Insurance rant

[TwigtheWonderkid]

ferrariF50lover said:

A row of identical cars, parked in identical fashion on a stretch of road which remains utterly constant in all respects along its entire length.
Driver comes along and, at a moment, sneezes. As he sneezes, he pulls the wheel hard right, hitting just one of the parked cars.
The owner of that car is now higher risk?
It's bks. Having a properly parked car hit on one occasion is a statistical anomaly, a total freak, a one off. To load a premium, especially to assess that the risk the OP poses is virtually double, is a scam of the highest order. You can dress it up any way you like, it's profiteering. Yet another stick with which to beat the average man.

You haven't really read this thread, have you?

Nobody would disagree that the sneezing incident is a one off. Just like the careful 17 year old who sticks to the speed limit and never puts a foot wrong is a one off. But we're taking about people who have non fault accidents as a whole group. Within that group there will be people for whom the non fault claim clearly isn't a one off, for all the reasons explained in previous posts. Therefore, as a group, they represent a higher risk.

Of course, there is a way for individuals to extract themselves from the group and be judged as an individual, and that is with the black box policy. However many people, despite despising being lumped in with the mob, don't seem to be keen on that alternative!

[Roger Irrelevant]

xRIEx said:

The data would quite clearly show if non-fault policyholders are at more risk of being hit more than once, as we would see results something like:

- never had a non-fault accident: 100,000
- 1 non-fault accident: 5,000
- 2 non-fault accidents: 10,000
- 3 non-fault accidents: 20,000
...

There would be a greater number of people with multiple non-fault accidents than with a single non-fault accident; chance of accident would increase rather than decrease.

Sorry but this is just plain wrong. Say the probability of someone who has not yet had a no-fault accident having one in a the next year is 0.1, what the insurer is saying (based on their claims experience) is that the probability of someone who has had one no-fault accident in the past having another in the next year is, say, 0.15. And the probability of someone who has had two NFAs in the past having one in the next year is 0.2. Three in the past 0.25, and so on. Run the numbers through and you'll still see that the number of people with no NFAs is greater than those with one, which is greater than those with two etc, but it's the size of the 'two' group in relation to the 'one', when compared to the size of the 'one' group in relation to the 'none', that matters to the insurer.

The insurer doesn't have perfect information about the insured and so cannot tell whether there is in fact a higher risk of another NFA in the next year in his particular case. All it knows is that he is now in a group (people who have had one NFA in the recent past), that it's data shows tend to have a higher risk of having another NFA in the next year, and so (irrespective of the correlation/causation thing), they'll load the premium accordingly.

Having said all that, I expect that a large part of the increase here is in fact due to the insurer doing the usual trick of whacking the premium up in the second year and hoping the policyholder is too lazy to shop around.

[TwigtheWonderkid]

Another myth is that non fault claims cost the insurer nothing. That may be true if you claim directly from the tp, but in many cases when you have comp cover you go thru your own insurer and they pay out and then recover their outlay from the tp or tp's insurers. That all takes time and money. Of course your bonus is unaffected but you've still cost them more than someone who has had no claim at all.

[Devil2575]

I

Roger Irrelevant said:

xRIEx said:

The data would quite clearly show if non-fault policyholders are at more risk of being hit more than once, as we would see results something like:

- never had a non-fault accident: 100,000
- 1 non-fault accident: 5,000
- 2 non-fault accidents: 10,000
- 3 non-fault accidents: 20,000
...

There would be a greater number of people with multiple non-fault accidents than with a single non-fault accident; chance of accident would increase rather than decrease.

Sorry but this is just plain wrong.

Indeed. I think someone doesn't understand probabilities.

[xRIEx]

Devil2575 said:

I

Roger Irrelevant said:

xRIEx said:

The data would quite clearly show if non-fault policyholders are at more risk of being hit more than once, as we would see results something like:

- never had a non-fault accident: 100,000
- 1 non-fault accident: 5,000
- 2 non-fault accidents: 10,000
- 3 non-fault accidents: 20,000
...

There would be a greater number of people with multiple non-fault accidents than with a single non-fault accident; chance of accident would increase rather than decrease.

Sorry but this is just plain wrong.

Indeed. I think someone doesn't understand probabilities.

Yeah sorry, it was exaggerated to extremes to make the point, I wasn't quoting exact numbers, I thought that was obvious.

[xRIEx]

Centurion07 said:

Having an accident is "caused" by you; ... parking somewhere where your car got hit

Why?

Scenario: negligent driver hits parked car.

What is the proximate cause of the accident:
- the location of the parked car?
- the negligent driver?

Centurion07 said:

i.e. it requires an action by you which is not affected by chance.

