Car insurance renewal

beorhthelm · Sep 6, 2016

Balders said:
Renewal Pricing - in general terms, these days the longer you stay with the same company, the more expensive your renewal will become! When I was last in the industry (broking side) renewal pricing was based on your propensity to renew. Very likely - load it up, unlikely, don't load it up. All based on demographic data and your policy history ;-)

sounds right. after a couple of years of allowing the auto-renewal go through for the sake of a £10-20 increment they hit me with £100 increase last year. went online and found they'd do cheaper than my previous year. complained and got the price back down, but for the hassle i may as well have gone price shopping. i dont understand why you'd treat loyalty like this as now i'll auto-price check rather than auto-renew.

MF'84 · Sep 6, 2016

Notters said:
But as I understand it, there will still be a significant hike in your insurance either way?

I'm pretty sure it has only ever cost me something like £40 / £50 extra to protect my NCD.

Arthritic Toe · Sep 6, 2016

Re. protected NCD and in fact any insurance product.... They are offering you this product to make a profit from you. If they are making a profit from it, that involves you giving them more money than they give you. It is therefore a bad deal.

father_and_son · Sep 6, 2016

Arthritic Toe said:
Re. protected NCD and in fact any insurance product.... They are offering you this product to make a profit from you. If they are making a profit from it, that involves you giving them more money than they give you. It is therefore a bad deal.

No entirely true. Yes, insurance is there to make money (something that the motor insurance industry is terrible at... as a whole it loses money, on average, 6 years in 7... however, they more than make up for the loss by selling you home/pet/travel which are all massively more profitable but not compulsory like motor insurance is).

The profit comes from the pool, not any individual. Each individual in an insurance pool will pay less than they would take out if they made a claim, but there are more people in the pool who won't make a claim.

For motor, it's broadly 1 person in 5 who makes a claim in any given year (ignoring things like windscreen and breakdown, but it does vary hugely depending on the sort of person they insure). So if the average claim costs, say £5,000 then each person needs to pay about £1,250 into the pool. That gives the insurer the money to pay £5,000 to the one who does make a claim and the rest pays the wages of all the people involved. The insurer would be hoping to make a profit but often don't and a single million pound medical claim would wipe out the profitability from a huge pool of people contributing a little each.

At an individual level, you will almost certainly "get back" more than you pay in if you make a claim, however, if you are lucky enough to never need to make a claim then you are always paying for someone else's accidents. But that is how the pool works.

Unlike many industries the insurance industry is extremely heavily regulated to "treat customer's fairly" and that means they cannot offer products that don't work within the basic framework described above.

father_and_son · Sep 6, 2016

MF'84 said:
I'm pretty sure it has only ever cost me something like £40 / £50 extra to protect my NCD.

It's normally between 10 and 15% of your basic premium. So if you are in your early twenties and only just reaching 5 years bonus then it can be hundreds of pounds. If you are middle-aged, middle-income, middle-england and paying £200-£300 then it's less than a match day ticket.

Notters · Sep 6, 2016

MF'84 said:
I'm pretty sure it has only ever cost me something like £40 / £50 extra to protect my NCD.

Yes, but my point was, if you make a claim, your insurance will go up on renewal whether you protect it or not.

LlcoolJ · Sep 6, 2016

beorhthelm said:
sounds right. after a couple of years of allowing the auto-renewal go through for the sake of a £10-20 increment they hit me with £100 increase last year. went online and found they'd do cheaper than my previous year. complained and got the price back down, but for the hassle i may as well have gone price shopping. i dont understand why you'd treat loyalty like this as now i'll auto-price check rather than auto-renew.

Same thing has just happened to me. The opera man's site gave me plenty of options that were £200 cheaper than what my current insurer could offer, even after speaking to them.

Considering their offer was around £600 then £200 is a massive saving. It makes no sense.

