Is Insurance becoming irrelevant?

[WelshGas]

Interesting take on Insurance and the transfer of risk from the Insurance Company to the Policyholder, eg: the requirement to have a Tracker fitted.​

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Risk-averse insurers are making themselves irrelevant​

Providers are transferring the risk of the unpredictable back to policyholders – so what is the point of using them?
TAHA LOKHANDWALA9 April 2021 • 5:00am

What is the point of insurance? Being quite financially conservative, I do not normally ask myself this question. I have forever been insured for anything and everything, removing as much risk from my financial life as possible. This attitude was only reinforced when, the one time my partner and I each assumed the other had arranged travel cover, our flight was cancelled three times and we got home a week late at much expense.
However, as the pandemic has progressed my faith in the quid pro quo of insurance has been broken. Insurers seem to be on a mission to alienate their customers as much as possible before we return to normality.
I’ve always believed that the concept of insurance is sound. For a small cost, another party absorbs the risk of the unpredictable: the “unknown unknowns”, as the former US defence secretary Donald Rumsfeld famously said. Yes the insurer tends to win, but only because it pools the risk of millions of people. On an individual level, it’s a good deal and a worthy trade.
But as we come out on the other side of this pandemic it seems clear that insurers want to renege on their side of the bargain.
They are no longer willing to take on unpredictability and increasingly force policyholders to jump through hoops to meet their demands, and even then will cover only the obvious risks, not the unpredictable ones.

The number of coronavirus exclusions in everyday travel policies can make them all but worthless
Insurers will say demanding that customers are vaccinated – or that charging more for those who do not have a so-called vaccine passport – is fair. Covid-19 is no longer an unpredictable risk, one could argue, and people can take action to avoid catching it and avoid the medical costs involved in treating it.
But as we have reported in previous weeks, the number of coronavirus exclusions in everyday travel policies can make them all but worthless. Some providers will cover medical treatment as a result of catching Covid-19, but others will not pay out if a trip has to be cancelled because of a requirement to self-isolate or because Foreign Office guidance has changed.
This desire for insurers to curb their risk has spread from travel to car insurance. Customers now have to fork out more, and make changes to their vehicles, to cover simple theft policies.
I understand where insurance companies are coming from. Every small increase in risk, be it the health consequences of coronavirus, car theft or changing government rules on travelling, can cost them huge amounts. The cost is simply too high.
But with every exclusion clause, every demand for a vaccine passport and every new hoop to jump through, insurers are undermining the rationale for their own existence.
The industry is ripe for a new entrant to give consumers what they want. We are witnessing the biggest transfer of risk from insurers back to the consumer when the whole point of insurance has always been for them to take the risk from you. So I ask once more, with the way the market is going, what is the point of insurance?

 

[GrannyJen]

I would nod sagely to all the above and then gently disagree....

until I came to insure a bicycle.

There are hardly any circumstances Iwhere I can see a claim being honoured. I have had to re-engineer my garage to have sold-secure-gold lashing points cemented into the ground, I carry in value almost was much in bike locks as I do in bikes, when I go away to secure bikes anywhere I normally need two locks weighing in at about 4 kilo's each, the places I can and cannot leave them needs a book thicker than the Bible to list and talking about the Bible any acts relating to the ultimate author are exempt!

 

[andyinluton]

I normally need two cocks weighing in at about 4 kilo's each,

That was a quick edit!!

 

[GrannyJen]

Yes it was but being greedy my mind was on three cocks ....

The forum that is ....

 

[ThomasHJ]

Even regardless of the corona-pandemic I have been feeling the whole idea of insurance is becoming pointlessly unfair.

I pay a hefty insurance fee and when something happens to my van my fee goes up quite a bit. Forcing me, every time something happens, to decide not to have it fixxed, or pay for it out of my own pocket, or let insurance pay for it and then paying for it myself anyways, through the fee going up. The only situation in which insurance seems useful is is teh van gets totalled or stolen.

 

[Vagophile]

Unfortunately, motor insurance is compulsory. I agree that more competition would be good.
Years ago, I was able to obtain specialist water sports insurance via Lloyds, everything that I wanted covered, no problem and an acceptable premium. Effected by an excellent broker who knew his business. Where are these specialists now?

 

[Joker 1299]

Insurance is a business. Just like any other, it exists to make money. Sometimes it does, sometimes it doesn’t. When it doesn’t, then the prices will go up to the point where it does.

 

[ThomasHJ]

Insurance is a business. Just like any other, it exists to make money. Sometimes it does, sometimes it doesn’t. When it doesn’t, then the prices will go up to the point where it does.

and then it goes up some more.. and goes up some more...

and then (some) people feel they have to cheat the insurance because prices are so high....

and then the prices go up... and up some more...

