Good News!

[Velma's Dad]

Camping and Caravan club told me they have had some big changes this year, and are often finding their quotes to be very expensive, and losing lots of business.
They were still doing the 'we'll beat any quote by £25'. When I made up a fictional quote, they offered me £289. Without the fictional quote, £670!
It just shows what a daft market it is when they would happily have insured me for 289 providing someone else had quoted 25 more, when they considered my real risk to be 670.

I think for any individual car insurance quote it's important to realise that the actuarially-calculated risk is only one component of it. The company is aiming to make a positive return on investment out of you, the punter, over the whole customer cycle and after all costs have been factored in. And one of the largest of those is customer acquisition marketing in year one, including of course the discounts you are offered.

I don't have any data at all but I'd be happy to bet that the big insurers expect to make an overall loss on your business in the first year (you being a composite you, with an average claim probability). Their 'customer lifetime value' model - CLTV in the marketing jargon - can however predict reliably how likely you are to renew at various renewal rates: in order words, how lazy you will be about shopping around at renewal time. And it's then in the renewal years that the company makes all of its money, including recovery of the loss it made on the first year.

No wonder they are quietly phasing out NCDs, in favour of 'introductory discounts'.

I've never worked in the insurance industry so the above us just my assumption based on how other direct marketing sectors work. If anyone on here has insider knowledge, would they dare to share?