Arthritic Toe · Sep 6, 2016

father_and_son said:
...
...
Unlike many industries the insurance industry is extremely heavily regulated to "treat customer's fairly" and that means they cannot offer products that don't work within the basic framework described above.

I find this a bit of a stretch. Customers are generally penalised for loyalty, i.e. they will try to get you to sign up for auto-renewal of premiums and then hope you don't notice your annual premium becoming more and more uncompetitive each year. How is that treating customers fairly?

Anecdotally, I have a mate, early 50's, with a bog standard boring VW Passat. He's comfortably off and can't be bothered to switch his insurance that he's had now for about 25 years with the same company. He has never had a claim and has the full NCD. His premiums are about £800 a year. I have a similar boring car and pay about £130. (and yes, he's an idiot for not switching).

Leekbrookgull · Sep 6, 2016

Have to say that i could get a lower price for my insurance as i have checked online however my saving anything from £50-£100 is wiped out if the insurer is call centre based outside the UK where you pay over the top call charges as you spend the first 20 mins going through your case ! Secondly and its just me but i am with the NFU and found them to be very good in my two claims over ten years being with them (one no fault second was) and to be honest they do tell you that they are not the cheapest but almost every town seems to have a NFU office where you can actually speak to a real person and counts to me. Going low cost can be risky.

Balders · Sep 6, 2016

Interesting that the Insurance market "cry wolf" when accused of certain renewal tactics, yet the FCA are certainly on the case about treating customers fairly, with new rules coming in 1st April 2017

https://www.fca.org.uk/publications...ent-renewal-general-insurance-markets-ps16-21

Good job it is regulated, but with any regulation, it takes ages to do something about it - this renewal thing has been going on for years. I do have sympathy for some of Insurers as they give brokers nett rates and the brokers hike it up with their margin. When I was broking, I had to defend these kind of things to my Insurers who even 10 years ago were questioning if we were treating customers fairly ;-)

Cheshire Cat · Sep 6, 2016

Use the comparison websites. If your current insurer gives a cheaper quote on there for similar cover to what you need, ring the insurer and tell them - they should be able to match the price. If not use the prices on the comparison website as a new customer, and don't automatically renew.

Or go to a new cheaper insurer via the comparison website. Insurance companies have no loyalty to you so have no qualms about dumping them when they hike the prices up.

No claims protection is useful when you have make a claim. If you don't, like all other insurance it is just an added cost but you will never know that in advance (unless you have a time machine).

thedonkeycentrehalf · Sep 6, 2016

Rule of thumb with anything that offers auto-renewal is to spend a little bit of time to check the market for lower prices, then ring to cancel your renewal and when they ask why, give them the examples of the lower price. Most of the time they will magically find a way to lower the price to nearly match those you have found online. Usually they will be a couple of quid more expensive, enough for them to get a minimal increase but so it is not worth your while going through the hassle of changing.

This applies to various things - insurance, breakdown cover, anti-virus software..

Garage_Doors · Sep 6, 2016

If you have a an accident your premiums will go up regardless of fault.
A few years ago I had two accidents two days apart.
On the Saturday got knocked of the bike and on the Monday the front of my car ripped off !
Both non fault and both paid paid as non fault.
When it came to renewal time both policies had increased, when question I had almost identical answer form both insures.
Although neither my NCB had been affected the premiums were higher because I was a higher risk !
Asked why as I had not been at fault, it was explained to me that because I had been hit this meant I was a higher risk because I was in a position to be hit, whether it be location/ area or time of day etc to be involved in an accident albit not my fault !

Additionally as an “old git” the wrong side of 50 I know realise at my age that NCB is almost irrelevant,
With my current bike being a 1400cc Full comp is £88 with 10+ year NCB, when looking to buy a second bike being only a 1000cc with no NCB (as I cant have on both bikes) the premium was going to be £98 with NO NCB, if got rid of the other bike and transferred the NCB to the new one the policy drops to £89 ! 10+ years NCB makes a difference for a piddly £9.
As anyone else played when using comparison site with changing from full NCB and zero to see what the difference is?

