When I first moved to the UK, I was under the impression that securing auto insurance (of all things!) would be a relatively straight forward endeavour - I mean there are that many similarities between how things are administered in Australia and the UK, that auto insurance would likely be one of them.
My first quote for a car similar to what I was already driving back home came in at a whopping 3k online. Thinking I was missing out on something big style, I visited a broker, where the best I was offered was £1900 - more than twice the value of the car receiving the cover in the first place! Perhaps more surprisingly was being told that this was infact a good deal! Further digging online halved this price again, but the amount of input variables required by these companies when quoting I found to be simply astounding - the occupation list alone was about as extensive as that of the tax office. After handing over a substantial wad of cash, I was under the impression that this was the end of the hassle, and next years bill would be loads cheaper in any case, as I'd be accruing 'valuable' UK driving history.
Moving house 2 months later, well you could hardly call it moving when it was 5 doors down on what was once the same street, the insurance company decided that they were accepting additional risk and charged an additional £50 for the move. While I can appreciate that it may have been closer to a more dangerous area, I would hardly call 5 doors statistically significant - and herein lies the problem - If insurance companies sense any kind of additional risk that can be quantified on any scale they will charge for it! Clearly uncontrollable factors such as manner of parking, gang activity, and other incompetent drivers activity, and an individuals pre-disposition to making a claim (to name a few) would be more significant contributing factors to an insurers risk, but since auto insurance is administered via a call centre, the odds of actually having an intelligent conversation are out the window.
To Illustrate just how out of touch call centre operators selling insurance are, I'll give an example of how I tried to negotiate my premium increase down from the £50 increase. The only factors left to change were where I could leave my vehicle overnight (street, driveway, or garaged). I had them all quoted, and was surprised that the most expensive was indeed having it garaged! The explanation: "People who have expensive cars garage them". Once again a demonstration of lack of critical thinking - In reality it's likely that these expensive cars are actually targeted by organised thieves, and are not simply kids out stealing whatever they can break into. Putting things into context - I was driving a family car in South Yorkshire at the time - clearly not a target for organised crime, and much more likely to be stolen by joy riders. Clearly if they are going to use such a high-level model on quoting insurance premiums, they should occasionally apply the odd reality check! Incidentally I didn't have any of these options available to me living in a flat - hence also demonstrating the lack of operator engagement or any kind of thought, when you can check all this on google street view!
Further to this, I've been charged indiscriminately for minor policy upgrades. Firstly I wanted to add another driver for a week - fair play, I get charged. To add 1 more day of coverage to this, I'm charged for a whole extra week - cover I don't need, but I'm still paying for. I've also borrowed a car from the dealer while mine has been getting serviced - only to be told that I'd need to get it added to my policy for £20 per day! And that no, I couldn't remove my car from the policy, as it would need to be insured too. Clearly this would have incurred a lot of administration costs to do so, but the stupidity remains - my car getting serviced would have been covered by the dealers property / professional insurance, and it would hardly have been possible for me to be driving both at once in any case. Further the car I did end up borrowing had the power of a lawnmower - reduced risk if anything! And for all this they wanted £25! for 1 Day. Just to go the full trifecta, I'll add one more example. Recently I had to add business cover for my partner on the policy (the fact that they can charge for usage type on it's own is a crime), and as I'm the policy holder, I had to upgrade too - yes thats right, more fees for additional features that i'm never going to use!
These 3 examples illustrate the rigid nature to which insurance companies enforce and monitor usage - any changes, you bet they will charge you for them! Sure they also demonstrate a clear lack of analytical thought on the operators behalf too, but what is slightly worrying for me is that for an industry such as this which is essentially a service sector, the customer is treated like crap. I mean if you walked into a car dealership and spent the same order of money as we are talking about here on accessories, then had the hide to ask for a discount or say take 2 car matts instead of 4, I'm sure they'd come to the party to please you owing to the amount of money spent.
So we have seen by the previous price hike that insurance companies blindly apply statistics to any kind of circumstances change, all without the slightest reality check, so long as it adds up in there favour - so what happens when it doesn't? Recently I changed from an Australian to UK licence, and was told before doing so that my premium would be discounted. Clearly this makes sense, as a UK licence means that points from traffic offences actually count, rather than being lost in international waters. Funnily enough though this made no difference to my premium, despite a pretty significant incentive to slow my driving down, had I been inclined to fully exploit the benefits of possessing a foreign licence.
