Are You Overpaying For Car Insurance Cover?

Cut Your Car Insurance Premiums Costs! is a Specialist Car Insurance post. If you own a specialist car you can compare car insurance at the UK's largest specialist car insurance comparison website for cheaper cover and quote savings.

From Insurance Blog

The UK Government has declared war on the private motor insurance market.

The Government has yet to decide who the enemy actually is, although one ethnic group ‘CFA referal collectors’ have been singled out for the death camps and news coming out of Westminter today confirms this.

The call for the ‘War on Car Insurance’ from the media and consumer led groups has reached deafening proportions recently and the UK Government will tell you they have been forced to act.

The AA have stated that the ‘average’ car insurance premium has risen by 40% and on the word of the AA and probably as a deflection away from the more pressing economic issues, battle has begun.

Government Forces Attack

First into battle yesterday for the Government, was the consumer watchdog the OFT (Office of Fair Trading). They have been asked by HQ to find out if the car insurance prices rises are real and whether there are any (choke) anti competitive practices occuring in the UK ptrivate motor insurance market that may be pushing up prices. To do this they have asked the nation to contribute in an open call to arms, to publically air their grievances on car insurance price hikes, by filling in a form.

The OFT has asked all the suspects to contribute to the war effort or else stand accused of being part of the problem not the solution to higher car insurance premiums.

Most Wanted Suspects

1.  Price Comparison  Websites

2. Replacement Vehicle and Car Hire Companies

3. Approved Motor Vehicle Repairers.

4. Insurance Companies Products.

None of the major suspects is being pulled in for interrogation at this point in time. They have been given 5 weeks until October 12 to comply with the resolution or face shock and awe.

Have your Say

A spokesperson for the regime said’

“We will be engaging with participants in this market, trade bodies, the Government, regulatory agencies and consumer groups over the next five weeks by issuing information requests, arranging roundtable discussions and holding bilateral meetings.

Information requests:

• Questions for credit hire providers (pdf 96 kb)
• Questions for insurance companies (pdf 157 kb)
• Questions for vehicle repairers (pdf 97 kb)
• Questions to price comparison sites (pdf 93 kb)

We will also be inviting comments from consumers and other interested parties. The OFT is, however, unable as part of this study to address or advise consumers in this market on individual matters or complaints.

Any party that wishes to submit their written views, can e-mail motorinsurance@oft.gsi.gov.uk by 12 October 2011 or write to:

Private Motor Insurance Call For Evidence
Fourth Floor
Office of Fair Trading
Fleetbank House
2-6 Salisbury Square
London EC4Y 8JX “.

Second Front Opens with Pincer Movement

As soon as the OFT went into battle yesterday, it was immediately announced that the Government were opening up another front with a full out attack of its heavily armed praetorian guard, the FSA, against those supplying information to the enemy in return for money. The practice is to be banned immediately it has been confirmed today, confirminmg that the government will take the side of Insurers against Lawyers. Questions of the legality of the war and the interfering with free trade could be raised at the international courts at a later date.

Tensions between Solicitors and Insurance Companies have been rising steadily over the last few years with Insurers furious about having to pick up massive bills for professional negligence by solicitors involved in mortgage and building surveying disputes. In many cases Solicitors Professional Indemnity insurance premiums have been raised so high that many solicitors are now finding it impossible to practice.

Coupled with the massive amounts that the insurance companies are having to pay against public liability and employers liability claims for negligence, it appears the Insurance companies have finally had enough.

The number of car accidents involving personal injury claims is 31% down on the average for ten years prior.

However the cost of personal injury claims has more than doubled from £7bn to £14bn in the past ten years and motor insurance premiums have risen at least 30% this year.

Insurance companies are blaming Conditional Fee Arrangements (CFA’s) or ‘No Win No Fee’ for the rising costs of car insurance. They argue that there is no disincentive, such as having to pay if you lose, that’s stops people making a claim if you have been injured in a car insurance accident.

The Government has stopped going as far as banning CFA’s completely, which would seriously impede that right to justice for the majority of the people in this country who cannot afford solicitors bills of £180 per hour +.

