Why is driving uninsured such a big deal?

[masermartin]

No idea!

[TwigtheWonderkid]

MGJohn said:

TwigtheWonderkid said:

Claims are funded by premiums.

There's a lot more to it than that. Re-Insurance.

All insurers buy re-insurance, but where do they get the money to buy it? Premiums!

[TwigtheWonderkid]

caelite said:

The issue isnt with the mandating of 3rd party cover it is with the lack of regulation in the insurance industry. Insurers are pricing people off the road. Not only the young but many others who are living just above the povertyline in the UK. They are doing this well running huge profit margins. The other and even larger issue in my eyes is the legalese that insurers are using these days to try harder and harder to actually NOT do there jobs as fking insurers and pass the buck onto the people they are SUPPOSED to be insuring. Like seriously

I do not pretend to be an expert in law but some of the reasoning that I have seen recently to not payout claims and drop IN10s on people are getting rediculus. An obvious example that springs to mind is recently (2014 i believe) tesco insurance refused to pay out to the 3rd party because there client passed out behind the wheel. The legal reasoning was that he wasnt in coherant control of his actions therefore he couldnt be at fault (This defence has been used in the past as a result of involuntery bodily actions resulting in manslaughters and other crimes (i.e i sneezed and stabbed him with a pair of scissors)). The 3rd party then attempted to claim back off of there own insurance who refused payment because the tesco client was found to be at fault. Leaving the 3rd party out of pocket OR having to take on the lawyers of a huge corporation out of his own pocket.

Which moves me on to the 3rd point. IN10s. WHAT THE fk. So insurers response to people not being able to afford insurance / refusing to pay for whatever reason is to INCREASE THERE INSURANCE FIVEFOLD. Like seriously WHAT THE fk. How can they even argue that they are a higher risk client. They DIDNT have insurance. Now they are showing and intrest and attempting to get insurance, OH but then they are having another brick wall thrown at them.

Ugh the more and more I think about it the more and more I just want to say sod the law and see how long it takes for them to jail me for driving without insurance/license/all the other jazz. Laws are only for the abiding and all that pish. ;D

PS: drunk post

Drunk idiot post. Factually wrong on just about every point.

[PugwasHDJ80]

simon1987 said:

yep its mental.

i never had insurance for the first 10 years of driving. just use to get producers and ignore them. totally mental how times have changed.

troll?

[TooMany2cvs]

caelite said:

The issue isnt with the mandating of 3rd party cover it is with the lack of regulation in the insurance industry. Insurers are pricing people off the road. Not only the young but many others who are living just above the povertyline in the UK.

So would YOU promise to cover any damage these people caused, in return for a couple of hundred quid a year?

caelite said:

They are doing this well running huge profit margins.

Got any figures to share?

Because I can give you some... Let's take AXA - no particular reason, just the first insurer to come to my mind.
They made FOUR POINT THREE BILLION EURO PROFIT in 2011! Despicable money-grabbing bds.

Or are they? That was off the back of €86bn turnover. Five big fat whole percent. Woo. The business is worth €48bn. If they closed everything down, cashed everything in, and invested that €48bn, they'd only need to get less than 9% return to beat that profit. Barely seems worth the risk, does it?

OK, that's across the entirety of their insurance business, worldwide, but is UK motor insurance REALLY that much more profitable than anything else? If it was, why isn't everybody and their dog cutting margins just a tad to undercut the competition and grab a huge market share?

Don't tell me... Illegal cartels. It's all a conspiracy.

caelite said:

An obvious example that springs to mind is recently (2014 i believe) tesco insurance refused to pay out to the 3rd party

No, they didn't. But thank you for confirming just how little clue you really have.

[MadDog1962]

FlynnFlynn said:

In America, Australia and New Zealand you don't even need insurance legally. It is wrong that it is a legal requirement when the real crime is the rates the companies charge. They make huge profits, I have 6 years NCB now and that is thousands of pounds since I was 19 for nothing other than some bullst arse legal requirement.

Errr.... bks.

I've just come back from two and a half years in Texas. You cannot register your car without proof of insurance. (Although there are indeed people driving around illegally in unregistered and uninsured vehicles, it is an offence). I think you'll probably find all states have similar rules on this.