Being fed up of paying for minor changes - which incidentally are a legal requirement of being insured driving in the UK - I decided to look into the regulations on the industry. I'd heard many times on the phone to my insurer about who they are regulated by in the legal blurb, and for all the legal crap that they sugar coat it with, essentially my insurer (and all others i presume) are regulated by the FSA, while the industry is self regulated by an industry association. A small but significant point- this only regulates them in terms of selling financial products, not in terms of how they can charge for policy differences. Sure they do provide a high level of financial cover - if you ever actually need it - and this is what is required by the government, but for the vast majority of people this remains a facility seldom used. I believe that the way this industry conducts itself is a shining example of self regulation, and a strong case for government to step in, and ensure these companies limit their profits and cut down on scamming the public. The irony here is that this is perhaps one of the better microcosms for the current attitude of UK society - that self regulation promotes competition and is good for business. That it may be, but at what price to the consumer? Sure it can be a hefty financial price, but few Brits ever consider what I like to call the administration cost - the lost time spent checking for discounts, updating the companies on minute circumstance details, and wondering which car they should buy based on how much the insurance is going to be. I'm honestly surprised that few seem to want to do anything about the state of affairs given the supreme waste of time it generates, not to mention the family feuds it must cause for all those but the super wealthy who are not bothered by a few thousand pounds expenditure on the rolls.
Whilst on the cost of insurance to the average Joe - it must be significant, given the fact that there are of order 500K drivers on this small island presently driving without cover - this must be of order 2-3 % of cars on the road if we estimate that there is roughly half the population owning and driving cars. I'm sure this number is liable to grow, as we are presently watching unemployment climb, and auto insurance has gone up 40% or so in the past year. Hold up 40%! Thats ridiculous. So while there is currently a government inquiry into the price of auto insurance, the public is repeatedly fed the message by insurers that the price of insurance is driven up by un-insured drivers. Interestingly the fine for being uninsured is £500 max ,and the cheapest car you can get is only a few hundred, so when you compare this to nearly £1k for an insurance policy for someone living a less than desirable area, you can see if you are barely scraping by financially, its a risk thats going to look more and more attractive as the economic situation worsens, and insurance premiums rise. Incidently, it is often that in impoverished areas where people struggle to pay the bills that auto insurance is also at its highest.
So Insurance was something I'd never be making use of - that was until someone decided to key my car in a supermarket carpark under full view of CCTV. While it would be any sane person's view that catching the petty theif who did this (along with several other cars at the same time) would be the primary concern of the insurance company, supermarket, and police - sadly it was not. My partner was shown CCTV footage of the car parked in the car park at the supermarket, so she made a police report in the hope that they would have access to the footage and get on the case. Several days later the police notified us that the the supermarket had no sign of our vehicle on CCTV footage. For me that just didn't add up, so a trip to the supermarket revealed that their corporate policy was to only release footage to insurance companies - not even the Police! From this series of events, I'm left to conclude that the supermarket probably did have the footage, and that it's highly likely they are in bed with the insurance companies - financially it adds up. If the perp was to be prosecuted without me making a claim, there is no upside for the supermarket - perhaps apart from having retained a customer, however knowing the state of affairs with the accident and injury claims side of auto insurance that was revealed some months ago, it would not be too much of a stretch to assume a similar state of affairs here.
One more nail in the coffin of poor customer service was when it came to renewal time. One would think that for a business that customer retention would be a high priority, given the administration time and costs involved in transferring customer information between companies, so you can imagine my surprise when discovering my renewal price was £250-300 more than a 'new customer' price from the same insurer with identical policy conditions! This does nothing to retain a customer, and it clearly is poor business when the onus is on the customer to check the pricing, and even poorer when the discrepancy is so great. Alas though, as with the case with the supermarket, it would appear that customer retention is a long lost concept in the UK.
Fundamentaly it's a pretty poor state of affairs in the UK when there is little to no transparency in policy pricing, or even any common sense behind it. The industry is one of the few of its kind left that is not administered online, rather it relies on call centres - I suspect in part this is so the consumer is unable to spend too much time comparing the relative costs of policy options in order to get a discount. In essence it is the complexity and lack of clarity in the system that allows them to charge to the hilt, legaly and without a so much as a reality check. To further Illustrate the state of affairs one can purchase "No claims bonus protection" along with a policy - i.e. paying an extra premium to retain ones no claim history in the event of a claim - Hold up thats effectively taking out insurance on your insurance!
To avoid this pile of nonsense, it would be my suggestion to charge based on 4 simple factors: accidents, claims, driving history, and vehicle class only. Other factors that are charged for at present - which indeed may or may not be actual significant factors - are likely discrimination under European Law. Earlier last year, a case was heard in Luxembourg as to why there was discrepancy between men and womens insurance premiums - this was ruled illegal under EU law, so naturally premiums will rise to parity! Furthermore 3rd party cover should be assumed on any vehicle if the driver has permission - the amount of drivers who are restricted to a single car, and for example could not driver their drunk friends car home from the pub, is simply ridiculous owing to current legislation. Government regulation would also likely make insurance affordable for those who presently do not see the financial benefit (i.e. those who choose to drive uninsured), meaning fairer cover for all in the long run.
