Car Insurance Renewal

SallyPhase2

Hello, has anyone had my experience or can advise on my situation. Motor insurance not renewed with existing multi cover provider due to inflated cost 2023/24.

 Purchased a new policy with a new provider based on cost and policy cover details in November 2023 to commence cover 1st December with a long standing 'CAR' recovery company. In late December notified me by email that due to an error of the insurers themselves  they have amended my cover and terms and conditions. The original underwriter will only cover a third of any claims, an additional offshore underwriter will cover the remaining two thirds of cover.

The covering email states my insurance cover is unaffected, however the amendments (2 A4 pages) confirms if either underwriter defaults on a claim the remaining underwriter is not responsible for the balance of any claim!

Now if I cancel they want to charge an admin fee, also will charge me for the original setup fees added to the period cost for one months cover!?

Is any of this normal or any advice would be much appreciated.

DullGreyGuy

Co-insurance is very normal when you get into big risks... the Shard in London for example used to be insured for £1.6bn, no single insurer will want to pay that amount out on a single claim even if the chances of it ever happening is exceptionally remote and so instead their policy is covered by many insurers each taking a relatively small slice of the risk. 

When it comes to smaller insurances like consumer home and car it becomes less common but still far from unheard of. There are plenty of MGAs where people will say they are insured by "Towergate" but actually it's a consortium of insurers which Towergate just acts as the managing agent for. 

FSCS protection applies at the insurer level so whilst one insurer won't step in for the other in your arrangement the FSCS would fill in for the failed insurer

SallyPhase2

Thanks DullGreyGuy,

Interesting to read your comments, just seems extreme arrangements for a car valued under £20k and the bulk of the cover off shore!

Morph4610

Sally, it's not really the value of your car which they'll be worried about. It's more about potential multi million pound claims which can occur if your car hits a pedestrian or a cyclist    

DullGreyGuy

SallyPhase2 said:

Thanks DullGreyGuy,

Interesting to read your comments, just seems extreme arrangements for a car valued under £20k and the bulk of the cover off shore!

It will be done as a consortium or MGA arrangement where every risk placed will be put in this model with the same share between the insurers... for things like the Shard it will be an individually negotiated stack of insurers (which itself may include MGAs and consortiums).

It's more common than you think but thats because a lot of people get confused between what an insurer, broker and other intermediary types are. You'll see people here recommend "Towergate" as an insurer for insurance on non-standard construction property but they are an intermediary and often operate with a consortium of insurers providing the capacity (ie 3-4 insurers sharing each risk - it changes each year)

dunstonh

Interesting to read your comments, just seems extreme arrangements for a car valued under £20k and the bulk of the cover off shore!

Lets say you parked your car in a car park and it caught fire and was responsible for 6000 cars being written off.   Or if you were in an accident that killed the main breadwinner and resulted in a payout in the tens of millions.

The cost of your car is tiny by comparison.

DullGreyGuy

dunstonh said:

Interesting to read your comments, just seems extreme arrangements for a car valued under £20k and the bulk of the cover off shore!

Lets say you parked your car in a car park and it caught fire and was responsible for 6000 cars being written off.   Or if you were in an accident that killed the main breadwinner and resulted in a payout in the tens of millions.

The cost of your car is tiny by comparison.

Most Motor policies are limited to £20m of property damage so you better hope that those cars are on average below £3,333 each else you will be picking up the rest. 

Killing the main breadwinner is unlikely to result in a payout of tens of millions, a 37yo male on £30k with a 35yo female dependent wife would be looking at circa £1.1m

Obviously all still numbers way in excess of a single persons premiums but then thats where the concept of the common pool comes in and that everyone's premiums are used to pay out claims not just your own. 

Most insurers further mitigate the risks by buying reinsurance (insurance on insurance) rather than forming consortiums, though for proportional reinsurance there is arguably not the greatest of differences at the bottom line. Excess of Loss, and other non-proportional, more commonly used in Motor is very different though in that its effectively a policy with a £1m or more excess (can be on a single claim or aggregate basis). So with a £5m XS £1m treaty the reinsurer would be reimbursing the £0.1m of the claim above or £5m if it was "tens of millions"

SallyPhase2

Well all, thank you for the wealth of information you have, Despite this as my original subject, my first interest is that I am protected for any claim that could arise. I'm required by law to have motor insurance and the first consideration is my cost now or in the future. So are you missing the point, if this insurance cover fails in the UK or the off shore 66.64% none of your facts will be supported without 100% cover!

SallyPhase2

Anyway all, thank you for your reply's, just leave it at that I think!