In Australia it is compulsory to have "green slip" insurance which is effectively compulsory third party injury cover. In NZ they have a similar system paid for out of general taxation. I know I lived and worked in both Oz and NZ, and owned vehicles there.

If you drive without insurance in any of these countries, and you have an accident where you're found to be at fault, you'll end up paying for it. If you're on a low income you'll be given time to pay.

Frankly, it might sound harsh, but if you can't afford insurance you probably shouldn't be owning a car. If the insurance is too expensive or you've been turned down because you're judged to be too great a risk there will be good reasons. Drive something more modest and stay out of trouble. When I bought my first car about 30 years ago the 3rd party insurance cost as much as the car. Not much has really changed.

What if you have an accident, are found at fault, and people are maimed or killed? Perhaps they are unable to work as a result or have dependents. What then? If everybody has insurance the premiums should be lower as the Motor Insurers Bureau wouldn't have to pay for the losses caused by reckless uninsured idiots.

[PoleDriver]

HMMMMm, this explains a lot!

FlynnFlynn said:

I appreciate it matey. I am one of those people who have never gone to a GP for anything. It's something about me not being able to tackle something that is in my own head myself that makes me reluctant. Also they are likely to offer me meds. I was on Ritalin and Risperidone as a kid to calm me downso that has put me off the ole' medications for life. And some of the stuff is really disturbing to talk about. I am just glad it is not only me, especially on a forum as normal as PH.

[MadDog1962]

Sump said:

This is precisely why road tax needs to be hiked up to something like £2500 P/A. Weed out the poor people onto public transport and leave the roads to people who can actually afford to be there.

Errm here in Singapore we have a thing called the COE or "Certifcate of Entitlement". There are about 600,000 of these and they run for a maximum of 10 years. We have to bid for them. The current going rate for a private car is around 30,000 quid. That definitely keeps most of the worst of the riff-raff off the roads... (there's not enough road space for more cars anyway)

[walm]

TooMany2cvs said:

The business is worth €48bn. If they closed everything down, cashed everything in, and invested that €48bn, they'd only need to get less than 9% return to beat that profit. Barely seems worth the risk, does it?

O/T but just FYI that isn't how the market cap of a company works.
If you shut it down the business is worth zero - there wouldn't be any EUR48bn to invest!

Nevertheless you are absolutely correct that automotive insurance isn't some conspiracy market run by a cartel.
Auto is usually a loss-leader.
And for anyone who cares to check automotive premiums specifically have been falling pretty dramatically through 2013 and 2014.
Down 10% vs. Q1 2012 in Q4 2014 according to the ABI.
Admiral for example had 4% more customers in 2014 but wrote -6% less premiums so that ties with the negative 10% delta.
https://www.admiralgroup.co.uk/investor/presentati...

[trashbat]

Watch out everyone, our part-time nemesis is in town, and this time, he's pissed! Availability permitting.

Y I K E S.

[Roger Irrelevant]

caelite said:

Insurers are pricing people off the road. Not only the young but many others who are living just above the povertyline in the UK. They are doing this well running huge profit margins.

Huge profit margins? Take some time (whilst sober) to understand what is meant by a general insurer's 'Core Operating Ratio'. Then see what the COR actually is for a variety of motor insurers. You may be surprised at how far from huge the margins are.

[Sump]

MadDog1962 said:

Sump said:

This is precisely why road tax needs to be hiked up to something like £2500 P/A. Weed out the poor people onto public transport and leave the roads to people who can actually afford to be there.

Errm here in Singapore we have a thing called the COE or "Certifcate of Entitlement". There are about 600,000 of these and they run for a maximum of 10 years. We have to bid for them. The current going rate for a private car is around 30,000 quid. That definitely keeps most of the worst of the riff-raff off the roads... (there's not enough road space for more cars anyway)

Now that is more like it. Can you just imagine how beautiful driving would become if we could make it £3k P/A.

Everything would run smoother, public transport would get better over time also.

[M3DGE]

MGJohn said:

TwigtheWonderkid said:

Claims are funded by premiums.

There's a lot more to it than that. Re-Insurance.

Long time ago now but way back, I was involved with the then UK's largest Motor Insurance Company. Part of my job along with a few other Brokers, was to place various levels of ReInsurance with LLOYDS underwriters.

Fascinating subject.

