Has insurance jumped up a lot?!

[StevieP]

I'm old enough to remember when insurance went down every year, with more NCD!

And in general this is what happens - the trouble is, once you get to 5/6 years (which is most insurers maximums) then your discount simply stays static and you are then at the mercy of the rating changes (usually increases!) that all insurers have!

With car insurance the best advice is to simply shop around each year - there are enough comparison websites out there that it's not exactly a chore these days!

I can never work out the logic of car insurance, doing some quotes at the min and it works out cheaper if I put 0 years no claims rather than 2 years. Having an older driver no longer brings the price down but on a positive note the choice of car doesn't really increase the price by much.

THIS I can't understand - in 20+ years in the industry (sadly!) I've literally never seen a quote cheaper by putting nil NCB as opposed to 2 years!?!?!?!?

 

[adolf hamster]

And in general this is what happens - the trouble is, once you get to 5/6 years (which is most insurers maximums) then your discount simply stays static and you are then at the mercy of the rating changes (usually increases!) that all insurers have!

the thing i find a mystery is given how the vast majority drive their entire lives without any serious accidents, every year paying hundreds if not thousands to insurance companies for absolutely no tangible return, and somehow this is an industry that's struggling to make ends meet that they need to raise prices.

 

[StevieP]

the thing i find a mystery is given how the vast majority drive their entire lives without any
serious accidents, every year paying hundreds if not thousands to insurance companies for absolutely no tangible return, and somehow this is an industry that's struggling to make ends meet that they need to raise prices.

I can see your point but the advent of personal injury claims on top of damage claims, fire claims, theft claims etc have to be paid somehow! - and remember, car and van insurers are not isolated in this - most insurers also provide cover for businesses, liabilities, travel, debt etc etc etc - what do you think they do if one particular sector is causing them huge losses? Lump the entire increase on that sector, or spread the load around across various policy types?

Solicitors have got an awful lot to answer for in my opinion - just this last week I've dealt with a liability claim that has been rumbling on for about a year and a half (an employee slipped on a cracked tile and broke her ankle) - it's now looking like the payout to her will be in the region of £22,000 - and the solicitors costs across both parties are going to end up north of £60,000!!!!

Don't get me wrong, I'm not defending insurers putting up their prices (I have to pay them just like everybody else!) but if you ran a business and it wasn't making money, would you continue operating at a loss??

It takes an awful lot of £300 car policies to just break even with an £82,000 claim!

 

[adolf hamster]

I still cant see how they can be that close, or how that allows for seemingly random fluctuations depending on area, age, etc. I've been driving for nearly 8 years now and still insurance is over a grand for anything even slightly more luxurious than a 1l econobox.

You cant deny its a bit of a **** scenario drivers are put in paying hundreds every year for insurance and then the moment they would need to call on it the first reaction is "dont get the insurance involved because my premium will go up even though its not my fault"

There needs to be much better regulation for some of the practices going on, seems to me the complex numbers game has grown so complex its easy to sneak bad practices through the cracks.

 

[Marvin]

So the main thing that will impact on motor insurance pricing at the moment is the change in the Ogden discount rate in March. When insurers settle large injury claims, they are almost always a lump-sum payment, to cover cost of care and loss of earnings over the rest of the injured party's life. This affects large claims generally (the ones you really want insurance for) - whiplash and the like will be different. In order to come to the settlement, a government-set collection of actuarial tables are used, covering the IP's age, career, dependencies and so on. Basically, the estimated cost of care etc is calculated per year, and the discount rate applied. Sum the total and you've got the lump sum. This was lower than the total because the IP is receiving the full amount on day one, so it's assumed the money will be invested (in Government bonds - the "safest" form of investment), hence for each additional year, the discount rate is applied. Since 2001, this has been 2.5%, and on the 22nd March 2017 this was changed to -0.75%. An example best illustrates the difference:

This is purely hypothetical, I don't work in claims. Take an injured party, a 25 year old earning £30k per year. They have serious injuries, and it is anticipated that the total cost of loss of earnings and care is £40k/year at today's prices, lasting for 45 years.

 Year  |     2.5% discount rate     |      -0.75% discount rate     |
   1   |                    £40,000 |                       £40,000 |
   2   |                    £39,000 |                       £40,300 |
   3   |                    £38,025 |                       £40,602 |
.......|                    ........|                       ........|
  44   |                    £13,467 |                       £55,157 |
  45   |                    £13,130 |                       £55,570 |

The totals? Prior to the 22nd March, this hypothetical claim would have been settled with a lump sum of £1.09m, and after, £2.13m.

As the change to the discount rate affects claims whether they're made before or after the 22nd March, this means a significant number of existing claims (which were priced for at the old discount rate) will settle for a significant amount more than expected (or reserved for). This is why there's a double-hit on this occasion, there's the increased cost going forward, but also existing.

Younger drivers will be hit harder as cost of claims for young drivers tends to be higher (due to the injured parties involved being younger and therefore needing more care) for these kinds of injuries.

Most insurers have now posted revised 2016 earnings with combined operating ratios (basically the ratio of claims paid, costs experienced etc vs premium collected) well over 100%, and this is across all lines of business (this change only affects injury liabilities), not just motor.

Expect prices to start to settle once again, but it'll take a while to shake this change through the market before it corrects again.

 

[Nasher]

I can see your point but the advent of personal injury claims on top of damage claims, fire claims, theft claims etc have to be paid somehow! - and remember, car and van insurers are not isolated in this - most insurers also provide cover for businesses, liabilities, travel, debt etc etc etc - what do you think they do if one particular sector is causing them huge losses? Lump the entire increase on that sector, or spread the load around across various policy types?