My first quote for a car similar to what I was already driving back home came in at a whopping 3k online. Thinking I was missing out on something big style, I visited a broker, where the best I was offered was £1900 - more than twice the value of the car receiving the cover in the first place! Perhaps more surprisingly was being told that this was infact a good deal! Further digging online halved this price again, but the amount of input variables required by these companies when quoting I found to be simply astounding - the occupation list alone was about as extensive as that of the tax office. After handing over a substantial wad of cash, I was under the impression that this was the end of the hassle, and next years bill would be loads cheaper in any case, as I'd be accruing 'valuable' UK driving history.
Moving house 2 months later, well you could hardly call it moving when it was 5 doors down on what was once the same street, the insurance company decided that they were accepting additional risk and charged an additional £50 for the move. While I can appreciate that it may have been closer to a more dangerous area, I would hardly call 5 doors statistically significant - and herein lies the problem - If insurance companies sense any kind of additional risk that can be quantified on any scale they will charge for it! Clearly uncontrollable factors such as manner of parking, gang activity, and other incompetent drivers activity, and an individuals pre-disposition to making a claim (to name a few) would be more significant contributing factors to an insurers risk, but since auto insurance is administered via a call centre, the odds of actually having an intelligent conversation are out the window.
To Illustrate just how out of touch call centre operators selling insurance are, I'll give an example of how I tried to negotiate my premium increase down from the £50 increase. The only factors left to change were where I could leave my vehicle overnight (street, driveway, or garaged). I had them all quoted, and was surprised that the most expensive was indeed having it garaged! The explanation: "People who have expensive cars garage them". Once again a demonstration of lack of critical thinking - In reality it's likely that these expensive cars are actually targeted by organised thieves, and are not simply kids out stealing whatever they can break into. Putting things into context - I was driving a family car in South Yorkshire at the time - clearly not a target for organised crime, and much more likely to be stolen by joy riders. Clearly if they are going to use such a high-level model on quoting insurance premiums, they should occasionally apply the odd reality check! Incidentally I didn't have any of these options available to me living in a flat - hence also demonstrating the lack of operator engagement or any kind of thought, when you can check all this on google street view!
Further to this, I've been charged indiscriminately for minor policy upgrades. Firstly I wanted to add another driver for a week - fair play, I get charged. To add 1 more day of coverage to this, I'm charged for a whole extra week - cover I don't need, but I'm still paying for. I've also borrowed a car from the dealer while mine has been getting serviced - only to be told that I'd need to get it added to my policy for £20 per day! And that no, I couldn't remove my car from the policy, as it would need to be insured too. Clearly this would have incurred a lot of administration costs to do so, but the stupidity remains - my car getting serviced would have been covered by the dealers property / professional insurance, and it would hardly have been possible for me to be driving both at once in any case. Further the car I did end up borrowing had the power of a lawnmower - reduced risk if anything! And for all this they wanted £25! for 1 Day. Just to go the full trifecta, I'll add one more example. Recently I had to add business cover for my partner on the policy (the fact that they can charge for usage type on it's own is a crime), and as I'm the policy holder, I had to upgrade too - yes thats right, more fees for additional features that i'm never going to use!
These 3 examples illustrate the rigid nature to which insurance companies enforce and monitor usage - any changes, you bet they will charge you for them! Sure they also demonstrate a clear lack of analytical thought on the operators behalf too, but what is slightly worrying for me is that for an industry such as this which is essentially a service sector, the customer is treated like crap. I mean if you walked into a car dealership and spent the same order of money as we are talking about here on accessories, then had the hide to ask for a discount or say take 2 car matts instead of 4, I'm sure they'd come to the party to please you owing to the amount of money spent.
So we have seen by the previous price hike that insurance companies blindly apply statistics to any kind of circumstances change, all without the slightest reality check, so long as it adds up in there favour - so what happens when it doesn't? Recently I changed from an Australian to UK licence, and was told before doing so that my premium would be discounted. Clearly this makes sense, as a UK licence means that points from traffic offences actually count, rather than being lost in international waters. Funnily enough though this made no difference to my premium, despite a pretty significant incentive to slow my driving down, had I been inclined to fully exploit the benefits of possessing a foreign licence.
