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  • FIRST POST
    • SouthLondonUser
    • By SouthLondonUser 10th Apr 18, 6:12 PM
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    SouthLondonUser
    Why is comprehensive insurance often cheaper than TPFT ?
    • #1
    • 10th Apr 18, 6:12 PM
    Why is comprehensive insurance often cheaper than TPFT ? 10th Apr 18 at 6:12 PM
    (I am talking about cars; the opposite seems to be true, and not only in my experience, for motorcycles - which intuitively makes a lot of sense).

    The most common answer, mentioned multiple times on this forum, too (yes, I did search the forum before posting), is that many insurers view those who apply for TPFT only as riskier drivers. However, I don’t understand the logic. In this day and age, once you have a quote, be it from an insurer or from a comparison website, it typically takes just one click to check how the price would change between TPFT and comprehensive. I understand most people are lazy etc, but it takes one click only. Are there still many people who check for one type of insurance only?

    A comprehensive policy clearly exposes the insurer to the risk of paying much more. So why is it cheaper?

    Is it just a way to charge consumers more? As in, insurers have worked out that they’d be happy charging, say, £80 for TPFT and £100 for comprehensive, but they are charging £100 for comprehensive and £120 for TPFT in the hope that people won’t notice?

    Have they worked out that in most cases they can recover the extra costs from a third party? Eg the council, if an accident was caused by poorly maintained roads?

    I understand that the black-box pricing algorithms can spit out nonsensical results at an individual level (I have had prices varying by 30% from one day to the next, with tracker more expensive than without, etc), but AFAIK this (comprehensive being cheaper) does not seem an isolated case.

    Of course it’s just a curiosity with no practical implications, but I do wonder what the rationale is. Thoughts?
Page 2
    • Mercdriver
    • By Mercdriver 12th Apr 18, 2:52 AM
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    Mercdriver
    OP - is this yet another hypothetical question or a genuine query that affects you?
    • SouthLondonUser
    • By SouthLondonUser 12th Apr 18, 7:22 AM
    • 539 Posts
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    SouthLondonUser
    Why?
    Anyway, I have answered this already.
    And I am certainly not the only one who gets quoted much lower prices for comprehensive than for TPFT.
    • nicechap
    • By nicechap 12th Apr 18, 11:23 AM
    • 1,266 Posts
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    nicechap
    You appear to be confusing sale price and profit margin, and well as risk profile.


    If you sell something for £130 and make £2 profit is that better than selling something for £50 to only 10% of people and making £30 profit on the single sale?


    If you want an academic debate pop back to your threads on discussion time, or maybe ask the insurance companies themselves and see what marketing gooblygook they come up with.
    “Never argue with an idiot. They will only bring you down to their level and beat you with experience.” - George Carlin
    • SouthLondonUser
    • By SouthLondonUser 12th Apr 18, 12:04 PM
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    SouthLondonUser
    Have you even read what my question was? It seems not!

    I have explained very clearly why I fail to understand how the two categories (those applying for comprehensive and those for TPFT) can be thought of as two separate risk profiles when all it takes is one click of the mouse. If you could shed some light, it would be most helpful. Otherwise please don't waste your time and mine.

    Profit margin? Those who get TPFT claim more? But we go back to the previous point: applying for one or the other is not an intrinsic characteristic I cannot (easily) change, like age or living in London vs Nowhereshire.

    But asking the insurance companies is a brilliant idea, thanks for the suggestion; I am sure that Janine and Bob from the call centre will know all the details about pricing and commercial strategy. Or maybe I could track down actuaries working for insurers on Linkedin and ask them - I am sure they will be delighted to share their employers' secrets with total strangers. Once again, thank you so much for the suggestion!
    • societys child
    • By societys child 12th Apr 18, 1:16 PM
    • 5,270 Posts
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    societys child
    Your question was answered by LandyAndy . .

    Insurers do it that way because their statistics tell them that it is the most profitable way to go.
    Originally posted by LandyAndy
    Pricing is based on STATISTICS, they have large departments churning the data.

    Prices are based on what the data analysis shows.

    Some won't even quote, simply because for example, you live in wrong postcode, you're the wrong age, they don't like your car etc etc . . .

    • nicechap
    • By nicechap 12th Apr 18, 1:52 PM
    • 1,266 Posts
    • 2,622 Thanks
    nicechap
    Have you even read what my question was? It seems not!

    I have explained very clearly why I fail to understand how the two categories (those applying for comprehensive and those for TPFT) can be thought of as two separate risk profiles when all it takes is one click of the mouse. If you could shed some light, it would be most helpful. Otherwise please don't waste your time and mine.

    Profit margin? Those who get TPFT claim more? But we go back to the previous point: applying for one or the other is not an intrinsic characteristic I cannot (easily) change, like age or living in London vs Nowhereshire.