Solicitors have got an awful lot to answer for in my opinion - just this last week I've dealt with a liability claim that has been rumbling on for about a year and a half (an employee slipped on a cracked tile and broke her ankle) - it's now looking like the payout to her will be in the region of £22,000 - and the solicitors costs across both parties are going to end up north of £60,000!!!!

Don't get me wrong, I'm not defending insurers putting up their prices (I have to pay them just like everybody else!) but if you ran a business and it wasn't making money, would you continue operating at a loss??

It takes an awful lot of £300 car policies to just break even with an £82,000 claim!

Yea this is the kind of crap that needs to be stopped. 82k because of a hurty ankle. They should cover their wages for the time they are off and that's it, which is probably a few weeks.

 

[Dup]

Last year £350, this year £500. Comparison sites at first were £490 best price.

Circumstances have not changed besides one extra NCD. Disappointing.

I re-quoted a week later, later at night on comparison sites and got £373 best price for the exact policy I am on now. Still more expensive, but better than £500! Will call them soon and see what they have to say.

 

[adam cool dude]

Both my daily's went down to under £200 this year although my weekender went up as I went for more specialist cover. Still £800 all in for 3 cars I cannot really complain. My tax is more

 

[VTR]

Yep, paid £272 last year, gone up to £380 this year! BMW 630i.

 

[Jono]

I renewed mine last week with Aviva. From £276 to £291 this year so only a slight rise.

I think this has been the 3rd year in a row I have auto-renewed with Aviva. I shop around everywhere but no-one comes close to my renewal price each year.

What car/milage, and do you have legal/courtesy car on that?

 

[HangTime]

This is almost correct - the discount rate (otherwise known as the Ogden Report) is actually more to do with the way a long term injury payout is calculated rather than anything to do with frequency - in basic terms where a payout was previously £10m for example, the new calculation makes the same award somewhere in the region of £22m (obviously there are other variables but in a nutshell insurers are going to be forced to pay out more and so they are going to want to collect more premiums to compensate - they are businesses after all!)

The point I was making about frequency was because injury claims are relatively more common in Motor lines compared to other common types of insurance that the general public will purchase. So a reduction in discount rate is likely to impact Motor premiums more than say Home insurance, whereas the IPT change should impact all applicable lines equally.

 

[Gammawolf]

I renewed mine last week with Aviva. From £276 to £291 this year so only a slight rise.

I think this has been the 3rd year in a row I have auto-renewed with Aviva. I shop around everywhere but no-one comes close to my renewal price each year.

My renewal from aviva is the same, was cheaper than everyone else so let it renew. I went up from £386 to £411 but during the year i changed addresses and also added business usage.

 

[chaparral]

the thing i find a mystery is given how the vast majority drive their entire lives without any serious accidents, every year paying hundreds if not thousands to insurance companies for absolutely no tangible return, and somehow this is an industry that's struggling to make ends meet that they need to raise prices.

But there paying for people like me who had a huge insurance claim of over half a million....

 

[almoststew1990]

In the end I went with a multicar policy as we happened to get another car this weekend. £830 for Admiral multicar policy on a 2001 golf and the 2003 BMW down from £1030 quote on Confused.com after a phone call. A bit expensive as my partner is a new driver! Business use for both of us on both cars. Reasonably happy with that as More Than wanted £700andwhatever for just the BMW with me on it!

 

[GhostWKD]

My Noble insurance went up over £100 vs last year (based on cheapest I could find both years) but the value of the car is much higher so hard to draw a direct comparison

 

[Flibster]

£18 more this year with the same insurer and same level of cover, difference is due to having the brakes changed to grooved discs and yellowstuff pads. Oh, and moved house.

 

[StevieP]

But there paying for people like me who had a huge insurance claim of over half a million....

This basically - claims of this magnitude may be relatively rare but it takes an awful lot of £350 premiums to cover even a one-off claim!

Apparently one major insurer have gone from a circa 5% profit to a 6% loss in 2016 simply because of unsettled claims that now benefit from the reduced discount rate (any claims not already settled before 20/3/17 are automatically calculated on the new figure!)

Imagine how annoyed you'd be if you had a serious injury claim settled a few days before the deadline date!!

 

[Rids]

Imagine how annoyed you'd be if you had a serious injury claim settled a few days before the deadline date!!

To be fair if you had a solicitor who pushed for a lump sum settlement over a PPO in the months before the Ogden rate ruling then you hired the village idiot. I know a certain insurers claims team were having trouble progressing anything over the 3 months up to the ruling because every claimants legal team was stalling. Conversely they're now all in a rush to settle before the Ogden rate is reviewed, propensity to plead PPO's has also dropped through the floor.

The change in Ogden rate also has indirect impacts aside from the direct hit on reserves. MIB has just announced that it expects its 2018 levy call to be about £50m on prior years, so from around 1.6% of premium to closer to 2%, and the cost of XOL reinsurance has gone through the roof (mainly because the whole reinsurance market just took a massive kick to the face)

 

[pepp77]

Just had my renewal through

BMW M135i on a 64 plate
40 years old
22 years driving licence
16 years no claims
No convictions etc

Last year (first year of me owning the car) was £680 for the year (I live in an E* postcode I believe).

Esure sent me the renewal through and wanted £1048 for the year.

Quick check on gocompare, compare the market, confused etc came back with several quotes in the £650-700 bracket, one of which included esure, but directly on their website they wanted £990. I picked someone else and went with them (Admiral for £670 for the year, including legal cover plus protected no claims), then phoned esure to cancel and said do not even try to match as you should have just done that to start with.

Kinda scary that my age and no claims coverage still results in such a high quote.

 

[Flack88]

Just got my renewal through today £690 for a highly modified Glanza V, was around £550 last year. Will certainly be doing some shopping around. This is for 26 year old with 8 years NCB with no points.