Car insurance premium increasing with longer ownership

Nuffsaid

I see a forum thread from 2018  (see below) that complains about premiums being higher for users that have recently bought cars compared to those who've owned the car for a while.  I've just found the opposite.  I used a comparison site and got good quotes but, when I went into the vendors site, I note that the purchase date is for the current month.  When I switch it to the real date, in my case Nov 2021, the premium increased by around 30-35%.  There must be some actuarial logic behind this but I'm jiggered if I understand it.


https://forums.moneysavingexpert.com/discussion/5936050/length-of-car-ownership-determines-policy-prices?utm_source=community-search&utm_medium=organic-search&utm_term=car+insurance+length+ownership

Car_54

I suspect the logic is that when you change details to get a revised quote, alarm bells ring.

DullGreyGuy

Nuffsaid said:

I see a forum thread from 2018  (see below) that complains about premiums being higher for users that have recently bought cars compared to those who've owned the car for a while.  I've just found the opposite.  I used a comparison site and got good quotes but, when I went into the vendors site, I note that the purchase date is for the current month.  When I switch it to the real date, in my case Nov 2021, the premium increased by around 30-35%.  There must be some actuarial logic behind this but I'm jiggered if I understand it.

Consumer insurance isn't rated by actuarial logic but by statistical analysis of the backbook, before Solvency II came in some consumer only insurers didnt even employ any actuaries. Unfortunately SII required everyone to have an economic view so many caved and got a couple of actuaries for capital modelling. 

Have to say it's been a while since I looked at the rating tables for Motor and dont think I have any of the old files left. I remember well the curves for things like driver age, mileage and excess but dont recall what the vehicle ownership one was. 

Having done a quick dummy quote going from the car being owned for 2 months to 2 years and 2 months and it shows a substantial reduction in price. push it to 3 years and 2 months and most the prices dont move but the cheapest one became a touch cheaper. 

If you wanted to put logic to it then you could argue that a car thats new for you you are going to be more careful with etc -v- something you've had for years but I'm not convinced that attitude would last a full 12 months nor that it would offset accidents for not being used to the vehicles length/stopping distance etc. 

Insurance risk isn't the only thing that sets the price however, insurers do run anti-fraud processes with some choosing to spike prices if its deemed that someone is trying to game the pricing (ie trying lots of different combinations to find the cheapest price). Some insurers do differentiate between things that can change and things that cannot change... eg there is often more than one way to describe a job and people may be shopping around for different cars etc but some things are fixed, you cannot change your criminal record or how long you've owned a car, and these fixed things may trigger counter fraud more rapidly. 

The other possible consideration is differential pricing. Many insurers charge different prices depending if you buy from an aggregator, online, on the phone etc. Given you got the initial price on an aggregator and then the revised price on their own website its possible the revised price was using the web pricing rather than aggregator. Would have been interesting to see the revised price had you gone back and corrected the purchase date on the aggregator site and rerun the comparison.