Hit and run - Car Damage

[alanm_3]

It's all down to statistics and risk (perceived or otherwise).

When I moved from supercharged petrol Range Rover to a TDV8 Range Rover my premium actually went up, despite the huge gap in performance and (in my mind) the higher chance of making a claim in the SC.

I was told, no, that's not how it works. They look at the number of cars of each type on the road, then calculate the "risk" based on that, so because significantly more people had diesel cars than petrol, the amount of claims was higher, therefore the apparent risk was higher, statistically!

I gave up trying to second guess them at that point.

[adrianw]

It's all down to statistics and risk (perceived or otherwise).

When I moved from supercharged petrol Range Rover to a TDV8 Range Rover my premium actually went up, despite the huge gap in performance and (in my mind) the higher chance of making a claim in the SC.

I was told, no, that's not how it works. They look at the number of cars of each type on the road, then calculate the "risk" based on that, so because significantly more people had diesel cars than petrol, the amount of claims was higher, therefore the apparent risk was higher, statistically!

I gave up trying to second guess them at that point.

Risk book balancing is all about when you insure the car, sometimes it can work for you and you get lucky.

[M1011]

It's all down to statistics and risk (perceived or otherwise).

When I moved from supercharged petrol Range Rover to a TDV8 Range Rover my premium actually went up, despite the huge gap in performance and (in my mind) the higher chance of making a claim in the SC.

I was told, no, that's not how it works. They look at the number of cars of each type on the road, then calculate the "risk" based on that, so because significantly more people had diesel cars than petrol, the amount of claims was higher, therefore the apparent risk was higher, statistically!

I gave up trying to second guess them at that point.

It would be proportionate incidents to the number of vehicles, so if there was [10 of car x with 2 crashes] and [100 of car y with 15 crashes], car x is statistically safer despite there being more of them and them having more crashes in absolute terms (in this massively oversimplified example).

[Ethos]

It would be proportionate incidents to the number of vehicles, so if there was [10 of car x with 2 crashes] and [100 of car y with 15 crashes], car x is statistically safer despite there being more of them and them having more crashes in absolute terms (in this massively oversimplified example).

This!

There's a very simplistic view of insurance companies being taken in some cases.
Are they trying to make as much of a profit as they can - Yes!
Are they incredibly frustrating making you jump through hoops to avoid costs going up year on year so that they can maximise their profit - Yes!
Do they have actuaries creating pretty sophisticated risk models to evaluate you as a customer - Yes!
Are the results of these models easy to explain to the common man by people manning call centres who themselves may not understand them - Not always!
Are the models perfect - No!
Beyond the obvious factors, do they also try to balance their portfolio of different types of customers - Yes!

I'm no fan of insurance companies and find the annual process frustrating. If there was a reputable firm that said they would charge 5% over the best quote from the comparison sites and update it every year, I'd be happy to sign up immediately! Clearly though, the more profitable thing for companies is to rely on the less savvy and keep bumping up prices for existing customers. Let's see what the latest changes from the Govt do - whether it takes a slice out of profits or just redistributes the same pricing pie differently among customers.

There's a lot insurance companies who are listed and their financial statements are a quick google away. If they were money printing machines, capitalism would do its usual thing... In fact it already is. Check out Lemonade in the US - often touted as a tech firm with a social conscience that also does insurance. They take a flat fee out of the premium and leave the rest to pay claims. Any money left over goes to charity. The interface is really slick and very very quick. I don't think they're in the UK yet and I'm sure they're not perfect either but a bit of glimpse of a better future model perhaps? I'm hopeful!