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BoRED S2upid

Original Poster:

20,763 posts

256 months

Thursday 23rd June 2011
quotequote all
Driving me mental! Who do they not want repeat business? I would be happy to stay with the same insurer if they just kept to the same price. Two years ago I was with More Than until the renewal came through for more so I went to Barclays guess what renewal just come through and has increased so back to More Than who are now quoting less than they did 2 years ago and half the price of Barclays.

Sarnie

8,231 posts

225 months

Thursday 23rd June 2011
quotequote all
The longer your with them, the more likely they are to have to pay out a claim to you. So, they increase the renewal figure, you leave, they've had 12 months premiums for bugger all.

BJG1

5,966 posts

228 months

Thursday 23rd June 2011
quotequote all
Sarnie said:
The longer your with them, the more likely they are to have to pay out a claim to you. So, they increase the renewal figure, you leave, they've had 12 months premiums for bugger all.
I must be being thick - why does the length of time with one particular insurer increase the likelihood of a claim being made?

Sarnie

8,231 posts

225 months

Thursday 23rd June 2011
quotequote all
BJG1 said:
I must be being thick - why does the length of time with one particular insurer increase the likelihood of a claim being made?
Basic statistics. Most people will make a claim at some point on their home insurance, the longer your with them, the closer you are to making a claim, statistically speaking.

cuprabob

16,941 posts

230 months

Thursday 23rd June 2011
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They don't care about churn rate, the only metric they are interested in is number of new customers

Spitfire2

1,936 posts

202 months

Thursday 23rd June 2011
quotequote all
Pissing me off too.

So far in the last few months I've phoned the number of renewal notices and asked them why the business of repeat/loyal customers such as I is worth less to them than a new customer taking out a policy online.

The bullst they come back with really gives the impression they think I'm a mug. Most recently, the chap I spoke to at the AA claimed that it was down to FSA rules that they could not offer me the same discount in writing as they give new online customers - what a crock.

The smarmy individual I spoke at AA really started to piss me off. I ended up suggesting we cut the crap and that we both knew that by the end of the call he would be giving me the cover for the online price so why not just get on with it. And he did too.


NorthernBoy

12,642 posts

273 months

Friday 24th June 2011
quotequote all
Sarnie said:
Basic statistics. Most people will make a claim at some point on their home insurance, the longer your with them, the closer you are to making a claim, statistically speaking.
This makes no sense at all. The statistic that matters is the chance of making a claim during the next policy year, not the cumulative probability of ever making one.

They'd need to believe that you were a higher risk in year two than in year one for it to make sense to try to drop you.

I do hope that you were being facetious with your way of looking at things, as it's bizarrely wrong.

Remember, you pay a premium each year, this is not about paying once, then having a policy cut off to avoid continuing risk.

BoRED S2upid

Original Poster:

20,763 posts

256 months

Friday 24th June 2011
quotequote all
I discussed this in detail with MoreThan 2 years ago and said I will probably be back with you at a cheaper rate in 12 months its bizzar if you ask me. Maybe its to keep the staff busy setting up "new" accounts or something. How do they do their business planning? How many customers will we have next year? who knows 80% will leave when we stick their renewal up...

mcflurry

9,179 posts

269 months

Friday 24th June 2011
quotequote all
BoRED S2upid said:
who knows 80% will leave when we stick their renewal up...
..and 20% pay the inflated sticker price without haggle?

A bean counter somewhere must have worked out that the profit from the staying customers paying more is higher than the cost of earning new business.

aceparts

3,724 posts

257 months

Monday 27th June 2011
quotequote all
Just had this. Like a mug direct line had been automatically mugging me for the inflated renewal premium year after year. Cancelled, took a new policy and saved £200. Gave me a load of st on the phone explaining why it's dearer for 2nd year etc.

Sarnie

8,231 posts

225 months

Monday 27th June 2011
quotequote all
NorthernBoy said:
Sarnie said:
Basic statistics. Most people will make a claim at some point on their home insurance, the longer your with them, the closer you are to making a claim, statistically speaking.
They'd need to believe that you were a higher risk in year two than in year one for it to make sense to try to drop you.
They do, hence why the premium increases.

As I said, it's basic statistics.

otherman

2,246 posts

181 months

Monday 27th June 2011
quotequote all
Sarnie said:
NorthernBoy said:
Sarnie said:
Basic statistics. Most people will make a claim at some point on their home insurance, the longer your with them, the closer you are to making a claim, statistically speaking.
They'd need to believe that you were a higher risk in year two than in year one for it to make sense to try to drop you.
They do, hence why the premium increases.

