Vehicle insurance is a con

Hornblower · Sep 30, 2014

57 years old. Been biking for 40 years, 100% no claims, no convictions and no changes to my policy or bike yet the b*stards wanted to charge me 40% more for my premium than I paid last year. I phone up, complain, and then they discount it back to what I paid last year. What a f*cking con.

Notters · Sep 30, 2014

It's nearly always cheaper to change providers. You're lucky they agreed to reduce it down again!

Chinman3000 · Sep 30, 2014

Insurance companies are a r s e holes.

Not only do they now charge for amendments / changes / cancellations / direct debits / phone calls / paper documents but they continue to fleece people of money and then doing everything they can to get out of paying claims. Sub-human scum.

edna krabappel · Sep 30, 2014

Well it is a bit cheeky, but they all do it, and if you've eventually got it back down again to what you consider to be an acceptable price, then it's not quite a con, just slightly sharp practice, right?

I simply refuse to go with the same insurer if they do that. I just can't be arsed. We all know they'll make you an offer and then rapidly drop it down once you tell them you can get it cheaper elsewhere. My take is that if they're not going to quote their best price in the first place, I won't even bother going back to them. I'll just take out a policy with somebody else and tell the original company that's the reason for cancelling. I don't like playing their game.

There was a story a while back about some pensioner who'd been buying his home/contents insurer through the same company for decades. Each year they put the premium up, and each year, being elderly and frail and unquestioning, he just renewed it. Until one year when a family member discovered he was paying something quite outrageous (in the region of several thousands) for his cover, when he could have been paying under a hundred quid if he'd gone elsewhere. These are the people who suffer from such practices, which is when it's quite sad. The rest of us are quite capable of telling them where to poke it.

edna krabappel · Sep 30, 2014

Notters said:
It's nearly always cheaper to change providers. You're lucky they agreed to reduce it down again!

He's not though. They almost always will, it's just that they expect you to make the effort to get them to that point.

I had a policy with Hastings Direct one year. Got the renewal notice though, sure enough it had gone up, despite no claims or issues. I rang them, asked if that was the best they could do, they said "yep, that's yer lot". I shopped around, found another company and got a quote, then rang Hastings back to ask if they could match it. They offered to knock twenty quid or so off, still leaving the other quote about sixty quid cheaper, so I told them thanks but no thanks, and then went and took out the other policy.

I rang Hastings back to confirm cancellation of the old policy, at which point- SURPRISE!- they announced that, miraculously, they could beat the other company's quote. Equally as mysteriously, it turned out the other company was a subsidiary of Hastings Direct. I told them I'd already taken out the new policy, to which they advised me to cancel it and go with Hastings. I asked if they could do it themselves, given that this other company was effectively part of theirs, but they said they couldn't do that. Then they offered to drop the price even more. Cocks.

The hassle involved in doing this, even with a 14 day cancellation period, did my head in, so I ended up telling Hastings to shove it up their arses and just stuck with the new one. That's the massive irritant with it all: that they could quite easily give you a reasonable quote early on, but they don't, even when you're the one doing the running around. Didn't stop them bombarding me with junk mail for years afterwards either, urging me to consider them for every other type of insurance on the planet.

studio150 · Sep 30, 2014

Why if you felt that the renewal terms were a con did you not just throw the renewal invite into the bin, and move to another insurer.

There are many other service providers that follow the same theme of looking for new customers at the expense of loyal customers, not just insurers. Building societies and banks who provide higher interest rates to new customers but leave existing ones on much lower rates, TV and Internet providers who will reduce prices if you ring to say you are leaving, the list goes on.

Since1982 · Sep 30, 2014

The market for motor and home insurance is a mess. Too much focus on acquiring new customers and too little on rewarding loyalty - and the aggregators have amplified this behaviour even more by encouraging the view that cheapest is best. I always shop around at renewal - if for no other reason than underwriting appetite and therefore pricing can change frequently. I've worked in the industry for 26 years and don't consider myself to be "sub human scum" but if that is your view of people you probably get treated the way you deserve.

Notters · Sep 30, 2014

edna krabappel said:
He's not though. They almost always will, it's just that they expect you to make the effort to get them to that point.

