did happen to me, multiple times.

No, statistics are not the wrong way of doing everything. Statistics is a very powerful tool, but like all powerful tools, it must be used sensibly – which it not always is. With black-box approaches it is very hard, if not impossible, to tell whether that’s the case. This is not based on reading some conspiracy theory on the net, but is based on my education and on about 10 years of working with, if not big, certainly mid-sized data - which has taught me a thing or two about overfitting, spurious correlations, etc.

Two particularly ludicrous pricing examples which come to mind are:

I once considered buying a new Sym 125 scooter. The scooter had come out about 2 months ago, but I couldn’t find a single insurer which had it in their database. In the end the broker recommended by the dealer suggested a TPFT premium of £1,500, “because the scooter was not in their database and had to be treated like a specialist vehicle”, even though it was mechanically and aesthetically almost identical to the previous year’s version – which would have only cost £ 300 to insure. But no, “sound statistics” justified a 5x price hike.

Another case I remember was a guy (this was in a printed magazine, so I don’t have a link) who wanted to buy an old bike, I believe a Kawa GPZ, but was presented with ludicrously high quotes. After a formal complaint, it came out that the insurers he contacted had conveniently “forgot” to update their records: this bike was in a high-risk category when it came out, but shouldn’t be now that it is less powerful than what is now a mid-range bike. How many similar cases happen every day? Who knows, pricing is a black-box, so how can we tell? But no, I cannot say this, because it’s always sound statistics and I sound like a loony conspiracy theorist if I say otherwise…

takman

SouthLondonUser wrote: »

There is a difference between being inefficient, and explicitly and intentionally overcharging rival firms for repairs, in the full knowledge , and with the explicit intent, of driving up premiums!

Where is the £8 potential saving you quoted? Sorry, I must have missed that

It's from the first link:

"The worry is that not only do they not care how much it costs because they are not paying, they will select the company which pays them the highest kickback.

The competition watchdog concluded that “this separation of control and liability” was adding between £150m and £200m a year to policyholders’ premiums.

Alasdair Smith, who chairs the Competition Commission’s private motor insurance investigation group, said: “Our view is that many drivers of the UK’s 25 million privately registered cars are footing the bill for unnecessary costs incurred during the claims process following an accident."

So £200m spread out across 25 million cars = £8 per car.


I disagree that they do it "with the explicit intent, of driving up premiums". They do it because they get kickbacks and the other insurance company is the one who pays.

BeenThroughItAll

SouthLondonUser wrote: »

As for price, like I said, insuring more powerful and more expensive German or Japanese bikes was way cheaper.

Might be worth reading again what was written in the post quoted.


The 'price and availability of spares'. Not 'purchase price of motorcycle'.


Incidentally, the F4 I had a couple of years ago cost less to insure than my MORE EXPENSIVE German bike.

SouthLondonUser

BeenThroughItAll wrote: »

Might be worth reading again what was written in the post quoted.
The 'price and availability of spares'. Not 'purchase price of motorcycle'.

Like I already said, I was not comparing comprehensive policies, so I am not sure how the price of spares would be relevant. If I damage the bike, I wouldn't be covered. If a third party does, it's their insurer paying - not mine. Like I said, maybe if the bike gets stolen, then found but is in a bad shape? Tbh I'm not sure if this would be covered

BeenThroughItAll wrote: »

Incidentally, the F4 I had a couple of years ago cost less to insure than my MORE EXPENSIVE German bike.

Blimey, you have all had excellent experiences with your insurers. I must be so unlucky, then, I must be the only client ripped off by predatory insurers - everyone else has always been treated fairly, based on what I am reading.

SouthLondonUser

takman wrote: »

So £200m spread out across 25 million cars = £8 per car.

So it's your average calculation, I see. Well, like all averages, it can mean lots of things. Like all averages, it will mean less, possibly zero, for some and way more than £8 for others.
For example, it could even mean that, say, 5 million motorists are overcharged by £ 40. If the "average" premium of those motorists were, say, £440, you could even say: "5 million motorists overcharged by 10%".