GoldWithFalmer · Sep 6, 2016

Ok.....having been with my current insurer for 4 years,they hit me with a £415 renewal,i admit i have since last year ungraded from a 1.2 to a 2.0.....the 1.2 i had for 5 years (drive for a profession so used to 56mph :lolol:

) but daughter has now got car....basically a phone call has seen me insure the 2.0 for £276 .....i have surrendered my 10 year NCD protection though..

father_and_son · Sep 7, 2016

Arthritic Toe said:
I find this a bit of a stretch. Customers are generally penalised for loyalty, i.e. they will try to get you to sign up for auto-renewal of premiums and then hope you don't notice your annual premium becoming more and more uncompetitive each year. How is that treating customers fairly?

Anecdotally, I have a mate, early 50's, with a bog standard boring VW Passat. He's comfortably off and can't be bothered to switch his insurance that he's had now for about 25 years with the same company. He has never had a claim and has the full NCD. His premiums are about £800 a year. I have a similar boring car and pay about £130. (and yes, he's an idiot for not switching).

Personally, I agree. I am vehemently against this practice as both a customer and an underwriter, but I will explain why it happens...

The simple mathematics is that the insurers who do this do so because it allows them to make a loss in the first couple of years and start to recover that loss once they have got the premium creeping up. If everyone shopped around every year then they wouldn't be able to afford to take that hit to get you on their books and so it would always cost a little more for everyone in the first place.

In respect of Treating Customers Fairly... the change that will occur soon is that insurers will have to show you last year's price as well as your renewal premium so that it's more obvious if it has changed. TCF (as it's known in the industry) isn't about always doing things a certain way, just about being clear what you are doing so that people can make an informed choice. You are offered a renewal price and you are perfectly at liberty to take or leave that offer and there is no promise, explicit or implicit, that it is the cheapest price available. It might not be completely transparent, but its not "unfair".

Be grateful for all the people who are "cash rich, time poor" and can't be bothered to shop around (or do and don't move because the amount saved is too small for the hassle) because they are subsidising the people who do shop around!

father_and_son · Sep 7, 2016

Garage_Doors said:
As anyone else played when using comparison site with changing from full NCB and zero to see what the difference is?

Word to the wise. Lots of insurers now monitor EVERY quote that comes to them, regardless of whether it is direct or via a comparison site and cross match the details so that they get a view of every quote done by every [potential] customer. This is essential to combat fraud as it shows up immediately people who are manipulating the system to squeeze the cheapest price out by being economical with the truth.

Get quotes for a few different cars and no one will care because it just looks like you are shopping normally. Likewise, changing the excess or add-ons (breakdown, legal expenses, etc) doesn't raise eyebrows. But the same person doing quotes with and without declaring claims or with 3-4 different occupations raises alarm bells and the clever insurers will react and either stop returning prices, stop you being able to buy the policy online or actually start to change the premium they return because now you look like a worse risk (someone who will lie about their occupation is likely to lie about an accident or "have a dozen extra CDs in the car when it was stolen, honest" or make up a whiplash injury or exaggerate something else)..

Also, most insurers use the credit agencies to validate identity (your actual credit score doesn't make that much of a difference, but proof of ID does) and if they can't get a score (if you aren't on the electoral roll or are using made up details) then again, they either don't quote or load the premium, so using a false name/address will give duff results on the comparison sites too.

Shropshire Seagull · Sep 7, 2016

With the comparison sites they are often able to gain bulk customer discounts.

A work colleague tipped me off on this last year when I was looking for a better energy supplier deal. I was already with E-on on a fixed price deal that was still someway from contract end date. Went on Money Supermarket and input my details and sure enough E-on was on there as best deal for my same contract, but estimated at £400 p/a cheaper - my contract termination fee was £20 IIRC so I switched and was £380 better off.

Can't see why the same concept wouldn't exist for car insurance?

