Car Insurance Premiums

DiscoRed

Hi All.
I am wondering if anyone has contacted the government about this subject and received a response, and/or seen anything on MSE before that addresses it.  I sent a letter to the government a long while back but didn't receive a response.
I basically asked what the governments view is on capping/regulating car insurance premiums.  The reasoning is that when we take advantage of our car insurance (exactly what it's there for), we are then punished for doing so, since when we come to renew our insurance, the premium has increased due to the fact we made previous claims.  Oh and by the way, it's a legal requirement that you have car insurance...   So it seems to me that car insurance is simply a box-ticking exercise these days since it is in our interests to avoid using it for the basis of saving money.  Ok, granted, it's somewhat essential if you are involved in legal proceedings due to a crash or-the-like.
Any thoughts/experiences?

Caz3121

Insurance is based on risk....if someone has previous claims then they would be deemed a higher risk that someone that has never made a claim.
If there was a cap on premiums that would mean that some people could find that no insurer would agree to cover them? (as they deem the risk too high and would not be able to charge appropriately for the risk)

davidmcn

DiscoRed said:

it seems to me that car insurance is simply a box-ticking exercise these days since it is in our interests to avoid using it for the basis of saving money.  Ok, granted, it's somewhat essential if you are involved in legal proceedings due to a crash or-the-like.
Any thoughts/experiences?

I think you've misunderstood how insurance works.

Tell us all about your proposed alternative system.

sheramber

When our car written off the same insurance company offered  the following year's renewal at a lower premium than we had  the previous  year 

DiscoRed

Thanks all for taking time to respond.  Ok so how about the case where those who have never made a claim still suffer with increasing premiums due to a national average bench-marking system?  Basically those drivers which are low risk still have to take on increasing premiums created by the riskier drivers.

chrisw

Ultimately insurance is a business and so is subject to the usual rules of supply and demand, competitIon and the need to make a profit.

If premiums didn't increase following a claim then those who didn't claim would have to subsidise those who did in order for the company to at least break even. Somebody in a Ford Fiesta wiping out a bus queue could create a bill of millions which has to be recovered somehow. 

If your premium increases following a non-fault claim, you are free to shop around to see if you can find it cheaper.

I does annoy me that they tend to charge loyal customers more than new customers, however, you are again free to shop around and those who blindly renew subsidise those of us who don't.

forgotmyname

Yes cap it but at what level £100,000 a year?   Nothing to stop someone making a claim every single day if its too cheap.

Penalised for making a claim.. your view. Others may see it as getting a discount for not making a claim.

Obiwan_kinobe

From the media , it would seem that car insurance premiums are increasing 30% on average. This may be partly  due to losses incurred from E.V. cars, which are increasingly expensive to repair, and often are written off, if the battery is damaged. - I use MSE to search and compare, it is also worth talking directly to the cheapest quote company , especially if you are renewing .

 I got both my cars re-insured this January with Churchill and only a 5% increase on last year. 

  BUT crucially only after I had called them. They have a discount available , but only if you haggle over the phone!

 If I had "auto renewed"  it would have gone up 35% !

DullGreyGuy

Obiwan_kinobe said:

From the media , it would seem that car insurance premiums are increasing 30% on average. This may be partly  due to losses incurred from E.V. cars, which are increasingly expensive to repair, and often are written off, if the battery is damaged. - I use MSE to search and compare, it is also worth talking directly to the cheapest quote company , especially if you are renewing .

 I got both my cars re-insured this January with Churchill and only a 5% increase on last year. 

  BUT crucially only after I had called them. They have a discount available , but only if you haggle over the phone!

 If I had "auto renewed"  it would have gone up 35% !

The impact of EVs is grossly over estimated by the naysayers... it may become a long term but who knows what will change in the tech.

There is 1.1m electric cars on the road -v- a total of 41.2 cars, 4.8m vans, 0.5m lorries and who knows how many cyclists, pedestrians etc the later of which are very expensive claims when you hit one. Yes they represent a big proportion of new vehicle sales but not of what's on the road today. 

 Insurers underwriting losses have been much more driven by problems with parts meaning repairs take longer meaning customers are in hire cars longer. Secondhand vehicle prices are high meaning previous write offs now get repaired adding in hire costs or the car is written off as a constructive total loss at a higher price. General inflationary pressure on salaries, utilities etc and they flow through to claims payouts too when you are compensating for loss of earnings etc. 

PS. You got your cars insured with Churchill, Churchill is the one that reinsured them, now they buy QS reinsurance on top of their traditional excess of loss. 

DullGreyGuy

davidmcn said:

Tell us all about your proposed alternative system.

Appreciate this is a very old thread resurrected by others but there are other options out there however some are a much broader change...

1) Reduce minimum insurance vastly, you are obviously left with a personal liability for anything above your policy limit. Inevitably means some victims will never receive a settlement

2) Introduce a state run TP "insurer" that is funded either by road tax, fuel tax or general taxation and so has no "profit margin"

3)  Copy NZ with separating property damage and bodily injury. The later, car accidents, work accidents, medical malpractice, slips/trips etc, covered by a governmental fund from a capped loss of earnings/future adjustments basis and totally scrap payments for pain & suffering

You could also keep the same systems we have today but change the laws on what people are liable for, and therefore their insurers. A previous study considered a couple of hypothetical scenarios (eg married male aged 40 with salary of £40,000 and 2 kids is left quadriplegic and unable to return to work) and estimated what the likely settlement would be in the US, UK, Germany, France, Spain, Poland and somewhere else. Depending on the exact scenario the differences were vast... obviously US on a totally different scale but UK came out next most expensive in all the scenarios though how much varied significantly because of the different elements the defendant would need to fund -v- the state or "its just tough" (eg if they need 24/7 carer in the UK the insurer would need to fund towards that, in other countries the state would)