That's the thing with averages. You can play with the numbers to convey very different messages.
Every motorist overcharged by £8 doesn't sound much.
5 million motorists overcharged by 10% starts being a bit more material.

Of course I have no way of knowing that 5 million motorists were, in fact, overcharged by 10%. I am simply saying it's one of the infinite possible interpretations.

takman wrote: »

I disagree that they do it "with the explicit intent, of driving up premiums". They do it because they get kickbacks and the other insurance company is the one who pays.

Kinda reminds me of banks and PPI. Mmm, I wonder how that ended... :rotfl:

BeenThroughItAll

SouthLondonUser wrote: »

Like I already said, I was not comparing comprehensive policies, so I am not sure how the price of spares would be relevant. If I damage the bike, I wouldn't be covered. If a third party does, it's their insurer paying - not mine. Like I said, maybe if the bike gets stolen, then found but is in a bad shape? Tbh I'm not sure if this would be covered

Fair enough, I missed the 3rd party bit, but you were still arguing the toss based on misinterpreting the other poster's point.

Blimey, you have all had excellent experiences with your insurers. I must be so unlucky, then, I must be the only client ripped off by predatory insurers - everyone else has always been treated fairly, based on what I am reading.

Or maybe, just maybe, they're not ripping you off, and you're just paranoid. Or perhaps you're not as good at looking for insurance as I am. Or perhaps there's something in your insurance history, circumstances, usage pattern, credit history, address history, vehicle history, driving record, vehicle choice or similar that has an adverse effect on your premiums. Take your pick.

SouthLondonUser

BeenThroughItAll wrote: »

Or perhaps there's something in your insurance history, circumstances, usage pattern, credit history, address history, vehicle history, driving record, vehicle choice or similar that has an adverse effect on your premiums. Take your pick.

Or maybe the pricing algorithms sometimes spit out odd, inexplicable results which make very little sense? The things with these black-box algorithms is, I cannot know. Nor can you. Nor can any one.

Of course I am not expecting to buy an MV F4 Serie Oro, keep it on the road at night in a dodgy neighbourhood, and pay only £30 for TPFT. Of course not. I would simply like a modicum of consistency.

Just yesterday I was comparing quotes for a used Triumph Tiger Sport, one of my favourite bikes. Well, a 2013 model was £ 50 cheaper to insure if kept on the road than in a locked garage, while a 2014 model was £ 40 cheaper the other way around. TPFT, insured value £ 6k in both cases.:mad:

Surely you will now tell me there is no doubt some sound statistics justifying why 2013 Triumphs are more likely to be stolen from a garage than from the open road, but for 2014 Triumphs it's the other way round??? I understand that comprehensive may be cheaper than TPFT in some cases; I understand insurers may perceive the mere fact that someone is looking at comprehensive as a sign of a prudent driver. Fine. But the difference between a 2013 and a 2014 Triumph?

takman

SouthLondonUser wrote: »

So it's your average calculation, I see. Well, like all averages, it can mean lots of things. Like all averages, it will mean less, possibly zero, for some and way more than £8 for others.
For example, it could even mean that, say, 5 million motorists are overcharged by £ 40. If the "average" premium of those motorists were, say, £440, you could even say: "5 million motorists overcharged by 10%".

That's the thing with averages. You can play with the numbers to convey very different messages.
Every motorist overcharged by £8 doesn't sound much.
5 million motorists overcharged by 10% starts being a bit more material.

Of course I have no way of knowing that 5 million motorists were, in fact, overcharged by 10%. I am simply saying it's one of the infinite possible interpretations.

Yes it is an average but I'm just going by the information provided in a link you posted.

SouthLondonUser wrote: »

Kinda reminds me of banks and PPI. Mmm, I wonder how that ended... :rotfl:

I'm not saying it's not a bad thing and they obviously shouldn't be doing it. All I'm saying is they are doing it because it looks good on their books to get the kickbacks. They are not doing it to intentionally increase insurance premiums.