A parked car might as well be the definition of passive, it is in no way active.

I'm trying to determine whether you think there is culpability on the part of the driver who parked the car in a particular location - would a defence such as, "if you hadn't have parked there you wouldn't have been hit" work in a court?


My car was hit while parked in my previous company's car park - obviously non-fault, all settled, no prejudicing of NCB, etc.

Am I now a higher risk of being hit? If so, why?
Is it due to where I park, or is it due to where Miss D C... drives (and parks) her car?

[Ilovejapcrap]

JuanGandini said:

So... (deep breath)

Car insurance renewal time at the Gandini household and so off I trot to the compare the supermarket comparison sites to get some new quotes. This was all prompted by my current insurer kindly reminding me that my insurance is due for renewal next month.

To set the scene, last June a stupid bh crashed her car into my (parked and unoccupied) M135i and left the scene. Luckily a neighbour saw it and the police tracked her down. Unluckily the police took no further action and I had to claim through her insurers to fix the damage at a cool £900 for a new front wing.

This debacle now means that I have to declare a non-fault claim onto my insurance applications.

My current year's insurance cost me £304 with protected NCB. They quoted me £749 for next year! Comparison sites have quoted me the cheapest quote at £440. So either way I'm being punished for someone being a) st at driving and b) dishonest and c) too poor to pay for the damage they caused rather than go through their insurers.

Surely something's wrong with the system isn't it?

Yes well said its all terrible.

On a side note you have protected no claims but insurance will still go up shows how much of a farce pay extra and protect your no claims is as well

[xRIEx]

Roger Irrelevant said:

Say the probability of someone who has not yet had a no-fault accident having one in a the next year is 0.1, what the insurer is saying (based on their claims experience) is that the probability of someone who has had one no-fault accident in the past having another in the next year is, say, 0.15. And the probability of someone who has had two NFAs in the past having one in the next year is 0.2. Three in the past 0.25, and so on.

OK, that's fine you're absolutely right there. My question is why is that the case? What we're saying here (making the assumption) that the behaviours, and therefore risk profiles, are remaining the same before and after an incident. Why do the percentages change?

[CoolHands]

Look, thickoes park in stupid places and get their cars hit. Its not hard to understand. Hence why they get charged more. That's entirely fair.

[xRIEx]

CoolHands said:

Look, thickoes park in stupid places and get their cars hit. Its not hard to understand. Hence why they get charged more. That's entirely fair.

Well, when you put it like that...

Yeah OK, I'm over it

[jb2410]

Ilovejapcrap said:

On a side note you have protected no claims but insurance will still go up shows how much of a farce pay extra and protect your no claims is as well

Not true. Protected NCB does exactly what it says by protecting your no claims bonus. If you have full ncb with say 60% discount because of it, and go on to have a fault claim with protected ncb, you will maintain your maximum no claim bonus and your 60% discount - yes, the amount you pay will go up as your premium has increased due to the claim - but you're still receiving the same 60% discount, just off the higher premium.

In the same scenario without protected ncb you're still subjected to the higher premium, but your bonus (and therefore discount) reduces as well, so you will end up paying more than what you would have paid had you protected your no claims as well as having to accrue bonus again.

Edited by jb2410 on Saturday 28th February 11:31

[TwigtheWonderkid]

jb2410 said:

Not true. Protected NCB does exactly what it says by protecting your no claims bonus. If you have full ncb with say 60% discount because of it, and go on to have a fault claim with protected ncb, you will maintain your no maximum claim bonus and your 60% discount - yes, the amount you pay will go up as your premium has increased due to the claim - but you're still receiving the same 60% discount, just off the higher premium.

In the same scenario without protected ncb you're still subjected to the higher premium, but your bonus (and therefore discount) reduces as well, so you will end up paying more than what you would have paid had you protected your no claims as well as having to accrue bonus again.

Absolutely right. That's why it's called "protected bonus", and not "price freeze protection".

[TwigtheWonderkid]

xRIEx said:

My car was hit while parked in my previous company's car park - obviously non-fault, all settled, no prejudicing of NCB, etc.

Am I now a higher risk of being hit? If so, why?
Is it due to where I park, or is it due to where Miss D C... drives (and parks) her car?

It's both. A negligent tp and probably a tight car park with small spaces. If your MD had his own allocated space separate from the company car park, where no other cars went apart from him, is he not less likely to get hit for the first time than you are to get hit for the 2nd time?

[Ilovejapcrap]

TwigtheWonderkid said:

jb2410 said:

Not true. Protected NCB does exactly what it says by protecting your no claims bonus. If you have full ncb with say 60% discount because of it, and go on to have a fault claim with protected ncb, you will maintain your no maximum claim bonus and your 60% discount - yes, the amount you pay will go up as your premium has increased due to the claim - but you're still receiving the same 60% discount, just off the higher premium.