I had a policy with Hastings Direct one year. Got the renewal notice though, sure enough it had gone up, despite no claims or issues. I rang them, asked if that was the best they could do, they said "yep, that's yer lot". I shopped around, found another company and got a quote, then rang Hastings back to ask if they could match it. They offered to knock twenty quid or so off, still leaving the other quote about sixty quid cheaper, so I told them thanks but no thanks, and then went and took out the other policy.

I rang Hastings back to confirm cancellation of the old policy, at which point- SURPRISE!- they announced that, miraculously, they could beat the other company's quote. Equally as mysteriously, it turned out the other company was a subsidiary of Hastings Direct. I told them I'd already taken out the new policy, to which they advised me to cancel it and go with Hastings. I asked if they could do it themselves, given that this other company was effectively part of theirs, but they said they couldn't do that. Then they offered to drop the price even more. Cocks.

The hassle involved in doing this, even with a 14 day cancellation period, did my head in, so I ended up telling Hastings to shove it up their arses and just stuck with the new one. That's the massive irritant with it all: that they could quite easily give you a reasonable quote early on, but they don't, even when you're the one doing the running around. Didn't stop them bombarding me with junk mail for years afterwards either, urging me to consider them for every other type of insurance on the planet.

Don't think I've ever managed to get them to go right down in price. I tend to end up alternating between Admiral and Hastings Direct every other year!

Hornblower · Sep 30, 2014

studio150 said:
Why if you felt that the renewal terms were a con did you not just throw the renewal invite into the bin, and move to another insurer.

There are many other service providers that follow the same theme of looking for new customers at the expense of loyal customers, not just insurers. Building societies and banks who provide higher interest rates to new customers but leave existing ones on much lower rates, TV and Internet providers who will reduce prices if you ring to say you are leaving, the list goes on.

I wanted to see if they had any justification for the 40% hike. Naturally, they didn't. What get's me here is why isn't the regulator stepping in to outlaw this sharp practice? As Edna points out, there must be thousands of 'vulnerable' people out there being ripped off. The energy companies would not be allowed to just apply a massive hike without explaining and/or justifying the extra cost. Even those monolithic capitalist shysters Sky write to you and explain their increases. To me, this is like walking into your newsagent and, in a slightly distracted mood, asking for a copy of the Mirror and the newsagent, relying on your distraction, asking you to pay £2. When you then say £2! He says oh sorry, you can have it for £1.20. As I said, it's a con.

Postman Pat · Sep 30, 2014

With the comparison sites on the internet it has never been easier to shop around, gone are the days of phoning 10 different companies or paying a broker fee ( I know you pay for the comparison sites, but it is much less)

The world has moved on, the Insurance companies haven't.

They need to realise if they put a premium up by £10/£20 a year most people will suck it up and avoid the hassle of moving, quoting £200/£300 more is pointless as it will be pretty easy to find a cheaper provider and they will have to drop it if they want to keep the business.

surrey jim · Sep 30, 2014

Purchasing insurance through a site (Quidco / topcashback et al) has over the last few years got me a bit of cash back as an added bonus.

Spun Cuppa · Sep 30, 2014

I think they employ the law of averages, in that a blemish free driving/biking record is no guarantee next year will be claim free, and they bump the premium accordingly

A new provider is starting their risk from zero, so you will get a better deal

dazzer6666 · Sep 30, 2014

They rely on inertia - still a large group of people who for whatever reason don't look around, and simply renew. Also, most insurance companies now have 'auto renewal', meaning you don't have to do any work at all. Another subtle trick.

I recently renewed my car insurance. I had a small incident last year resulting in a claim (first for 15 years). I have always paid for '100% protected no claims', but the renewal price was 60% up. I called to query this, and was told it was because of the incident. When I said I had protected no claims, they told me 'it's not gone up because of the claim, it's gone up because your details have changed'

'In what way ?'

'You've had a claim'..........

I got another quote that was lower than the previous year from a different company (and a free meerkat cuddly toy). The original company then tried to get me to stay by matching it. Ridiculous.

sten_super · Sep 30, 2014

dazzer6666 said:
I recently renewed my car insurance. I had a small incident last year resulting in a claim (first for 15 years). I have always paid for '100% protected no claims', but the renewal price was 60% up. I called to query this, and was told it was because of the incident. When I said I had protected no claims, they told me 'it's not gone up because of the claim, it's gone up because your details have changed'

'In what way ?'

'You've had a claim'..........