A few years ago I was told by my car insurance company that my fee was going up. I asked why and they explained it was because of the fact that in my neigbourhood there were many incidents of people's windows getting smashed because thieves were grabing stuff from the cars.

I mentioned that I only had liability insurance on that car. So that if someone smashed or otherwise damaged my car, the insurance company wouldnt even pay me. They only pay when I accidentally damaged someone else's car.

Didn't matter. The amount of the fee was calculated over all clients. So my fee went up, even though it had nothing to do with me or my insurance.

 

[Joker 1299]

and then it goes up some more.. and goes up some more...

and then (some) people feel they have to cheat the insurance because prices are so high....

and then the prices go up... and up some more...

A few years ago I was told by my car insurance company that my fee was going up. I asked why and they explained it was because of the fact that in my neigbourhood there were many incidents of people's windows getting smashed because thieves were grabing stuff from the cars.

I mentioned that I only had liability insurance on that car. So that if someone smashed or otherwise damaged my car, the insurance company wouldnt even pay me. They only pay when I accidentally damaged someone else's car.

Didn't matter. The amount of the fee was calculated over all clients. So my fee went up, even though it had nothing to do with me or my insurance.

Ha ha! Don’t get me started. I’ve been in insurance all my working life. The pricing of some companies is incomprehensible. My bike insurance was due a couple of years ago and it had gone up by about £400 to £1200. I called them and said I’m not paying that, it’s ridiculous. They said ok, let me refer it... they came back with their best price of £1,000. Hmmm, still too much, so I ran it through a price comparison web site and got a best price of £600 with, you guessed it, the same insurer!

apologies if this post offends any insurance companies, please feel free to delete it if it does.

 

[Tom]

When we lived in South Africa we lived why out in the bush in a thatched house and the one house insurance also covered all our vehicles as well. Bring used to UK insurers I was shocked when I rang my SA broker seeking to have some visitors covered on a landrover. I was informed that anyone could drive any of the vehicles once they had my permission! Why we can’t have a similar policy here is beyond me.

 

[66tim99]

When we lived in South Africa we lived why out in the bush in a thatched house and the one house insurance also covered all our vehicles as well. Bring used to UK insurers I was shocked when I rang my SA broker seeking to have some visitors covered on a landrover. I was informed that anyone could drive any of the vehicles once they had my permission! Why we can’t have a similar policy here is beyond me.

Yes and the 'additional driver' premium on hire cars is a rip off. Only one driver can be driving at any one time...

 

[vmaxkiddy]

As for NCB, that winds me up. Can only be applied to one vehicle, why ? I “earned “ it, the vehicle didn’t.

 

[Bellcrew]

As for NCB, that winds me up. Can only be applied to one vehicle, why ? I “earned “ it, the vehicle didn’t.

I am currently paying less than £200 a year for the Cali insurance, full cover whilst driving in Europe, this for a vehicle worth north of £45 k.
There are uncounted uninsured/unlicensed lunatics loose on the road who will not be required to stump up for any claims.
An NHS that uniquely demands that the cost of treatment for any injury caused by a traffic accident is reimbursed by said insurance policy.
Crash for cash darlings/stiff neck fraudsters, who for years managed to make a really good living totally unmolested by the police. Those genuine injury claims also have to be paid for, who knew.
And yet insurance is considered to be some sort of irrelevant con, you could do without it of course, but unfortunately if you have any assets those ambulance chasing lawyers will be happy to grab them tout suite, do you feel lucky.

 

[Sp0_0k]

Can always stress and suffer twice. After the accident and fighting with the insurance company to get what you deserve.
Logic is simple though. If you are left without a vehicle tomorrow and your life depends on it though you have no cash or ability to get one, go with the gamble of insurance.
I played this gamble for over 15 years and the insurance company helped me stop after not covering yet again, what they simply had to.

 

[PeteS]

I had to renew my policy in February this year and when I phoned to check the price I was offered a reduction in the premium offered plus an immediate refund of £45 as I had not used my car as much due to COVID-19 causing me to have to work from home.
I am always slightly disappointed that I am never offered the best renewal premium but that is just the game we have to play nowadays.
Insurance is required to drive on the road but you do have an option in the UK of opting for just third party insurance. In most cases going fully comprehensive is a not much more so I take it to be fully covered. I know of a 19 year old that was insuring his first car found comprehensive insurance was cheaper than third party fire and theft.

 

[Velma's Dad]

I'm sure the people who work in the insurance sector won't mind me saying the industry has its dirty little secrets that ultimately work against all policyholders by pushing average premiums up.