Briefly most/maybe all Insurance companies, no matter how big and successful, need ReInsurance. Works like this simplified model. Say the company decides that they can cope with any one claim up to one million quid but not anything above that. So they arrange with the various brokers to spread and share any very large payouts with each "name" agreeing to cover a certain percentage above the set limit for which they will, in return, receive a percentage of that company's premium income they are giving ReInsurance cover for.

Earlier in this thread, I mentioned the "Selby" Crash. That must have cost a huge amount and no doubt a range of Underwriters had to cough up huge sums under ReInsurance arrangements.

Things may be very different now but, the process must be much the same.

Without ReInsurance, one massive claim or series of claims in any one year could immediately bankrupt a Company and thus not all claims would be covered. What, an Insurance Company go mammories skyward! No way. Yes it did. That happened many moons ago. A relative had his shiny new car nicked by professionals ( broken up for parts later revealed ) but, he was insured ( so he thought ) with a company run by someone called Savundra. My cousin never got a penny. He even lost the very distinctive reg-plate.... 1111 MT if I remember correctly.

One of the most memorable TV programmes on British TV was when the late Sir David Frost cross examined Emil Savundra... may even be on YouTube...

Reinsurance protects against catastrophic losses (like Selby) but also costs money - insurers have to pay a premium to buy the cover, so the larger companies tend to take more 'on the chin'. Regardless, it's a complete fallacy that motor insurers make excessive profits, they are lucky to break even and have been for years. That's why so many of the smaller specialists have left the scene and it's dominated by the big players writing diverse books of business. Companies like Aviva only write motor insurance so they can cross sell other products, it just does not make a worthwhile return in isolation.
And an insurer can still go bust, but thanks to the Financial Services Compensation Scheme private policyholders always get paid out anyway (recent examples were Quinn Direct, and before then Independent and Municipal Mutual). Not sure who Suvundra was, but the last 'unprotected' insurer bankruptcy in the UK was the Vehicle and General in 1971.

Oh, and to echo almost everyone on here, the OP is a tool who should be sterilised.

[M3DGE]

Roger Irrelevant said:

caelite said:

Insurers are pricing people off the road. Not only the young but many others who are living just above the povertyline in the UK. They are doing this well running huge profit margins.

Huge profit margins? Take some time (whilst sober) to understand what is meant by a general insurer's 'Core Operating Ratio'. Then see what the COR actually is for a variety of motor insurers. You may be surprised at how far from huge the margins are.

Thank you Roger (nice username btw) precisely my point. Most motor insurers consider it a success to get a COR under 100% - ie, from £100 of premium they pay out less than £100 in claims, costs and commission (to brokers or comparison sites). Under 97% would be seen as a stellar performance.

[TooMany2cvs]

walm said:

TooMany2cvs said:

The business is worth €48bn. If they closed everything down, cashed everything in, and invested that €48bn, they'd only need to get less than 9% return to beat that profit. Barely seems worth the risk, does it?

O/T but just FYI that isn't how the market cap of a company works.
If you shut it down the business is worth zero - there wouldn't be any EUR48bn to invest!

You're right, but that's not the market cap figure. That's the equity in the business. Assets less liabilities.

Market cap for AXA is about €60bn.

[AW111]

M3DGE said:

Thank you Roger (nice username btw) precisely my point. Most motor insurers consider it a success to get a COR under 100% - ie, from £100 of premium they pay out less than £100 in claims, costs and commission (to brokers or comparison sites). Under 97% would be seen as a stellar performance.

note : Australian anecdote. YMMV
I worked out once that I had just about broken even on premiums (not counting compulsory medical) in my first "expensive" car.
Two accidents in that period (I think about 5 years) : total repair costs in the same ballpark.

Now my premiums are much lower, especially the van on 3rd party only, but one 5mph shunt a few years back means I am still probably around par for the van.
Actuaries, huh! What do they know, anyway?

If you want to cry about insurance premiums, buy a boat and bend over!

[SteveSteveson]

M3DGE said:

Roger Irrelevant said:

caelite said:

Insurers are pricing people off the road. Not only the young but many others who are living just above the povertyline in the UK. They are doing this well running huge profit margins.

Huge profit margins? Take some time (whilst sober) to understand what is meant by a general insurer's 'Core Operating Ratio'. Then see what the COR actually is for a variety of motor insurers. You may be surprised at how far from huge the margins are.

