Car insurance prices during recession

[Lons]

You're also statistically more likly to have an accident if you've already had one, even if the first one was in no way your fault. Car insurance logic for you!

That makes sense to me. I know it isn't always the case but I can definitely see their reasoning.

I know that's the case because my FIL told me so when he was a branch manager for one of the biggest insurers in the industry however he never could justify it and I think it's nonsense.

E.G.
My wife, a very careful driver doing max 5k a year locally has never had a claim as long as I can remember until a year ago when a motorcyclist came out of a side road without looking and into the side of her car. Although at that time she didn't have a dashcam ( has now), there was an expert witness and the police said the motorcyclist was 100% at fault. The claim including our excess and costs were settled in full by his insurance company, not "knock for knock" basis but we will still be penalised in the end because of those stats.

She is in no way more likely to have an accident than she was before that incident, just in the wrong place at the wrong time.

 

[marcros]

Yebut the insurance companies (believe it or not) don't just use random ways to penalise people or think specifically how risky is Mrs lons. They spend huge sums of money analysing data to model the risk. We can always think of exceptions as to why the assumption doesn't work in an individual case, but on average there is a clearly an elevated risk of a second accident based on hundreds of thousands of data points. Same for the very young and very old, based on data. Your wife may be less risk than the calculated risk and so may pay a bit more than she should have to. Others will be more risk and pay less than they should. You will pay far less than if somebody had to spend the time coming up with a bespoke risk price for each policy.

 

[u38cg]

On the second accident thing, the reason is simply that defensive driving eliminates an awful lot of accidents that are not your fault. So on average, someone who has a non-fault accident is more likely to not be a defensive driver. So now you can split your pool of non-fault drivers and assign a more accurate price to them.

The reason *why* they do this is that if you don't, the other insurer that does will pick up all the cheaper (safer drivers) risks and leave you with the statistically worse drivers. You'll have to increase your charges and meanwhile the other insurer can charge even less.

The same thing happened in the 70s and 80s when insurers introduced smoking rates for life insurance. As soon as it was introduced, everyone had to or they would have been left with a pool of only smokers.

 

[Lons]

Yebut the insurance companies (believe it or not) don't just use random ways to penalise people or think specifically how risky is Mrs lons. They spend huge sums of money analysing data to model the risk. We can always think of exceptions as to why the assumption doesn't work in an individual case, but on average there is a clearly an elevated risk of a second accident based on hundreds of thousands of data points. Same for the very young and very old, based on data. Your wife may be less risk than the calculated risk and so may pay a bit more than she should have to. Others will be more risk and pay less than they should. You will pay far less than if somebody had to spend the time coming up with a bespoke risk price for each policy.

I don't disagree with the overall data modelling Marcros and fully understand why they use it, they do after all need to calculate the risk as accurately as possible but they don't always get it right. In my FiL case he had all the data and couldn't justify it
On the point made earlier by a member about prices coming down if challenged. I insure 3 cars on a multi policy, only myself and wife as drivers, maximum no claims protected. The cost for a well specced comp last year was in round figures £590, just had renewal which is due 3rd June and it's risen to £722 ( 22% ). They didn't this time provide details of how much each car costs, haven't 'phoned them yet but messaged demanding an explanation and got a response, no explanation but a reduction to £648.
I'm not going to leave it at that and will be 'phoning around but interesting that the company is Norwich Union who have advertised heavily that they don't price match and the price they give is fair and won't be reduced.

 

[Lons]

On the second accident thing, the reason is simply that defensive driving eliminates an awful lot of accidents that are not your fault. So on average, someone who has a non-fault accident is more likely to not be a defensive driver.

I agree with the first part of that but not the second and would say that anyone who has been on the receiving end of a non fault accident is far more likely to be defensive following that.

 

[Jake]

Insurance companies are bleeding money left right and centre despite doing their level best as ever not to avoid paying out claims, so it will be no surprise to see premiums on the up.

 

[u38cg]

I agree with the first part of that but not the second and would say that anyone who has been on the receiving end of a non fault accident is far more likely to be defensive following that.

One would think, but the statistics don't agree. And statistics are there to describe group behaviours, not individual behaviours: I too am a far more careful driver than the young guy who drove his car into a ditch at an unsuitable speed. But maybe you and I are able to learn from our mistakes, an unusual trait

 

[Lons]

I agree with the first part of that but not the second and would say that anyone who has been on the receiving end of a non fault accident is far more likely to be defensive following that.

One would think, but the statistics don't agree. And statistics are there to describe group behaviours, not individual behaviours: I too am a far more careful driver than the young guy who drove his car into a ditch at an unsuitable speed. But maybe you and I are able to learn from our mistakes, an unusual trait

Yep that's a fair point the stats have to be right of course or they would all go bust and the risk and much of the cost is spread, we all pay for flood damage and spurious whiplash claims in the end.
Very strange however how risk data is interpreted or there wouldn't be such huge differences in premiums sometimes for identical products between different companies.

I shop around every year as there are 3 cars, a motorhome and the usual house and contents etc. but only change if the difference is marked which it often still is when they offer inducements to new customers but then lose existing ones because of that.

We bought our new motorhome in September 2018, an expensive vehicle and I shopped around for insurance among the companies who are prepared to insure so effectively new customer, quotes varied from £296 to £1866 and everything in between. I went for a reputable specialist company and find they are underwritten by Aviva which I'm happy with although they wouldn't insure direct despite all my other current policies being with them.
It's a complicated industry.

On the other point, anyone who's been driving along sensibly to find another driver hurtling out of a side road into their car will in future be watching all side roads very carefully, that's part of defensive driving and a natural reaction unless they're a moron, a not at fault accident is exactly what it says and it's really difficult to understand how being the victim of that makes a person more likely to have it happen again. Different from the "young guy....ditch" example.