Car insurance extortion

24

Comments

  • DullGreyGuy
    DullGreyGuy Posts: 10,313 Forumite
    First Post First Anniversary Name Dropper
    400ixl said:

    It doesn't sit on a hard drive and do nothing. If it were the case that the premiums you pay only cover your risk then your limit for paying out would be extremely low.

    The money is taken and invested for the period they can before it has to be paid out for some other purpose such as a claim by a policy holder.

    We are in a period where the supply chain costs have gone up, inflation is high, and the investment market (S&S, property etc) are all low. This means that the costs of claims have increased and they don't get as high (if any) return on the investment in the time they can invest.

    In these circumstances in a business where profit margins for the best performers is still in single digits they have to pass on the costs to the consumer.

    General Insurance is a competitive market and actually does see premiums drop when the market allows. It is also highly regulated.

    There isn't any extortion, cartels, greed or profiteering going on in General Insurance.

    The reason you have been able to get discounts each year is that at the start you were improving your driving history, allowing them to see you as a lower risk and therefore reward you for that. Then we had the pandemic where accidents were lower due less driving. Both of those scenario's have now gone away and replaced by high costs of claims and low returns on investments. Hence the price rise.
    Appreciate you explaining why these companies increase insurances ridiculously.

    No matter what way you look at it, nor what excuses or justifications are claimed, there is no-one who's going to be happy about paying double and in some cases x5 more than last time.
    And nor are the insurers happy about paying out much more in claims than they predicted when they set the premiums last year nor the increase in costs they are seeing when they buy their Reinsurance. 

    No one likes increased costs but its impacting everyone including insurers and reinsurers
  • 400ixl
    400ixl Posts: 2,786 Forumite
    First Anniversary First Post Name Dropper
    edited 30 October 2023 at 3:54PM
    Appreciate you explaining why these companies increase insurances ridiculously.

    No matter what way you look at it, nor what excuses or justifications are claimed, there is no-one who's going to be happy about paying double and in some cases x5 more than last time.
    You are right that no one is happy when their policy renewal goes up and shopping around doesn't reduce it to the same level as last year. But equally, you have had 7 years of the renewal being lower, did you feel that they should have kept the premium artificially high so they could smooth out the bad times?

    No? Then that is where you get economical change and the rough comes with the smooth.

    They aren't excuses or justifications, they are reality. For some who are seeing large increases it could be because of the vehicle they drive, such as there are parts shortages meaning long repair times and therefore high courtesy car costs, or the car could be found to have a security vulnerability and there for the theft risk is that much higher).

    My renewal went up as I was expecting it to (1. I changed car and despite it being similar I know that insurers always see higher risk in the first year of car ownership 2. I knew the economics of how the industry works and the position it is in). Thankfully I was able to shop around and minimise that increase. I also ensured that I bought a car which is not having supply chain issues and one which does not have keyless entry security vulnerabilities, therefore limiting my additional risk to the insurer.

    Make sure you have tried the non comparison site insurers such as Aviva, Direct Line, LV= etc) as they may have a better deal. Other things to try, are there other drivers with good records that could be added as named drivers if you haven't already looked at this option. Have you got the best selection of job description (sometimes a similar description can be cheaper but you must stay within the realms of reality).

    It is going to fall on deaf ears I know. Appreciate you are frustrated and even angry, but that does not change the reality. Good luck in getting your renewal down, hope that can find a way.

    And good luck with the mortgage as well in the current climate.
  • LightFlare
    LightFlare Posts: 532 Forumite
    First Post Name Dropper
    edited 30 October 2023 at 6:23PM
    Premiums are rising fast due to a number of factors:

    a) more people “buying” new and expensive cars that cost more to repair. Years of cheap finance helped facilitate this

    b) modern cars are way more complicated with sensors etc, so even minor bumps can cost 1000s

    c)an increase In personal injury claims (real and fraudulent)

    d) claims management companies getting involved and causing hugely inflated car hire costs

    e) driving standards over the last 2-3 years appear to have dramatically degraded - so probably more muppets having crashes/scrapes/bangs

    At the end of the day, insurance company it’s aren’t charities and still need to make profits etc
    Annoying as it is, prices have gone up dramatically 
  • Car_54
    Car_54 Posts: 8,209 Forumite
    First Anniversary Name Dropper First Post


    I'm currently trying to get a mortgage at the minute, too, and all I can see right now is the ugliness of greed at every turn.