Thank you Roger (nice username btw) precisely my point. Most motor insurers consider it a success to get a COR under 100% - ie, from £100 of premium they pay out less than £100 in claims, costs and commission (to brokers or comparison sites). Under 97% would be seen as a stellar performance.

I suspect most people don't think about how much accidents cost and how much car insurance costs. I suspect everyone knows/knew a kid who had 2-3 accidents in a year. There was always at least one. That is what costs kids.

I consider my insurance to be quite a bargain having had an accident not that long ago.

Its been around £250 per year for the last 7 years I have built up NCB (I had a money enforced brake from driving for a while before that. Due to car changes and house moves NCB savings have balanced vaguely against increases). In that time I have spent £1750ish. Earlier this year someone ran in to the back of my car. Deemed 100% their fault, no contest. The repairs cost £1500 (for a minor bump) plus I got a rental SLK.

The person who hit me had not had an accident in 20 years, but their car was a write off. I have a vague idea of the cost as she is someone I vaguely know through work. Her car was valued at £2k, and I would guess her insurance would be lower than mine (Older, more NCB, female and driving a 1.0 polo). Lets say it cost the same as mine, so £5k over 20 years.

Total cost of repairs, £3500
Total cost of two hire cars for 4 weeks? £2k seems a reasonable guess for an SLK and a VW polo.
Total insurance, £6750
Total cost, £5500
Total money left for the insurance company, over 27 driver years, £1250, not including the cost of sending out an assessor for the other driver, cost of all the work they did, etc.

This was for a relatively minor bump with no personal injury involved and one car with little damage and the other a cheap car that was written off. It is easy to see how money from insurance gets eaten up.

[walm]

TooMany2cvs said:

walm said:

TooMany2cvs said:

The business is worth €48bn. If they closed everything down, cashed everything in, and invested that €48bn, they'd only need to get less than 9% return to beat that profit. Barely seems worth the risk, does it?

O/T but just FYI that isn't how the market cap of a company works.
If you shut it down the business is worth zero - there wouldn't be any EUR48bn to invest!

You're right, but that's not the market cap figure. That's the equity in the business. Assets less liabilities.

Market cap for AXA is about €60bn.

Ah. Sorry, my mistake.

(Nevertheless book value isn't a particularly good measure of the "value" in most industries. In the case of a winding up that EUR16bn of goodwill will go to zero for example - among many other issues!)

[r11co]

vikingaero said:

You CAN drive around with no insurance and it doesn't involve being a Freeman of the Land. Just deposit your spare £500,000-£1M as a bond with the High Court! Simple!

I used to know someone who did indeed indemnify himself, but it wasn't this way. He was the son of a wealthy family (in the cheese business I kid you not) who wanted to drive an Aston while still in his late teens.

Rather than pay a mahoosive premium that was surrendered regardless of a claim, he lodged a large sum of cash (equivalent to the retail value of the car IIRC) with the insurance company on the basis that he got the whole lot back at the end of the year if no claims were made against him, or he surrendered the lot otherwise.

I always imagined the insurers had pedestrians stationed on street corners ready to jump out in front of him...!

I also suspect that those sorts of deals are no longer available as I think the scheme worked for the insurers on the back of interest rates being much higher at the time. This was 25 years ago!

[bigfatnick]

Condi said:

MJK 24 said:

I've just spent a few months in NZ. You're correct in saying that there's no legal requirement for third party insurance cover. However, should you have an accident that is deemed to be your fault, and you don't have insurance, the third parties insurers will take you to court to recover their losses. This can lead to people being forced by the courts to sell assets - ie their home!

Thats not true. Your road licence contains a 3rd party insurance cost, which covers personal injury for anyone you hit. You need that by law. Any damage to other vehicles/property can be reclaimed from the at fault party - which, as you say, can lead to many thousand dollar claims.

I was talking to a bloke who ran a kayaking tours place in nz a few years ago and although I can't remember the full story, the basics are that they don't have no win no fee ambulance chaser types and if you have an accident worthy of a claim, you have to go to their version of the HSE, who will fine the company/individual. This keeps it all a lot more sensible than our situation.


Imagine how cheap our insurance would be without whiplash claims!