MPs to debate £1200 insurance cap for under 25s.
Discussion
fblm said:
sidicks said:
fblm said:
sidicks said:
...profit margins are miniscule...
Non existent.https://www.google.com/search?q=google&ie=utf-...
"In 2013, UK insurers are forecast to pay as much as £1.08 in claims and expenses for every pound they earn from premiums – the 19th consecutive year that the industry will have failed to turn an underwriting profit."
After the whiplash reforms they turned a profit in 2015 but they were back into a loss in 2016 and looking like another loss this year...
I'm in this group and dislike the cap. It'll make premiums rocket for people in the next band up (25 - 30ish). My insurance has gone £827 - £650 - next insurance is looking around £400. Only on my next insurance I can commute and have a large amount of miles and even store the car at home. Also helps my car isn't exactly a rocket ship and is on classic insurance. Even on basic apprentice wages I can afford it. People want everything all now, and that isn't how life works.
vsonix said:
s3fella said:
£1200 is not a lot of money
err.... It's close to a month's take home wages if you work minimum wage - which if you're under 25 is quite likely. Cars have ALWAYS been expensive to run for new drivers, its part of the right of passage that comes with the independaence they provide. And if you aren't willing to sacrifice a 12th of your take home to insure it (which, in most cases will be by far the largest costs initially, more than fuel, and loan to buy the car itself), then exercise your choice and stick too dad's taxi.
In the scale of things, with SKY TV costing 70-100 quid a month, average mortgage in the SE being 1500 - 2k, average council tax in SE being 1200, it's not a huge amount of money. I am not against a cap, but it would need to be at a far higher level than £1200 and would need to be funded somehow and it would not be fair to hit the drivers who are statistically at less ris of a claim who have already been through the period of high insurance and earning your "wings" so to speak.
menguin said:
Insurance is mandatory, driving a car is not.
Insurance companies compete on price. From what I understand of the industry the margins aren't huge. If there was a gap in the market because of significant overcharging someone would jump in - like Sheila's wheels for females.
Ways to make it more affordable = buy your kid a £1000 or less snotter. It's what I drove. Nowadays I see more new drivers driving £5k cars. Of course this will cost more to insure.
You're right, but your final line also highlights one of the issues. For my first car, I bought it myself, with my own money saved up over 5 years (yes, really, I worked each summer holiday and saved every penny of it). The reason young drivers are in £5k of metal is that most are paid for by mum and dad. No harm in that, but as you say, mum and dad should buy a cheapo car and give £3k to insure it, not a £5k car that makes them and little johnny feel great about themselves, then moan about how to insure it!Insurance companies compete on price. From what I understand of the industry the margins aren't huge. If there was a gap in the market because of significant overcharging someone would jump in - like Sheila's wheels for females.
Ways to make it more affordable = buy your kid a £1000 or less snotter. It's what I drove. Nowadays I see more new drivers driving £5k cars. Of course this will cost more to insure.
The expectations of each generation is far higher than the previous generation. My dad was 21 before he had 4 wheels, up to that point he was on two wheels, as were all his mates and with their missus's on the back! His dad of course, was on foot!
But the expectation has to be paid for and the market will always set that price, on everything, not just the insurance.
poo at Paul's said:
I am not against a cap, but it would need to be at a far higher level than £1200 and would need to be funded somehow and it would not be fair to hit the drivers who are statistically at less ris of a claim who have already been through the period of high insurance and earning your "wings" so to speak.
So we're talking about a subsidy rather than a cap? That would work, in a way that a cap would not (a cap would just mean young drivers couldn't get insurance at all) but the only way I could see subsidy being implementable would be from the taxpayer. I'm not sure that would align with policy objectives.
98elise said:
Any yet some posters keep saying we should give 50% back to the millions that don't have accidents. I've yet to see an explanation of how that would work
You won't get an explanation. Because those suggesting it have an IQ score that if it were the number of points on their licence, they wouldn't have enough to get banned. 
fblm said:
I assume they are heavily restricted in what and how much of the float they can invest? By contrast the hedge fund industry has returned a paltry 3.5% over the last 10 years.
What would you invest in, if your investment horizon was less than 6 months on average, you had to ensure you met statutory solvency requirements at all times and had to hold additional capital for investment risk?!Insurers can pretty much buy what they want, but the extent they can count it towards statutory solvency (and the implications for capital requirements) as well as a practical requirement to have liquid assets to pay expenses and claims throughout the year, mean that there is little scope to take much investment risk, for most firms writing car insurance business.