Garage_Doors · Sep 7, 2016

father_and_son said:
Word to the wise. Lots of insurers now monitor EVERY quote that comes to them, regardless of whether it is direct or via a comparison site and cross match the details so that they get a view of every quote done by every [potential] customer. This is essential to combat fraud as it shows up immediately people who are manipulating the system to squeeze the cheapest price out by being economical with the truth.

Get quotes for a few different cars and no one will care because it just looks like you are shopping normally. Likewise, changing the excess or add-ons (breakdown, legal expenses, etc) doesn't raise eyebrows. But the same person doing quotes with and without declaring claims or with 3-4 different occupations raises alarm bells and the clever insurers will react and either stop returning prices, stop you being able to buy the policy online or actually start to change the premium they return because now you look like a worse risk (someone who will lie about their occupation is likely to lie about an accident or "have a dozen extra CDs in the car when it was stolen, honest" or make up a whiplash injury or exaggerate something else)..

Also, most insurers use the credit agencies to validate identity (your actual credit score doesn't make that much of a difference, but proof of ID does) and if they can't get a score (if you aren't on the electoral roll or are using made up details) then again, they either don't quote or load the premium, so using a false name/address will give duff results on the comparison sites too.

What is a " credit score" ?

father_and_son · Sep 8, 2016

Garage_Doors said:
What is a " credit score" ?

A score created by a credit reference agency (Experian are one of the biggest) that has details of everything you have ever borrowed or tried to borrow and whether you pay your bills on time. The higher your score the better credit risk you, the lower your score, the more likely you are to default or go bankrupt. Banks use them to decide what overdraft limit you are allowed, whether you can have a mortgage, etc etc.

Other companies can pay to access this information (or at least a summary) to decide whether they want to offer you a product of theirs. Insurers use it because there is a correlation between your score and the chance you will make a claim (the link differs by product, its a pretty good indicator for home insurance and only quite a loose indicator for motor) or whether they want to let you pay by instalments.

[Worth stating that it isn't a straight forward link, so its not "good credit risk = good insurance risk", the best risks for insurers are actually the people with fairly middling scores... the people who struggle but manage to pay their bills on time. The bad risks are at the extremes of both ends, people with very bad scores - generally more likely to make a fraudulent claim because they need the money - and people with very high scores - generally more likely to exaggerate a claim because they see insurance as an investment and want their money back, one way or the other!]

Clearscore.com and Noddle.co.uk are two of the companies that you can use for free to look up your own score if you are interested.

Garage_Doors · Sep 8, 2016

father_and_son said:
A score created by a credit reference agency (Experian are one of the biggest) that has details of everything you have ever borrowed or tried to borrow and whether you pay your bills on time. The higher your score the better credit risk you, the lower your score, the more likely you are to default or go bankrupt. Banks use them to decide what overdraft limit you are allowed, whether you can have a mortgage, etc etc.

Other companies can pay to access this information (or at least a summary) to decide whether they want to offer you a product of theirs. Insurers use it because there is a correlation between your score and the chance you will make a claim (the link differs by product, its a pretty good indicator for home insurance and only quite a loose indicator for motor) or whether they want to let you pay by instalments.

[Worth stating that it isn't a straight forward link, so its not "good credit risk = good insurance risk", the best risks for insurers are actually the people with fairly middling scores... the people who struggle but manage to pay their bills on time. The bad risks are at the extremes of both ends, people with very bad scores - generally more likely to make a fraudulent claim because they need the money - and people with very high scores - generally more likely to exaggerate a claim because they see insurance as an investment and want their money back, one way or the other!]

Clearscore.com and Noddle.co.uk are two of the companies that you can use for free to look up your own score if you are interested.

Thanks for that, sounds like a right kurfuffle ! Guess i'm a bit out touch with things, but if i want to borrow money the lender says how much then tells me what it it will cost over what period, where does this credit score come into this? And why would you want to look up this score, what will this information help me to do?

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