Being fed up of paying for minor changes - which incidentally are a legal requirement of being insured driving in the UK - I decided to look into the regulations on the industry. I'd heard many times on the phone to my insurer about who they are regulated by in the legal blurb, and for all the legal crap that they sugar coat it with, essentially my insurer (and all others i presume) are regulated by the FSA, while the industry is self regulated by an industry association. A small but significant point- this only regulates them in terms of selling financial products, not in terms of how they can charge for policy differences. Sure they do provide a high level of financial cover - if you ever actually need it - and this is what is required by the government, but for the vast majority of people this remains a facility seldom used. I believe that the way this industry conducts itself is a shining example of self regulation, and a strong case for government to step in, and ensure these companies limit their profits and cut down on scamming the public. The irony here is that this is perhaps one of the better microcosms for the current attitude of UK society - that self regulation promotes competition and is good for business. That it may be, but at what price to the consumer? Sure it can be a hefty financial price, but few Brits ever consider what I like to call the administration cost - the lost time spent checking for discounts, updating the companies on minute circumstance details, and wondering which car they should buy based on how much the insurance is going to be. I'm honestly surprised that few seem to want to do anything about the state of affairs given the supreme waste of time it generates, not to mention the family feuds it must cause for all those but the super wealthy who are not bothered by a few thousand pounds expenditure on the rolls.
Whilst on the cost of insurance to the average Joe - it must be significant, given the fact that there are of order 500K drivers on this small island presently driving without cover - this must be of order 2-3 % of cars on the road if we estimate that there is roughly half the population owning and driving cars. I'm sure this number is liable to grow, as we are presently watching unemployment climb, and auto insurance has gone up 40% or so in the past year. Hold up 40%! Thats ridiculous. So while there is currently a government inquiry into the price of auto insurance, the public is repeatedly fed the message by insurers that the price of insurance is driven up by un-insured drivers. Interestingly the fine for being uninsured is £500 max ,and the cheapest car you can get is only a few hundred, so when you compare this to nearly £1k for an insurance policy for someone living a less than desirable area, you can see if you are barely scraping by financially, its a risk thats going to look more and more attractive as the economic situation worsens, and insurance premiums rise. Incidently, it is often that in impoverished areas where people struggle to pay the bills that auto insurance is also at its highest.
So Insurance was something I'd never be making use of - that was until someone decided to key my car in a supermarket carpark under full view of CCTV. While it would be any sane person's view that catching the petty theif who did this (along with several other cars at the same time) would be the primary concern of the insurance company, supermarket, and police - sadly it was not. My partner was shown CCTV footage of the car parked in the car park at the supermarket, so she made a police report in the hope that they would have access to the footage and get on the case. Several days later the police notified us that the the supermarket had no sign of our vehicle on CCTV footage. For me that just didn't add up, so a trip to the supermarket revealed that their corporate policy was to only release footage to insurance companies - not even the Police! From this series of events, I'm left to conclude that the supermarket probably did have the footage, and that it's highly likely they are in bed with the insurance companies - financially it adds up. If the perp was to be prosecuted without me making a claim, there is no upside for the supermarket - perhaps apart from having retained a customer, however knowing the state of affairs with the accident and injury claims side of auto insurance that was revealed some months ago, it would not be too much of a stretch to assume a similar state of affairs here.
One more nail in the coffin of poor customer service was when it came to renewal time. One would think that for a business that customer retention would be a high priority, given the administration time and costs involved in transferring customer information between companies, so you can imagine my surprise when discovering my renewal price was £250-300 more than a 'new customer' price from the same insurer with identical policy conditions! This does nothing to retain a customer, and it clearly is poor business when the onus is on the customer to check the pricing, and even poorer when the discrepancy is so great. Alas though, as with the case with the supermarket, it would appear that customer retention is a long lost concept in the UK.
Fundamentaly it's a pretty poor state of affairs in the UK when there is little to no transparency in policy pricing, or even any common sense behind it. The industry is one of the few of its kind left that is not administered online, rather it relies on call centres - I suspect in part this is so the consumer is unable to spend too much time comparing the relative costs of policy options in order to get a discount. In essence it is the complexity and lack of clarity in the system that allows them to charge to the hilt, legaly and without a so much as a reality check. To further Illustrate the state of affairs one can purchase "No claims bonus protection" along with a policy - i.e. paying an extra premium to retain ones no claim history in the event of a claim - Hold up thats effectively taking out insurance on your insurance!
To avoid this pile of nonsense, it would be my suggestion to charge based on 4 simple factors: accidents, claims, driving history, and vehicle class only. Other factors that are charged for at present - which indeed may or may not be actual significant factors - are likely discrimination under European Law. Earlier last year, a case was heard in Luxembourg as to why there was discrepancy between men and womens insurance premiums - this was ruled illegal under EU law, so naturally premiums will rise to parity! Furthermore 3rd party cover should be assumed on any vehicle if the driver has permission - the amount of drivers who are restricted to a single car, and for example could not driver their drunk friends car home from the pub, is simply ridiculous owing to current legislation. Government regulation would also likely make insurance affordable for those who presently do not see the financial benefit (i.e. those who choose to drive uninsured), meaning fairer cover for all in the long run.
thanks for posting this, I had been feeling how fukkin annoying things were here in Oz ... its nice to know that things are just as brown in other areas on the other side of the fence
ReplyDelete