Today it has announced that those referring accident injury victims to solicitors and lawyers will be banned from receiving payment!

It also seems that the special relationship that UK Insurance companies have with UK Government through the ABI etc. appears stronger than that of the Law Society and Solicitors Regulation Authority (SRA) who traditionally only find allies in the other place, the House of Lords.

It also appears that the Government think that the Insurance Companies, who set the car insurance prices, are not actually responsible for their own pricing!

Insurance Blog will keep you abreast of all the developments as the war on car insurance unfolds. We will also be running a series of posts that examine in detail the questions being asked of the Motor Insurance Market.

Car Insurance Premiums – War is Declared is a Specialist Car Insurance post. If you own a specialist car you can compare car insurance at the UK's largest specialist car insurance comparison website for cheaper cover and quote savings.

According to the Motor Insurers’ Bureau in a report released today, there has been a twenty percent drop in the number of people driving without car insurance in the UK.
However, there are still a third of a million uninsured drivers on the roads in the UK without adequate car insurance cover.
And it’s young drivers who are the biggest culprits when it comes to breaking the law and putting other road users at risk of loss.

The Motor Insurers’ Bureau (MIB) reports:

Young drivers are the least likely to be insured with new figures suggesting the problem is worse in Britain than any country in Western Europe.

One in five uninsured drivers is aged between 17 and 20.

300,000 young drivers in that age group breaking the law when they get behind the wheel of a car. Many have taken their driving test and hold a full licence but claim they cannot afford the rates charged by Car Insurance Companies

The Motor Insurers’ Bureau Chief executive Ashton West said

“We’ve made significant progress and seen a 20% reduction but we’ve still got a pretty embarrassing record in the UK and there’s a lot more that we need to do to rid the country of this problem.

“Young drivers present a higher risk so they end up paying more.

“The cost of insurance is higher, therefore some of them see that as beyond what they’re prepared to pay and they take the risk.”

Uninsured driving is not helped by the courts who typically hand out  a £200 fine and six points on your licence.
When you consider that the average young drivers car insurance premium is in the region of £2000 per year, and that the car may only be worth £500 and the fine £200  – you can see why taking a risk with uninsured driving is attractive to a certain type of young driver.

However what they fail to realise is that when they are caught they will be paying for this in high premiums for rest of their lives.

Cheap Young Drivers Car Insurance is available from a variety of providers at Car Insurance TV. Compare car insurance prices and shop around for cheaper quotes!

So on my way over to the Insurance Blog offices what do I hear on the BBC Radio One lunchtime news program for young people – Newsbeat – a very interesting  programme about the outrageous costs of car insurance for young drivers.

Being the BBC they have gone all multi media and you can follow the show at BBC Newsbeat  Facebook and listen to and download the podcast at http://www.bbc.co.uk/newsbeat

Listening to many of the comments and reading posts like this….

From Facebook

Chris Kidwell
I’m 22. I’ve been driving for 5 years. I’ve never had an accident. 2 weeks ago a 60 year old man crashed into my car while it was parked. He’s probably got protected insurance cover, and his premium will hardly go up even though he wrote my car off and damaged 2 other cars. I’ve never even come close to an accident in my 5 years, but my high … See moreinsurance policies have probably totalled enough to cover the damage to the other two vehicles, my written off car, and all the hire cars involved… So even though I’m the driver that is least likely to have an accident, my money is more likely to have paid for his irresponsible action. I do feel that young drivers are all tarred with the same brush. There should be a standard amount that all drivers start on (say £900-£1000) a year. Then the premium can increase/decrease accordingly depending on how the driver fares on the road. To charge anyone £3000 a year without knowing whether they are actually a bad driver is wrong.

………………

You’ve got to agree…hey, maybe the kids do have a serious point!

Uninsured Young Drivers Torment British Roads is a Specialist Car Insurance post. If you own a specialist car you can compare car insurance at the UK's largest specialist car insurance comparison website for cheaper cover and quote savings.

With both car insurance comparison website car-insurance.tv last week predicting a hardening market for and now the AA predicting massive premium hikes this is unwelcome news for both the private car owner and the UK economy as a whole, which hardly needs any more inflationary pressures.