This is something that MSE and their ilk have been drawing more attention to recently. You have retained your no claims bonus (6 years or whatever) but this affects the discount that you get on the standard price. The standard price is determined by your likelihood of accident, which is increased (from a statistical perspective) because you've had a recent accident.

As someone alluded to, almost utility providers are in on it. British Gas wouldn't offer me a competitive quote a few years ago until I'd already started the switchover process, and ever since they have hounded me constantly about switching back to them, and I told them that I've no interest and if they wanted my business they should have made that clear while I was a customer (and had been put on their very expensive standard rate) rather than after the fact. Similarly I end up changing insurance (household and car) provider almost every year because it's cheaper to move. I like Edna's plan of not even considering the current provider if they refuse to supply a competitive quote; unfortunately they must be making a fortune off people (like my parents) that don't ever bother to investigate switching, and I've found that if anything it's getting easier to leave these providers, and they're becoming less willing to match quotes from elsewhere, rather than vice versa and working harder at customer retention.

father_and_son · Sep 30, 2014

Since1982 said:
The market for motor and home insurance is a mess. Too much focus on acquiring new customers and too little on rewarding loyalty - and the aggregators have amplified this behaviour even more by encouraging the view that cheapest is best. I always shop around at renewal - if for no other reason than underwriting appetite and therefore pricing can change frequently. I've worked in the industry for 26 years and don't consider myself to be "sub human scum" but if that is your view of people you probably get treated the way you deserve.

I've spent 20+ years in the industry, the bulk of which has been spent pricing Motor insurance (Cars, Bikes, Vans & Fleets). I may occasionally be a bit of a c*nt but also don't consider myself "sub human scum".

Personally I don't agree with "Price Optimisation" (which includes the practice of charging existing customers more) but the reality is that if someone else is doing it, you have to otherwise you will have no business.

The specific example used by the OP is about customer segmentation and to respond to [MENTION=242]Hornblower[/MENTION] 's example of buying a newspaper, EXACTLY the same segmentation and price differentiation happens for newspapers too (its just done in a different way).

In the simplest case there are two kinds of people...

1. Time rich, cash poor TRCP
2. Cash rich, time poor CRTP

The first group will put the time and effort in to seeking out the best price. They will shop around, they will look for deals, they collect/use their 'clubcard' points, (THEY WILL CUT OUT THE COUPONS THAT LET YOU BUY THE PAPER FOR 50P RATHER THAN A POUND).

The second group are the opposite. They will pay a premium on something to avoid the hassle of having to shop around to save a nominal amount. (All the studies I have done - and its a lot - is that for Motor Insurance, this figure starts at £50 and goes up from there - most people do not to want to do the paperwork etc for less than that saving).

All of your personal details (age, gender, location, the car you drive, buying pattern, claiming pattern, no of changes you've made, etc etc) will be used to put you into one or the other category (there will be lots of categories but I'm simplifying things). This will determine whether the insurance company (OR NEWSPAPER PUBLISHER or supermarket or whoever) thinks you will pay more to avoid the hassle or not. If you are expected to be in the "Cash Rich, Time Poor" category then £50 will be added to your price (or whatever the load is... usually a percentage, again I'm simplifying) and the extra is used to discount someone deemed to be in the "Time Rich, Cash Poor" category.
When you call up, you've proven that you have been put in the wrong category and they will change your price!

Every time you have ever cut a coupon out of a magazine/newspaper and used it in the supermarket you are proving that you are TRCP.
Every time you have bought something in the supermarket that had a coupon offer available somewhere, you are proving you are CRTP.

To put this into context and I cannot emphasise this enough to anyone who thinks we are "sub human scum"...

THE MOTOR INSURANCE INDUSTRY MAKES MONEY, ON AVERAGE, JUST ONE YEAR IN SEVEN. IN ALL OF THE SIX OTHER YEARS, THEY LOSE MONEY!

Motor insurance is a "gateway" to the customer - because its pretty much the only compulsory insurance most people buy. The company is ONLY interested in you because they believe they can sell something else to you that is profitable!

(*There are a few motor only insurers out their who operate in niche markets where they can make money, but they still lose money regularly unless they are really good!)

Chinman3000 · Sep 30, 2014

Me on the phone to my insures when I was younger;

Me "I have had a £400 clifford alarm fitted to my car and wanted to let you know and to see if it reduces my premium at all"

Insurers "Thanks for letting us know but it has not changed your current premium"

A few months later...