In the same scenario without protected ncb you're still subjected to the higher premium, but your bonus (and therefore discount) reduces as well, so you will end up paying more than what you would have paid had you protected your no claims as well as having to accrue bonus again.

Absolutely right. That's why it's called "protected bonus", and not "price freeze protection".

I get what it's I just can't help think it's a pointless con.

[TwigtheWonderkid]

Ilovejapcrap said:

I get what it's I just can't help think it's a pointless con.

Fair enough. It's not compulsory.

[Roger Irrelevant]

xRIEx said:

OK, that's fine you're absolutely right there. My question is why is that the case? What we're saying here (making the assumption) that the behaviours, and therefore risk profiles, are remaining the same before and after an incident. Why do the percentages change?

You're probably right in saying that the inherent likelihood of a particular person having a NFA doesn't change just because they happen to have a NFA in a given year. However, what changes is the insurer's knowledge of what that likelihood actually is. When they started off they had no info on the likelihood of an NFA for this particular person, so they could only assume that the likelihood was the same as for anyone else who hadn't had an NFA to date. Now, and in hindsight, the insurer knows that that assumption was probably wrong and that the likelihood of an NFA was probably higher than they originally thought, so they adjust their assumption (and premium) accordingly.

Of course, the insurer doesn't really care about the ins and outs of human psychology that may mean that one person is more likely to cause them a loss than another. In order to stay in business they have to rely on what their experience tells them about the chance of a loss occurring in the real world.

[swisstoni]

CoolHands said:

Look, thickoes park in stupid places and get their cars hit. Its not hard to understand. Hence why they get charged more. That's entirely fair.

Well I hope you don't complain when it's your turn.

[JagXJR]

I'm still struggling. Have read the whole thread and understand it. Accept it costs more money if non-fault due to the company having to recover the costs from the third party. I accept that insurance is not fair, but a commercial venture. All of that.

But why does the fact that some incompetent person hit you make you more of a risk? You were just in the wrong place at the wrong time. Statistically you are at the same risk as anyone else to have another Non-Fault due to the roll a dice probability surely?

You could argue that as you were hit you will be more careful not to do it again, once bitten twice shy?

If the accident had blame attached then fully understand the increase.

I once had a newly qualified driver, over twice the legal drink drive limit, hit next door's car and shunted that into my car causing some slight damage. The road was wide enough for two large vehicles to pass without being close to the parked cars. How could I have prevented that given I had no drive? Well I did move shortly after so did influence any future risk of that particular incident happening again. But in the same way lightening rarely strikes in the same place twice how am I more of a risk than someone else?

CoolHands do you think I am a thicko for parking outside my home perfectly safely?

I think it is profiteering unless someone can offer me evidence otherwise. Either that or the inevitable 2nd year increase you would have got anyway.

In addition I think there is something wrong with something you have to have by law being used to fleece people, does nobody else think this is morally wrong?

Good topic OP, thanks.

Edited to add to posts added while writing

I understand what you are saying Roger but just because I have a non-fault accident, that clearly I could not anticipate, how does that make me more of a risk? Given the law of probability.

Edited by JagXJR on Saturday 28th February 11:59

[TwigtheWonderkid]

JagXJR said:

But why does the fact that some incompetent person hit you make you more of a risk? You were just in the wrong place at the wrong time. Statistically you are at the same risk as anyone else to have another Non-Fault due to the roll a dice probability surely?

You say wrong place wrong time. But what is it's your company car park? That also happens to be the right place at the right time. And you'll be back there tomorrow and the next day, same wrong place same wrong time. If it's a tight car park with narrow spaces, you are at a greater risk of it happening again than if you worked for the firm across the road, who have a much better car park. And next time the guilty party may not leave a note, so it will be in insurance terms a fault claim.

[omgus]

JagXJR said:

I understand what you are saying Roger but just because I have a non-fault accident, that clearly I could not anticipate, how does that make me more of a risk? Given the law of probability.

Not probability, it's statistical risk. I understand the basics of it but i cannot even begin to explain it due to a solid lack of maths skills compared with the person how spent about 4 hours explaining it to me.

The basic answer for insurance is insurance companies analysis of their own payouts have shown that once you make any claim, you are more likely to make a claim again over a certain timescale. This comes from their own records of payouts.

In terms i understand, my first few accidents were in sheds and were sorted direct with other owners so no payout, then i got a more expensive car and used an insurance company, accident probability hasn't changed but claim probability has.