Car insurance threads

[R1 Loon]

Every week around 3 or 4 new car insurance threads appear with the OP bemoaning the fact that their insurance has risen in price, followed by the usual ranting from others with their "facts" based on little more than opinion and ill-informed guesswork.

Just wondering if a sticky with a link to the submissions made to a Commons Select Committee with all threads directed to this may keep this to a minimum. The submissions were made by the insurance industry, independent consultants, Accident Management Companies, Personal Injury Lawyers and Trade Bodies from all affected areas.

It does contain some very useful factual statements, not least the consensus agreeing that motor insurers pay out between £1.20 and £1.22 for every £1 received, thus disproving the view that insurers have a "licence to print money". It laso dispels some of the other urban myths, which this site (via the posters) does tend to perpetuate.

Just an idea.

Here's the link:

http://www.publications.parliament.uk/pa/cm201011/...

Edited by R1 Loon on Saturday 12th February 11:35

[Mr Will]

That site is a bit dry to read, but if you can summarise it into a readable wiki then I'm happy to make it an FAQ.

[R1 Loon]

I'll have a go probably taking the main summary page, although no idea how to do a wiki (shame on me)

[fridgedoctor]

[quote=R1 Loon]

It does contain some very useful factual statements, not least the consensus agreeing that motor insurers pay out between £1.20 and 31.22 for every £1 received, thus disproving the view that insurers have a "licence to print money". It laso dispels some of the other urban myths, which this site (via the posters) does tend to perpetuate.


How can that be? What sort of business can survive when money goes out quicker than i came in?

Sorry, couldnt work the quote thing very well

[R1 Loon]

fridgedoctor said:

R1 Loon said:

It does contain some very useful factual statements, not least the consensus agreeing that motor insurers pay out between £1.20 and 31.22 for every £1 received, thus disproving the view that insurers have a "licence to print money". It also dispels some of the other urban myths, which this site (via the posters) does tend to perpetuate.


How can that be? What sort of business can survive when money goes out quicker than i came in?

Sorry, couldnt work the quote thing very well

Just noticed the bit in bold should be £1.22 not 31.22 (didn't hold down the shift key) and fixed the quote (you need to add "[R" after "fridgedoctor]"

In answer to the question, because they have all been hoping that the market conditions will change and thy will be able to cover all those losses in time. it's not happening though, so they're upping costs to try to break even and removing themselves from the worst risk categories.

Insurers are huge businesses operating internationally with many different lines of business, so losing on Motor insurance won't cripple many of them. However, some that are UK focussed on personal motor business are suffering badly. Quinn Direct went into administration last year and RBS Insurance (Direct Line, Churchill, Privilege and a few others) lost £233millionin the first 9 months of last year as a whole business, with their motor division costing them £433million. Hence why they no longer advertise on price exclusively and won't quote anythg under £3000 for drivers under 25.

Edited by R1 Loon on Saturday 12th February 12:19

[fridgedoctor]

Jeeez, understand the international / other activities angle, but those numbers are pretty BIG! This looks like a bit of a problem to me, theyre going to have to bin it, or squeeze everyone, not just kids.
Thanks for the quote help

[R1 Loon]

fridgedoctor said:

Jeeez, understand the international / other activities angle, but those numbers are pretty BIG! This looks like a bit of a problem to me, theyre going to have to bin it, or squeeze everyone, not just kids.
Thanks for the quote help

Exactly. So when everyone is moaning about the cost of their insurance, this is the reason why. it's similar to any other product, if the raw material (ultimate cost of claims) rises exponentially, then the retialer (the insurer) has to raise prices to try to compensate.

The only difference to other products is that the manufacturer, retailer etc know the cost of the raw materials upfront, so can adjust their prices in advance. Whereas insurance is all about trying to predict the future based on trends, statistics, experience and a lot of other imponderables.