Owners of specialist or expensive cars are more likely than the competitive middle market, to feel the brunt of the car insurance premium hikes.

Here’s what Insurance Blog has to say on the matter……….

UK Car Insurance Rates Must Harden As Loss Making Companies Claims Reserves Run Dry!

Incredibly Car Insurance companies in the UK are struggling to make a profit and 2010 is likely to see a large reduction in the supply of car insurance, with many famous brands and suppliers predicted to disappear from the high street and our television screens as the market adjusts to cater for the massive losses, according to analysts from car insurance comparison website Car-Insurance.tv.

Recently released figures show that the UK Motor Insurance market has been consistently losing money since 2004 when the total UK profit from underwriting car insurance policies was £77 million.
In 2007 the UK car insurance market made a £1.1 billion underwriting loss, last year the loss was £1.3 billion and the figures for 2009 are expected to be worse……..

Very few car insurance providers have escaped the losses and are profitable, whilst many have released claims reserves held from previous profitable years to disguise the ‘actual ‘ loss.

So what is causing such massive losses in a large compulsory market that not so long ago was the most aggressive in the world?

On the face of it the answer appears to be simple …… The Cost of Claims!

Claims are the problem not because the Car Insurance Companies have failed to include the rising costs of claims into their pricing structures; but because they have failed to cover the true costs in the retail price!

Car Insurance underwriters seem to have forgotten the basic rules of betting when setting their prices – and that is, that the Bookie never loses…….

To understand where the car insurance underwriting companies have gone wrong you first need to examine how they arrive at the price of a car insurance policy premium.

The cost of your car insurance premium is basically made up of three components:

1. The costs of production – Staff, Systems, Distribution etc
2. The costs of losses – known claims ratios ( the proportion of a policy premium pool that gets eaten up in claims)
3. Profit

The cost of all these components can be calculated by clever people called actuaries who work for the insurance companies and the rates set accordingly.

So what’s gone wrong?

Well naturally it is obvious to first look at claims as the cause of the losses – but the truth is far from this end of the life of a car insurance policy……

The frequency of claims has either fallen or remained fairly constant over the period of losses and the actual cost of claims has only risen by 1 percent.

Despite all the noise made about gangs of car insurance claims fraudsters roaming the streets of the UK, the fact of the matter is that most of this is propoganda aimed at deterring fraud which naturally rises during a recession/depression. The number of fraud cases are really insignificant in the true scale of the market to affect pricing.
Admittedly there has been a significant increase in the number of personal injury related claims, egged on by claims farming companies, which would affect long term pricing, however the losses experienced by Car Insurance companies are nothing to do with claims and claims pricing.

These type of claims fluctuations have always been dealt with successfully in the past by car insurance companies by adjusting reserve ratios or negotiating better re-insurance ( laying the risk off), or more importantly by adjusting price ……..

But this time something is different….

Car Insurance Companies can no longer set the price! Not if they want to win the business anyway!
And they certainly cannot sell policies at the premium levels that the Actuaries suggest!

Why? Seemple …….The Internet!

And more importantly Car Insurance Price Comparison websites or aggregators as they are known in the industry, which account for around 90 percent of the Car Insurance sold online. Since around 2004 it has been possible to easily compare car insurance quotes online from numerous suppliers, and invariably the cheapest premium wins the business.

Car Insurance companies not longer set their own prices! And this is the problem!
In a race to achieve enough volume to make a book of car insurance business profitable the car insurance companies have been selling their car insurance polices too cheap and covering their losses with their claims reserves……..time is running out!

For the consumer then as we enter 2010 it looks as if the best policy is still to visit comparison websites where you will be offered a choice of suitable policies at the most competitive prices.
If you stay with your current insurer – expect large premium hikes at renewal!
Shop around for specialist car insurance as prices are going to vary widely.
Visit a specialist car insurance comparison website as there will be many offers to be had as companies try to secure volume of car insurance policies.

specialist car insurance

Car Insurance Premium Hikes Set for 2010 is a Specialist Car Insurance post. If you own a specialist car you can compare car insurance at the UK's largest specialist car insurance comparison website for cheaper cover and quote savings.