Admiral now penalize drivers on speeding awareness courses.

[Drago]

My eldest daughter used to hoon about. One day some laddo pulled out in front of her from a sideroad so sharply that she sailed up his arriss.

Fortunately, it turned out he had no driving licence so by default it got written up as his fault as his very presence was unlawful, but it hammered home the lesson of slowing down a bit and anticipating twots, and touch wood she's been much better lately.

All the insurers have to contribute to the Motor Insurers Bureau to cover uninsured losses like this, another reason prices are so high.

 

[srw]

Sorry, I should have said "accident" not "claim". Due to the pricing power of the no claims discount there is limited link between the two.

Again.... the statistics prove you wrong.

Motor insurance is so competitive that if an insurer could really get away without loading premiums for non-fault claims someone would have done so - and everyone else would have to follow suit. The fact that premiums are loaded is in itself evidence that people who have made non-fault claims are more expensive as a class.

Look up anti-selection if you don't believe me.

 

[Buddfox]

Again.... the statistics prove you wrong.

Motor insurance is so competitive that if an insurer could really get away without loading premiums for non-fault claims someone would have done so - and everyone else would have to follow suit. The fact that premiums are loaded is in itself evidence that people who have made non-fault claims are more expensive as a class.

Look up anti-selection if you don't believe me.

Apologies to all if this is drifting off topic, it's a subject I find academically interesting and enjoy the debate. I can see your point regarding anti-selection, but I'm not sure that's how the customer perceives it, leading to the bad feelings described above.

I can see no intuitive reason why the following analysis is incorrect (illustrative example and figures used):

- I am in my car and rear-ended via a four vehicle shunt. The car behind me broke late, thus causing the bus two vehicles back to commence the shunt
- I assess the damage to both my vehicle and myself
- I conclude that the cost of repairs would be £300
- the excess on my insurance policy is £250, therefore all else being equal I would have some interest in making a claim
- I determine that by making a claim I would possibly lose my no-claims bonus of 8 years (if not protected), and I would have increased premia in any event, which would have a total net present value cost to me of at least £500
- I therefore choose not to claim and my cost of insurance remains unchanged

Why am I at any higher risk of the same scenario occurring a week later? I am not - hence I the risk associated with insuring me is no different. When I initially said "claim", I think you are correct. If someone has a propensity to claim, then indeed they should be charged higher premia. But in this limited example, it has no link to their actual risk as a driver. But when an insurance company increases someone's premium, the customer assumes they are being described as higher risk. They are not, they are being assessed as a more expensive customer. Which comes back to the earlier point made that insurance companies do not do a good job of explaining their pricing, which in turn generates anti-insurance company feeling (particularly as it is a legal requirement, which forces people to be subject to the impact of anti-selection).

Having a no-fault accident tells us nothing about someone's likelihood of being involved in a further no-fault accident. But an insurance company's pricing indicates otherwise.

 

[400bhp]

Buddfox - read my earlier posts.

 

[srw]

I

That's where your scenario falls over. Insurance is always about "we".

I agree, incidentally, that the industry doesn't always do the best job about explaining itself to the customer.

 

[GrasB]

It's very difficult to comment without knowing the full information, but generally I would say yes it would. @SRW will know more about this than me but I would guess modified cars will see greater variability in premium prices year on year than non modded cars (e.g. smaller market, more factors for the insurer to consider, more bespoke/underwriting needed)

Actually I've found insurance premiums on my cars to go up very smoothly over the years. Changing modifications obviously can have some rather dramatic effects on premiums, but once modifications are stable the insurance prices tend to be stable as well.

 

[Paul99]

But in this limited example, it has no link to their actual risk as a driver. But when an insurance company increases someone's premium, the customer assumes they are being described as higher risk. They are not, they are being assessed as a more expensive customer.
Having a no-fault accident tells us nothing about someone's likelihood of being involved in a further no-fault accident. But an insurance company's pricing indicates otherwise.

This is the problem. You can all sit here forever giving one off examples, but there are millions of customers, thousands of claims. If you want to be treated like an individual to the extent that should you be involved in a no fault accident then they will assess your liklihood of being involved in further accidents, past driving history etc, then the premium you initially pay will be far, far greater than it is. This kind of personal consideration would be prohibitive in cost, and the cost would be passed onto you the customer.