One such is the "contract hire" racket (I use the term deliberately, because it is). When you have a no fault accident - in my case because someone ran into the back of me when I was stopped at lights - the next thing you know is your insurer has referred you on to a "claims management company". Who having "assessed your needs" then "suggest" you need a rental vehicle while yours is being repaired, the costs of which will be met by the third party because you weren't at fault.

If you accept that, great, you'll have a nice shiny "equivalent spec" vehicle to use while yours is being repaired. But look at the per-day rate they're going to levy - in my case about £2,000 per day. After seeing the paperwork I declined it, even though I wouldn't be the one paying it, and suggested they come and uplift the car which I hadn't used. They got very ugly about it.

Of course, my insurer will have trousered a very nice "referral fee" from the contract hire company. So, my insurer actually profits from my accident, while an inflated bunch of costs is incurred by the other insurer. And who actually ends up paying for all that in the end?

 

[Vagophile]

This happened to me too. We had three cars between two of us, so wasn't interested in a replacement. It was via the claims management company that I was pestered and cajoled to "re-think".
I didn't really see why I needed the claims management company anyway, from the beginning you could see that everyone was on a nice little earner at the expense of the at fault driver's insurance company.

 

[66tim99]

I had to renew my policy in February this year and when I phoned to check the price I was offered a reduction in the premium offered plus an immediate refund of £45 as I had not used my car as much due to COVID-19 causing me to have to work from home.
I am always slightly disappointed that I am never offered the best renewal premium but that is just the game we have to play nowadays.
Insurance is required to drive on the road but you do have an option in the UK of opting for just third party insurance. In most cases going fully comprehensive is a not much more so I take it to be fully covered. I know of a 19 year old that was insuring his first car found comprehensive insurance was cheaper than third party fire and theft.

How can that be less risk?

 

[Velma's Dad]

This happened to me too. We had three cars between two of us, so wasn't interested in a replacement. It was via the claims management company that I was pestered and cajoled to "re-think".
I didn't really see why I needed the claims management company anyway, from the beginning you could see that everyone was on a nice little earner at the expense of the at fault driver's insurance company.

And... if you read the proposed contract carefully (which the company was careful not to provide me a copy of, until the car was delivered) in the event that the claim goes bad, the contract hire company reserves the right to enforce the costs against you.

But no doubt, you could get insurance against that, for an extra premium.

 

[Joker 1299]

How can that be less risk?

To some degree, choosing a comprehensive policy over third party reflects your attitude to risk and insurers prefer drivers who are less inclined to take risks.

 

[vwsween]

How can that be less risk?

It can be less risk, which is not the same thing as less cover. A young driver seeking third party on a car that most would expect to merit comp cover, may indicate that the car is in poor condition and not cared about. As such an Insurer may suspect it will not be driven with care and so quote a higher price accordingly. They will know from claims statistics that third party cover for young drivers is higher risk business.

 

[66tim99]

To some degree, choosing a comprehensive policy over third party reflects your attitude to risk and insurers prefer drivers who are less inclined to take risks.

Is that right? Doesn’t make sense to me. When do they judge you a risk taker, when you call for a third party quote? Many young drivers just need the cheapest quote so would assume third party cheapest, not because the driver is prepared to take more risk.
So if you rang for a third party quote, and then asked for a fully comp price, you wouldn’t be given a discount, because you’re a risk taker?
It’s a dark art, this insurance game

 

[Joker 1299]

Is that right? Doesn’t make sense to me. When do they judge you a task taker, when you call for a third party quote? Many young drivers just need the cheapest quote so would assume third party cheapest, not because the driver is prepared to take more risk.
So if you rang for a third party quote, and then asked for a fully comp price, you wouldn’t be given a discount, because you’re a risk taker?
It’s a dark art, this insurance game

It’s all done by algorithms these days. Computer says yes, or computer says no. Many factors are taken into account. I don’t do car insurance by the way.

 

[66tim99]

It can be less risk, which is not the same thing as less cover. A young driver seeking third party on a car that most would expect to merit comp cover, may indicate that the car is in poor condition and not cared about. As such an Insurer may suspect it will not be driven with care and so quote a higher price accordingly. They will know from claims statistics that third party cover for young drivers is higher risk business.

Its clearly more cover for less premium. The same driver hits a wall, and the car needs to be replaced...

 

[vwsween]

Its far more complicated than people realise. Have you ever wondered why they ask if you normally pay the premium in full or by monthly direct debit before they tell you the premium? That group of people who pay by monthly direct debit have slightly higher claims frequency/costs. So some will tweak their quote.

Its clearly more cover for less premium. The same driver hits a wall, and the car needs to be replaced...

Yes it is more cover for less premium but the risk is less if the driver is better even if you give them comp cover.