insurance - the megahappyawesomefunbussuperslide ride

[TamSV]

Originally Posted by Wideboy

forgetting about passing the costs onto the customer and getting credit, the fact that they can take such heavy losses a still operate as a business goes to show how much they are ripping people off in the first place? going by that reasoning, that means that they've been ripping joe public off for some time to build up that sort of collateral?

Aviva's figures above are for their whole book.

On a private motor book, most insurers are shooting for a long-term profit margin of about 3% - hardly extravagant. It's such a thin margin for a risk based business that they regularly miss the target and you get an ebb and flow of premiums where they make excess profit for a period (which goes into reserves) and then lose money for a while (and draw on the previous reserves).

Most are making money on motor now but just a couple of years ago the market was basically selling £10 notes for £8.50. If that's a rip-off it's not a very good one.

Premiums ARE a lot higher than they need to be but insurer greed is the wrong target. It's never been easier to shop around and compare prices. As a result, motor insurance is about as close as you can get to a perfect market in terms of competition. It's the underlying costs that are the problem.

Since Legal Aid for personal injury was removed a decade ago it's been replaced by a ludicrously expensive system - it would be hard to come up with something that offers less value for money. Add to that the cost of credit repairs, "like for like" courtesy cars (I've seen several 5 figure bills for vehicle hire), Insurers, Brokers, NHS, Ambulance Service, DWP and Police all getting in about it.

If your average motorist saw the costs attached to their run-of-the-mill bump I think they'd struggle to keep their feckin hats on. I've seen £5k damage claims turn into £25k easy. That's a fairly new phenomenon.

Insurance companies are complicit in all this right enough. While they publicly make a fuss about all the ambulance chasers they are also quietly selling their customers details to those very same firms and driving up the other insurers costs. The last decade has seen the absurd situation that all motor insurers are now involved in attempting to maintain a competitive position by driving up the claim costs of their competitors with legal bills and inflated repair costs. It's ****ed and needs sorting. It's not a situation created by insurance companies though - it's poorly thought out law that's the basic problem.

The recent OFT investigation into motor insurance pretty much agreed with the above and it's now been referred to the Competition Commission who will take another 2 years to come up with what the dogs in the street already know. Hopefully something permanent will get done about it eventually.

There's much else amiss with the private motor market though. Legal Expenses and Helmets/Leathers cover - that's where you're actually getting properly ripped off.

[Bibio]

yes Neeja if you had read my full post instead of just picking something out that looks like insurance company bashing you would have noticed that they are no longer making money from investments and interest. so who is to blame, well the banks are as they have caused all this due to being stupid but as per usual the public have to foot the bill instead of the banks doing the sensible thing and upping interest rates to a normal level instead of keeping them artificially low to encourage spending instead of saving. well i suppose that's what we get for having a consumer based society.

personally i'm feckin pizzed off having to pay for other peoples insurance. in the past 25 years i have had 1 claim and that was 2 years ago for the theft of my bike so why should my insurance go up and up and up when i'm a careful driver who has no points on his licence and 15 years no claims on my car insurance and that is only due to not having a car for a few years. they should be encouroging people not to claim but when young people are paying premiums of £4k for insurance then they are going to claim for the slightest bit of damage. you then get the opposite of those who just cant afford the premiums so drive uninsured to which the clever gov decided that we all need to put into the UDF which further pushed the premiums up and i'll bet my hairy azzhole getting pounded by a big 12" that those funds aren't ring fenced and the gov have spent a vast majority of it already.

so to stop all the stupidity of it all we should all stop buying insurance then watch how careful peoples driving gets.

The banks are keeping interest rates low because the Bank of England is setting rates low.

Originally Posted by Bibio

so to stop all the stupidity of it all we should all stop buying insurance then watch how careful peoples driving gets.

I mostly agree with the post bibio, except this bit. You honestly think the average knuckle dragger in a white van (or any colour for that matter) would change his driving just because there is no insurance. It would probably make it worse, once they had bumped into you, then probably then run you over to get away and not have to pay £20 for a new clutch lever. (I am aware there is a significant minority of road users who would do this already)

Originally Posted by Bibio

yes Neeja if you had read my full post instead of just picking something out that looks like insurance company bashing

I did read it. However, if stating:

Originally Posted by Bibio

now that the brown stuff has been thrown at the fan they now need joe public to front their lifestyle that they are accustomed to

only looks like insurance company bashing, and is in no way actually insurance company bashing as it appears, then I apologise profusely for any offense that you may have taken.

Wasn't he talking about the banks at that point?

He was. However, the implication seemed to be that insurance companies can't make money through investments, and therefore must wheedle money from joe public in order to "front their lifestyles", implying that these mysterious people are living large and refuse to give up their lifestyles, and instead leech off the general population's hard-earned rather than doing so.

[Bibio]

but they are. how can any insurance company pre empt that a new driver is going to crash so charge extortionate premiums when dozy women and old codgers cause most of the accidents.

it should be a points system. you start off with low premiums then for every claim it goes skyward. £2k to insure a car if your young is ridiculous. or how about cash back if you don't claim. i was always under the impression that insurance was a risk business but it seems that its now a licence to print money.































BTW if you haven't sussed it out i'm doing my usual winderupper

Because all new drivers (particularly male ones) drive cars that have been highly modded and tuned using Halford's tat, Redex, and an old vacuum cleaner hacked up to make a supercharger. The risk involved isn't an accident as such; it's all the third-party damage from an engine explosion.

A good friend is a risk analyst for a major underwriter. 5 years ago we had one of those lucid discussions were he explained to me that in simple terms the insurance industry is fixed (in a way). The underwriters set the 'cost' of insurance. But even the known major underwriters are 'underwritten' by other companies.

This sounded very familiar to the libor rate. Except, with the banks, volatility was induced by bad investments whereas in insurance the industry reacts to large-loss global events such as 911.

So, he explained that when your insurer says an increase in premium is due to insurance fraud or increased crime/accident risk, this is often a diversion from the truth which is that the cost set by the underwriters increased due to recouping losses from other major events.

Its not to say the localised reasons above won't have an impact on yearly premiums but the overall trend is that, following a major event or financial crisis, premiums and costs will remain on an upward trend for a good few years to allow recovery of these losses.

Whatever the truth, the biggest problem for me as a consumer - and I think also for a lot of people - is that its difficult to understand the link between the cost of this product and its perceived value. You don't have a choice but to purchase it (or the choice is not use a vehicle) yet the cost can fluctuate regardless of your own circumstances.