As it is computer models are used, they are generally fair. Some people benefit, others lose out a bit. Because car insurance is required by law, the industry is regulated. Very heavily. This means that you will not be ripped off, they can't just charge what they like. They don't have to justify it to the customer but they do have to justify it to the regulators. Why do you think the insurance companies are complaining about the forthcoming change to the equality laws which will force them to increase the price for female drivers. They don't want to, they know women are less like to be involved in an accident and it won't reflect the risk that they bring to the pool.

There has to be some line. If you are involved in an accident, fault or no fault, it will affect your premium negatively.

I've yet to see a 100% blameless example be posted here yet anyway, and just a heads up to those people that think by not making a claim they don't have to declare that they have been in an accident. Read your T&C's, you'll find that you probably do.

 

[GrumpyGregry]

Actually I've found insurance premiums on my cars to go up very smoothly over the years. Changing modifications obviously can have some rather dramatic effects on premiums, but once modifications are stable the insurance prices tend to be stable as well.

I've never gone down the mods route on four wheels. I've owned a few breathed on European motorbikes in my time. Every time I declared the modifications; head porting and skim jobs, racier cams, bigger carbs, free-er breathing exhausts, dyno tests showing improved HP at the wheel and every time they've gone "It's a classic bike policy, sir you're over forty, sir, thanks for letting us know sir, no change in premium sir, carry on sir." much to my delight.

 

[Buddfox]

Criticism of the scenario and the I vs we position absolutely accepted. There is no other pragmatic way to do it other than computer modelling. But as I think we're all agreeing, the consequence of this is people developing negative perceptions of insurance companies and how they determine what they charge.

Which brings us back to where the thread originally started - i.e. an insurance company increasing their premia when some believe they shouldn't.

Precisely because car insurance is legally required, it almost becomes like a tax on driving, and one which can become very expensive for reasons which are not immediately apparent (posts passim). Recent moves to regulate the industry differently to bring down premia are a welcome initiative (if indeed they work) but cynics will rightly assume that insurance companies won't bring down their premia as much as they could - hopefully the assertion that the market is so competitive, this is what will actually happen. Some would argue that we have a broken system if the price of insurance actually prevents people from buying a car (which I believe it does). Where I am able and I don't agree with how insurers price risk (e.g. home contents) I don't have insurance and am willing to take the risk myself. Problem is you can't do that with a car - but it's interesting that more and more people do by driving without insurance.

 

[Nortones2]

regulated. Very heavily. This means that you will not be ripped off, they can't just charge what they like. They don't have to justify it to the customer but they do have to justify it to the regulators. ]

I'm very surprised by that assertion. When has the "regulator" top-limited premiums? They seem to be able to charge quite high premiums, or decline to quote, for inexperienced drivers. Not that it necessarily unjust, but I don't recall any curb on the underwriters activities in setting whatever the market will bear, or indeed not offering cover.

 

[campbellab]

Car insurance market will collapse when car safety market revolutionises safety on the roads over the coming 10, 20, 30 years?

 

[srw]

Car insurance market will collapse when car safety market revolutionises safety on the roads over the coming 10, 20, 30 years?

The car insurance market won't collapse until the last car is off the roads. No amount of high-tech safety equipment can make a car so safe that it can't possibly injure someone else.

 

[400bhp]

Or can't be stolen.

Or can't set on fire.

 

[campbellab]

The car insurance market won't collapse until the last car is off the roads. No amount of high-tech safety equipment can make a car so safe that it can't possibly injure someone else.

In my opinion when we have fully automated cars there'll be a huge drop in road casualties. There may be some accidents, but they'll be much fewer.

But to get to a state where cars are fully automated governments cant leave liability with drivers for accidents. They either have to put blame on the manufacturer, or no blame and tight regulation.

Blame on the manufacturer will stop manufacturers selling automatic cars (unless they take out huge insurance to cover any accidents automatic vehicles cause - but this wont be the same as the current car insurance industry).

Theres a lot of traction in this area at the moment: http://www.techradar.com/news/car-tech/are-self-driving-cars-really-the-future-1093368

 

[campbellab]

Or can't be stolen.

Or can't set on fire.

You only need third party insurance no legal requirement for fire and theft. I speculate these probably only make up a small % of current claims compared to injury claims etc.