Me "Hi I have fitted some alloy wheels to my car and wanted to let you know"

Insurers "Thanks for letting us know, that has added £162 to your current premium"

Me "errr why?"

Insurers "It makes the car more likely to be stolen"

EDIT - Spelling

upthealbion1970 · Sep 30, 2014

Years ago someone reported me for hitting their parked car which I didn't and ended up going to court. Day of the case I get a call saying the bloke doesn't want to go to court.

Because the case wasn't heard I lost 2 years no claims because I wasn't found innocent.

Tricky Dicky · Sep 30, 2014

Hornblower said:
57 years old. Been biking for 40 years, 100% no claims, no convictions and no changes to my policy or bike yet the b*stards wanted to charge me 40% more for my premium than I paid last year. I phone up, complain, and then they discount it back to what I paid last year. What a f*cking con.

I had the same. Had been with Direct Line for 17 years, and they wanted to increase my premium from £300 to £900 in one year. I rang up and it took him sbout 4.5 seconds to reduce it back to £400. Told them to stick it and found one for £250. Not surprising the indurance business has such a bad name.

gregbrighton · Sep 30, 2014

That's why I don't have vehicle insurance. :cheers:

Hornblower · Sep 30, 2014

father_and_son said:
I've spent 20+ years in the industry, the bulk of which has been spent pricing Motor insurance (Cars, Bikes, Vans & Fleets). I may occasionally be a bit of a c*nt but also don't consider myself "sub human scum".

Personally I don't agree with "Price Optimisation" (which includes the practice of charging existing customers more) but the reality is that if someone else is doing it, you have to otherwise you will have no business.

The specific example used by the OP is about customer segmentation and to respond to [MENTION=242]Hornblower[/MENTION] 's example of buying a newspaper, EXACTLY the same segmentation and price differentiation happens for newspapers too (its just done in a different way).

In the simplest case there are two kinds of people...

1. Time rich, cash poor TRCP
2. Cash rich, time poor CRTP

The first group will put the time and effort in to seeking out the best price. They will shop around, they will look for deals, they collect/use their 'clubcard' points, (THEY WILL CUT OUT THE COUPONS THAT LET YOU BUY THE PAPER FOR 50P RATHER THAN A POUND).

The second group are the opposite. They will pay a premium on something to avoid the hassle of having to shop around to save a nominal amount. (All the studies I have done - and its a lot - is that for Motor Insurance, this figure starts at £50 and goes up from there - most people do not to want to do the paperwork etc for less than that saving).

All of your personal details (age, gender, location, the car you drive, buying pattern, claiming pattern, no of changes you've made, etc etc) will be used to put you into one or the other category (there will be lots of categories but I'm simplifying things). This will determine whether the insurance company (OR NEWSPAPER PUBLISHER or supermarket or whoever) thinks you will pay more to avoid the hassle or not. If you are expected to be in the "Cash Rich, Time Poor" category then £50 will be added to your price (or whatever the load is... usually a percentage, again I'm simplifying) and the extra is used to discount someone deemed to be in the "Time Rich, Cash Poor" category.
When you call up, you've proven that you have been put in the wrong category and they will change your price!

Every time you have ever cut a coupon out of a magazine/newspaper and used it in the supermarket you are proving that you are TRCP.
Every time you have bought something in the supermarket that had a coupon offer available somewhere, you are proving you are CRTP.

To put this into context and I cannot emphasise this enough to anyone who thinks we are "sub human scum"...

THE MOTOR INSURANCE INDUSTRY MAKES MONEY, ON AVERAGE, JUST ONE YEAR IN SEVEN. IN ALL OF THE SIX OTHER YEARS, THEY LOSE MONEY!

Motor insurance is a "gateway" to the customer - because its pretty much the only compulsory insurance most people buy. The company is ONLY interested in you because they believe they can sell something else to you that is profitable!

(*There are a few motor only insurers out their who operate in niche markets where they can make money, but they still lose money regularly unless they are really good!)

Thanks for that, it's a good explanation. I sincerely hope I can stay in the TRCP bracket from now on.

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Vehicle insurance is a con

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Not in Surrey

Thanks Greens :(

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bring on the trumpets....

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