As I said, it's basic statistics.
Northern Boy is right though. Your version might be basic stats, but it ain't basic risk analysis.

The reaons they push the premiums is because about a quarter of people pay it without shopping around.

Sarnie

8,231 posts

225 months

Monday 27th June 2011
quotequote all
otherman said:
Northern Boy is right though. Your version might be basic stats, but it ain't basic risk analysis.

The reaons they push the premiums is because about a quarter of people pay it without shopping around.
Of course it's risk analysis. Churn as many clients as they can.

Increase the premium year on year. If they leave then they have have the premiums, if they don't then the increased premiums are to pay for the likely claim that, is statistically, getting closer for the insurer.

walm

10,632 posts

218 months

Tuesday 28th June 2011
quotequote all
Sarnie said:
Then the increased premiums are to pay for the likely claim that, is statistically, getting closer for the insurer.
Epic fail.
NorthernBoy is right Sarnie.

Dice don't have a memory.

If you throw a six, the chance of throwing a six again is still 1/6.

Unless you become MORE risky, you are no "closer" to making a claim,

Unless you believe that EVERYONE makes exactly one claim in 25 years.

Perhaps you believe that once you have made a claim your insurance is free?

Sarnie

8,231 posts

225 months

Tuesday 28th June 2011
quotequote all
walm said:
Unless you become MORE risky, you are no "closer" to making a claim,
You do become MORE risky, by virtue of the fact that there was no claim in the previous year.

Insurers will work out what the average amount of time is from the policies inception to claim point. Lets say for example it's 48 months. They will price the first 12 months cheaper than the subsequent 12 and the next 12 and the next 12, as that's the furthest away from their average claim point. Every 12 months it will rise to pay for your impending claim, or cover the two that Joe Bloggs has in the first 12 months etc etc.

98elise

30,125 posts

177 months

Tuesday 28th June 2011
quotequote all
Sarnie said:
walm said:
Unless you become MORE risky, you are no "closer" to making a claim,
You do become MORE risky, by virtue of the fact that there was no claim in the previous year.

Insurers will work out what the average amount of time is from the policies inception to claim point. Lets say for example it's 48 months. They will price the first 12 months cheaper than the subsequent 12 and the next 12 and the next 12, as that's the furthest away from their average claim point. Every 12 months it will rise to pay for your impending claim, or cover the two that Joe Bloggs has in the first 12 months etc etc.
bks

I've not claimed on my car insurance, nor my home insurance in 20 years. I must be getting close to uninsurable now smile (yet my insurance is hardly any differfent year on year)

Stop digging...or you will sound like an idiot. The history has no affect on the furure....that is simple maths. Its only an increased risk if you have to have an accident once every 12 years.





Edited by 98elise on Tuesday 28th June 17:40

Sarnie

8,231 posts

225 months

Tuesday 28th June 2011
quotequote all
98elise said:
I've not claimed on my car insurance, nor my home insurance in 20 years. I must be getting close to uninsurable now smile (yet my insurance is hardly any differfent year on year)






Edited by 98elise on Tuesday 28th June 17:40
But we are not talking about you are we? We are talking about the OP and similar people who's insurers obviously do not want their business on their books for a length of time due to the perceived risk,whther that risk is postcode, age or occupation etc.

for every average there are two sides, those that bring it down, and those that bring it up, of which it sounds like you are. I never said that insurers look to churn EVERY single policy holder, I was just explaining from an insurers point of view, certain people premiums increase. I never said you had to like it or agree with, it's just the way it is.

BJG1

5,966 posts

228 months

Tuesday 28th June 2011
quotequote all
What a bizarre understanding of basic statistics...

Tell me - am I more likely of being robbed, or having an accident, by virtue of that not happening in the previous year?

Let me put this another way. If I flip tails on a £1 coin, I lose it. I flip this coin once a year. I take out insurance with you, in the first year, at 60p against the risk of flipping tails. If in year 1, I flip heads, are you seriously suggesting that the risk increases?

Sarnie

8,231 posts

225 months

Tuesday 28th June 2011
quotequote all
BJG1 said:
What a bizarre understanding of basic statistics...

Tell me - am I more likely of being robbed, or having an accident, by virtue of that not happening in the previous year?
On the assumption that everyone will make a claim at somepoint,which is the way that insurers will underwrite their policies, after 12 months without a claim, do you think you are closer or further away from that percieved claim?

Gareth79

8,437 posts

262 months

Tuesday 28th June 2011
quotequote all
There is possibly a small sliver of truth, in that a person who changes insurer every year might be less likely to make a claim.