    As an insurance company shareholder, I'd be grateful if you could point me towards a company that's making excessive profits.

    In fact, most haven't made an underwriting profit at all on motor insurance in recent years.
  • Aretnap
    Aretnap Posts: 5,210 Forumite
    First Anniversary Name Dropper First Post
    400ixl said:

    It doesn't sit on a hard drive and do nothing. If it were the case that the premiums you pay only cover your risk then your limit for paying out would be extremely low.

    The money is taken and invested for the period they can before it has to be paid out for some other purpose such as a claim by a policy holder.

    We are in a period where the supply chain costs have gone up, inflation is high, and the investment market (S&S, property etc) are all low. This means that the costs of claims have increased and they don't get as high (if any) return on the investment in the time they can invest.

    In these circumstances in a business where profit margins for the best performers is still in single digits they have to pass on the costs to the consumer.

    General Insurance is a competitive market and actually does see premiums drop when the market allows. It is also highly regulated.

    There isn't any extortion, cartels, greed or profiteering going on in General Insurance.

    The reason you have been able to get discounts each year is that at the start you were improving your driving history, allowing them to see you as a lower risk and therefore reward you for that. Then we had the pandemic where accidents were lower due less driving. Both of those scenario's have now gone away and replaced by high costs of claims and low returns on investments. Hence the price rise.
    Appreciate you explaining why these companies increase insurances ridiculously.

    No matter what way you look at it, nor what excuses or justifications are claimed, there is no-one who's going to be happy about paying double and in some cases x5 more than last time.
    I don't think anybody expects you to be happy about it. I'm certainly not happy about the increase in my own premium.

    However I also understand that not everything in life that I'm not happy about is due to extortion, greed or a scam. Sometimes events just conspire to make things a bit rubbish.
  • 400ixl said:

    You are right that no one is happy when their policy renewal goes up and shopping around doesn't reduce it to the same level as last year. But equally, you have had 7 years of the renewal being lower, did you feel that they should have kept the premium artificially high so they could smooth out the bad times?

    No? Then that is where you get economical change and the rough comes with the smooth.

    They aren't excuses or justifications, they are reality. For some who are seeing large increases it could be because of the vehicle they drive, such as there are parts shortages meaning long repair times and therefore high courtesy car costs, or the car could be found to have a security vulnerability and there for the theft risk is that much higher).

    My renewal went up as I was expecting it to (1. I changed car and despite it being similar I know that insurers always see higher risk in the first year of car ownership 2. I knew the economics of how the industry works and the position it is in). Thankfully I was able to shop around and minimise that increase. I also ensured that I bought a car which is not having supply chain issues and one which does not have keyless entry security vulnerabilities, therefore limiting my additional risk to the insurer.

    Make sure you have tried the non comparison site insurers such as Aviva, Direct Line, LV= etc) as they may have a better deal. Other things to try, are there other drivers with good records that could be added as named drivers if you haven't already looked at this option. Have you got the best selection of job description (sometimes a similar description can be cheaper but you must stay within the realms of reality).

    It is going to fall on deaf ears I know. Appreciate you are frustrated and even angry, but that does not change the reality. Good luck in getting your renewal down, hope that can find a way.

    And good luck with the mortgage as well in the current climate.
    Thanks, the mortgage thing has been another distasteful experience but here's hoping I can at least get it sorted so that I can start to move on from the sting it has caused.

    I checked Aviva and they want £2200!! 🤮 that is absolutely revolting.

    Can't believe I'm saying it but 800 quid might just be the best of a bad bunch.