    But asking the insurance companies is a brilliant idea, thanks for the suggestion; I am sure that Janine and Bob from the call centre will know all the details about pricing and commercial strategy. Or maybe I could track down actuaries working for insurers on Linkedin and ask them - I am sure they will be delighted to share their employers' secrets with total strangers. Once again, thank you so much for the suggestion!
    Originally posted by SouthLondonUser


    I can only guess at the reason that YOU do not understand given all the helpful replies you've had. YOU are conflating "clicking" with "risk" profiles. Like your other inane threads, you seem to be the cause of your own problems.
    “Never argue with an idiot. They will only bring you down to their level and beat you with experience.” - George Carlin
    • SouthLondonUser
    • By SouthLondonUser 12th Apr 18, 2:24 PM
    • 539 Posts
    • 78 Thanks
    SouthLondonUser
    Thank you, I am most grateful for a very insightful answer, which, as is your usual, thoroughly clarifies all the points I have raised.
    • Mercdriver
    • By Mercdriver 12th Apr 18, 2:31 PM
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    Mercdriver
    Thank you, I am most grateful for a very insightful answer, which, as is your usual, thoroughly clarifies all the points I have raised.
    Originally posted by SouthLondonUser
    It's what happens when you open so many general threads. You seem to be only wanting a debate not really an answer, because you seem to have decided what the answer is for you. At least be honest and say that's what you want.
    • stator
    • By stator 12th Apr 18, 2:37 PM
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    • 4,308 Thanks
    stator
    Your question was answered by LandyAndy . .



    Pricing is based on STATISTICS, they have large departments churning the data.

    Prices are based on what the data analysis shows.

    Some won't even quote, simply because for example, you live in wrong postcode, you're the wrong age, they don't like your car etc etc . . .
    Originally posted by societys child
    It's all speculation and assumption though. No-one really knows the answer.
    Changing the world, one sarcastic comment at a time.
    • nicechap
    • By nicechap 12th Apr 18, 3:05 PM
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    nicechap
    It's all speculation and assumption though. No-one really knows the answer.
    Originally posted by stator


    Well, the insurance companies know, but he doesn't want to ask them like he's been advised to.


    There seems to be a common theme, if only someone could understand what it is.


    Yett, apparently the people that own the black box do not understand it either but they expect strangers on the internet to explain it to them so they can understand Hey ho.
    Last edited by nicechap; 12-04-2018 at 3:30 PM.
    “Never argue with an idiot. They will only bring you down to their level and beat you with experience.” - George Carlin
    • SouthLondonUser
    • By SouthLondonUser 12th Apr 18, 3:21 PM
    • 539 Posts
    • 78 Thanks
    SouthLondonUser
    I don!!!8217;t want to ask the insurers!!!8230; Do you even listen to yourself?

    Who do you think I would be able to speak to if I called the insurers? The head actuary, or some clueless person in a call centre? And what could they possibly ever tell me?

    Last year my insurance quoted me about £400 to renew my bike policy; on the website of the same insurer, the price came to ca. £240. Unfair, but understandable !!!8211; the !!!8216;lazy tax!!!8217;. This year it was the other way round: the insurer sent me a renewal quote for £180, but their website quoted £600 (the day after I received the renewal quote in the post). I rang up to ask if there wasn!!!8217;t some kind of error, and the call centre lady said there wasn!!!8217;t: the website price was more than 3x higher than the renewal price. Why? Because the computer said so.

    And, by the way, if you had any knowledge of how some of these statistical algorithms work, you!!!8217;d appreciate that more often than not even the insurers !!!8220;don!!!8217;t know!!!8221;, in the sense that most of these algorithms are a non-transparent black box, with which it can be almost impossible to isolate and assess the impact of a single factor.
    • Mercdriver
    • By Mercdriver 12th Apr 18, 4:54 PM
    • 1,941 Posts
    • 1,324 Thanks
    Mercdriver
    I don!!!8217;t want to ask the insurers!!!8230; Do you even listen to yourself?

    Who do you think I would be able to speak to if I called the insurers? The head actuary, or some clueless person in a call centre? And what could they possibly ever tell me?

    Last year my insurance quoted me about £400 to renew my bike policy; on the website of the same insurer, the price came to ca. £240. Unfair, but understandable !!!8211; the !!!8216;lazy tax!!!8217;. This year it was the other way round: the insurer sent me a renewal quote for £180, but their website quoted £600 (the day after I received the renewal quote in the post). I rang up to ask if there wasn!!!8217;t some kind of error, and the call centre lady said there wasn!!!8217;t: the website price was more than 3x higher than the renewal price. Why? Because the computer said so.

    And, by the way, if you had any knowledge of how some of these statistical algorithms work, you!!!8217;d appreciate that more often than not even the insurers !!!8220;don!!!8217;t know!!!8221;, in the sense that most of these algorithms are a non-transparent black box, with which it can be almost impossible to isolate and assess the impact of a single factor.
    Originally posted by SouthLondonUser
    Are you allowing your computer to fill in your apostrophes? Put them in manually yourself and your posts will be slightly easier to read.

    You should try and ask the insurance company. Doubt they will give you chapter and verse though. Then perhaps start a debate in the Moneysaver's Arms.
    • SouthLondonUser
    • By SouthLondonUser 12th Apr 18, 4:57 PM
    • 539 Posts
    • 78 Thanks
    SouthLondonUser
    I had typed the text in Word, copied it over and Windows messed up the characters for some reason. Sorry about that.
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