98elise said:
Any yet some posters keep saying we should give 50% back to the millions that don't have accidents. I've yet to see an explanation of how that would work
How about, if they don't crash, then when they buy insurance another time, they are offered some kind of discount? To encourage them not to make a claim, they would get a "bonus" amount deducted from the cost the next year? And this could continue, with an even bigger discount for no claims, the year afterwards, and beyond that?Shakermaker said:
How about, if they don't crash, then when they buy insurance another time, they are offered some kind of discount? To encourage them not to make a claim, they would get a "bonus" amount deducted from the cost the next year? And this could continue, with an even bigger discount for no claims, the year afterwards, and beyond that?
Sounds very sensible, but there must be a flaw as otherwise surely someone would have thought of this already?Shakermaker said:
How about, if they don't crash, then when they buy insurance another time, they are offered some kind of discount? To encourage them not to make a claim, they would get a "bonus" amount deducted from the cost the next year? And this could continue, with an even bigger discount for no claims, the year afterwards, and beyond that?
Shakermaker said:
98elise said:
Any yet some posters keep saying we should give 50% back to the millions that don't have accidents. I've yet to see an explanation of how that would work
How about, if they don't crash, then when they buy insurance another time, they are offered some kind of discount? To encourage them not to make a claim, they would get a "bonus" amount deducted from the cost the next year? And this could continue, with an even bigger discount for no claims, the year afterwards, and beyond that?sidicks said:
What would you invest in, if your investment horizon was less than 6 months on average, you had to ensure you met statutory solvency requirements at all times and had to hold additional capital for investment risk?!
Insurers can pretty much buy what they want, but the extent they can count it towards statutory solvency (and the implications for capital requirements) as well as a practical requirement to have liquid assets to pay expenses and claims throughout the year, mean that there is little scope to take much investment risk, for most firms writing car insurance business.
I'm not knocking the investment returns; considering the restrictions and regulations they face they do better than hedge funds as a whole... What would I invest in? FX options, quit fvcking around and lever it up 200 times Insurers can pretty much buy what they want, but the extent they can count it towards statutory solvency (and the implications for capital requirements) as well as a practical requirement to have liquid assets to pay expenses and claims throughout the year, mean that there is little scope to take much investment risk, for most firms writing car insurance business.
But I don't think their investment horizon is 6 months; that might be the average time between premium and claim (or turn over of float) but I'd have thought, subject to some seasonality, the float remained pretty constant allowing a much longer horizon; BRK style.More genuine question:
Is there a gap in the market for insurance policies that last longer than one year?
The whole market is set up for everyone to buy insurance every year. But why?
Why not spread the cost of say, 3 years, or 5 years, of insurance, into 36/60 monthly payments, which you then renew when you are 20 or 22 (assuming you start driving at 17?)
Lower monthly cost to mitigate the extremely high up front cost, but 3 years NCD all in one hit later on rather than the lower gains to begin with.
Is there a gap in the market for insurance policies that last longer than one year?
The whole market is set up for everyone to buy insurance every year. But why?
Why not spread the cost of say, 3 years, or 5 years, of insurance, into 36/60 monthly payments, which you then renew when you are 20 or 22 (assuming you start driving at 17?)
Lower monthly cost to mitigate the extremely high up front cost, but 3 years NCD all in one hit later on rather than the lower gains to begin with.
Shakermaker said:
More genuine question:
Is there a gap in the market for insurance policies that last longer than one year?
The whole market is set up for everyone to buy insurance every year. But why?
I think most insurers want the opportunity, after a year, to either hike the premium for tIs there a gap in the market for insurance policies that last longer than one year?
The whole market is set up for everyone to buy insurance every year. But why?
ts, or refuse to offer renewal, and to reward claim free drivers with a lower premium for the next year. Customers also, if they have a claim that isn't handled well, want the chance for find another provider.
TwigtheWonderkid said:
Shakermaker said:
More genuine question:
Is there a gap in the market for insurance policies that last longer than one year?
The whole market is set up for everyone to buy insurance every year. But why?
I think most insurers want the opportunity, after a year, to either hike the premium for tIs there a gap in the market for insurance policies that last longer than one year?
The whole market is set up for everyone to buy insurance every year. But why?
ts, or refuse to offer renewal, and to reward claim free drivers with a lower premium for the next year. Customers also, if they have a claim that isn't handled well, want the chance for find another provider.
Insurers are guaranteeing the premium for two years, whether there are claims or not, but they cant force you to renew with them.
If you have made a claim you will take the second year
If you cant get a cheaper quote elsewhere you will take the second year.
If you get a cheaper quote elsewhere away you go.
From the insurer side
If you made a claim tough, they cant amend terms
If you decide to go elsewhere there is nothing they can do.
There is also the issue of changing the car, modifications, additional drivers, license endorsements.
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