    I have a couple of weeks yet, so I can try again and see if I can get it down a bit but I get the sense that I should not hold my breath.
  • Emmia
    Emmia Posts: 3,147 Forumite
    First Anniversary First Post Photogenic Name Dropper
    Do you really need a car? If you don't want the cost of insurance, giving up your car will reduce your insurance (and fuel, depreciation, maintenance, VED, and parking) costs to zero. 

    Obviously there will be implications associated with having no car, but that's the trade off.
  • Emmia said:
    Do you really need a car? If you don't want the cost of insurance, giving up your car will reduce your insurance (and fuel, depreciation, maintenance, VED, and parking) costs to zero. 

    Obviously there will be implications associated with having no car, but that's the trade off.
    I actually do, yeah. I would be able to live without it if my family didn't live 50 miles away (I'm the one who moved away). But then again if my new home purchase goes through, I'm a few miles outside the city and the car will be more essential then.

    I'm just really feeling the wrath of "adulting" right now from a financial perspective. I'm not saying I'm on the breadline or that my income doesn't cover things or anything like that (not that I'm wealthy, either), but it doesn't take away from the fact that a lot of these massive outgoings I'm going to be facing are really unwelcome and infuriating. Especially when your back is against the wall and you don't get a choice in matters (other than not buying a home or ditching the car, which aren't great options either). It quite simply feels like everyone wants to milk you dry at every turn (and they do).

    I will mostly definitely be using the experience of the last few months as motivation, though, to make more money. I've already begun educating myself on investing and stocks and stuff like that, and once I get over these hurdles I will start making moves in that world.
  • daveyjp
    daveyjp Posts: 12,515 Forumite
    First Post Name Dropper First Anniversary
    Premiums are rising fast due to a number of factors:

    a) more people “buying” new and expensive cars that cost more to repair. Years of cheap finance helped facilitate this

    b) modern cars are way more complicated with sensors etc, so even minor bumps can cost 1000s

    c)an increase In personal injury claims (real and fraudulent)

    d) claims management companies getting involved and causing hugely inflated car hire costs

    e) driving standards over the last 2-3 years appear to have dramatically degraded - so probably more muppets having crashes/scrapes/bangs

    At the end of the day, insurance company it’s aren’t charities and still need to make profits etc
    Annoying as it is, prices have gone up dramatically 
    f)  insurance actuaries looking at the future and the potential for future claims, especially due to natural disasters.  Over October alone a few thousand vehicles will have been written off thanks to flood water.  Another storm is due this week, next week a few hundred more vehicles will likely be written off.  
  • Emmia
    Emmia Posts: 3,147 Forumite
    First Anniversary First Post Photogenic Name Dropper
    Emmia said:
    Do you really need a car? If you don't want the cost of insurance, giving up your car will reduce your insurance (and fuel, depreciation, maintenance, VED, and parking) costs to zero. 

    Obviously there will be implications associated with having no car, but that's the trade off.
    I actually do, yeah. I would be able to live without it if my family didn't live 50 miles away (I'm the one who moved away). But then again if my new home purchase goes through, I'm a few miles outside the city and the car will be more essential then.

    I'm just really feeling the wrath of "adulting" right now from a financial perspective. I'm not saying I'm on the breadline or that my income doesn't cover things or anything like that (not that I'm wealthy, either), but it doesn't take away from the fact that a lot of these massive outgoings I'm going to be facing are really unwelcome and infuriating. Especially when your back is against the wall and you don't get a choice in matters (other than not buying a home or ditching the car, which aren't great options either). It quite simply feels like everyone wants to milk you dry at every turn (and they do).

    I will mostly definitely be using the experience of the last few months as motivation, though, to make more money. I've already begun educating myself on investing and stocks and stuff like that, and once I get over these hurdles I will start making moves in that world.
    Does the car cost prevent/ make it more difficult for you to get your own home? Could you look at something like a zip car / car sharing to give you car access when you need to see family etc. without many of the costs which are associated with having a lump of (depreciating) metal sat in front of your property...

    I'm posing these questions not to be annoying, but to challenge you to think about the choices available to you. I don't have a car, but I live in London with excellent public transport (and I walk a lot)... I also don't miss having a car, the costs etc.
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