Now Ye're Talking - to an Insurance Underwriter

Liam McPoyle

Pythia wrote: »

As a qualified commercial lines pricing actuary I can help on the point above. A loss ratio is a good acid test however I think the OP is confusing this with Combined Ratio which is the measure of overall profitability.

There are many components other than losses that lead to whether a company made a profit or not.

Expenses
Reinsurance costs
Tax
Reserve adjustments (basically money needed now for unexpected claims from older years)
Contingency reserves (money put aside for things like earthquakes, terrorist attacks etc)
Investment returns (this is obvious a gain, not a cost)

Expenses can be absolutely gigantic - as low as 10% of premium or as high as 50% of premium. Salaries, rent, costs of doing business etc plus commissions can be very large too (yes, your figures are net of commission though).

Yes, you are right, investment income is not insubstantial however this is very much the norm and a reduction in price to account for this is built in. Many claims are not paid for years and investing the money helps reduce the net cost of these claims. In fact allowing for positive investment income is a key part in pricing any kind of liability insurance.

I could make a lot of points on other issues raised here from an actuarial point of view but I think the OP is doing a very good job!

Thank you for that, much more succinct that I could muster!

Zebrano

Do u think solvency 2 is a good thing.
Do u think the central bank are doing a good job regulating since the bust.

Liam McPoyle

Zebrano wrote: »

Do u think solvency 2 is a good thing.
Do u think the central bank are doing a good job regulating since the bust.

It certainly is a good thing. Ultimately if an insurer goes tits up its going to be the public that pays the price.

Approx half the levy on insurance is down to insurers going bust, the most recent one been Quinn Direct, previous to that I believe it was PMPA that went bust.

Since the financial crisis yes, regulation and control has improved but IMO it's nowhere near the level it needs to be at.

As I mentioned previously, 123.ie masked a €250 million deficit with some creative accounting from a couple of senior staff, crap like that shouldn't happen or be allowed to happen but the problem is when the controls are in the hands of one or of a few, the potential for messing will always be there.

I'd be an advocate of sterner and heavier fines and penalties for companies found to be up to dodgy business.

Sobanek

I actually have a very interesting question.

Now, I pretty much know the answer - to do with risk etc.

How come I can insure a 5.4 litre V12 BMW at the age of 21, but I cannot insure the same brand's 2.0 Convertible which has considerably less power? (326 vs 143hp). Wouldn't the 750i be considered a much higher risk vehicle than a puny 318Ci Convertible?

Zebrano

Business Cat wrote: »

It certainly is a good thing. Ultimately if an insurer goes tits up its going to be the public that pays the price.

Approx half the levy on insurance is down to insurers going bust, the most recent one been Quinn Direct, previous to that I believe it was PMPA that went bust.

Since the financial crisis yes, regulation and control has improved but IMO it's nowhere near the level it needs to be at.

As I mentioned previously, 123.ie masked a €250 million deficit with some creative accounting from a couple of senior staff, crap like that shouldn't happen or be allowed to happen but the problem is when the controls are in the hands of one or of a few, the potential for messing will always be there.

I'd be an advocate of sterner and heavier fines and penalties for companies found to be up to dodgy business.

What in your opinion can the central bank do to improve.

Do you have any dogs

Zebrano

Business Cat wrote: »

It certainly is a good thing. Ultimately if an insurer goes tits up its going to be the public that pays the price.

Approx half the levy on insurance is down to insurers going bust, the most recent one been Quinn Direct, previous to that I believe it was PMPA that went bust.

Since the financial crisis yes, regulation and control has improved but IMO it's nowhere near the level it needs to be at.

As I mentioned previously, 123.ie masked a €250 million deficit with some creative accounting from a couple of senior staff, crap like that shouldn't happen or be allowed to happen but the problem is when the controls are in the hands of one or of a few, the potential for messing will always be there.

I'd be an advocate of sterner and heavier fines and penalties for companies found to be up to dodgy business.

What in your opinion can the central bank do to improve.
Would you ever work in the central bank.
Do you have any dogs.

dulpit

What would happen in a scenario where you get crashed into by somebody else, your car is mangled and the other dude is either un-insured or does a runner? Are you stuck claiming on your own policy, and do you lose your NCB?

H3llR4iser

Hi Business Cat,

I have a couple of questions I am surprised no one asked:

1 - What kind of data is used for the "risk assessment" process of car insurance, where is it available for viewing and if it is not, why is it secreted? As a lot of people do actually question its accuracy and suitability if not its very existence, wouldn't some transparency help everybody involved?

2 - Why do most insurance companies double the premium for EU license holders, in many cases to the levels of Irish Learner's permit holders, when the process for acquiring a license was stricter and longer outside of Ireland up until recently?

Plus another one that's out of sheer curiosity:

- What amount of "accident fronting" (e.g. father claiming he was driving at the time of the accident while it was clear it was the son, husband trying to take the blame instead of the wife and so on) do you see?

Liam McPoyle

Sobanek wrote: »

I actually have a very interesting question.

Now, I pretty much know the answer - to do with risk etc.

How come I can insure a 5.4 litre V12 BMW at the age of 21, but I cannot insure the same brand's 2.0 Convertible which has considerably less power? (326 vs 143hp). Wouldn't the 750i be considered a much higher risk vehicle than a puny 318Ci Convertible?

Simple reason is that insurance companies do not like convertible cars.

They tend to be a target for malicious damage/vandalism and the likelihood of a fatality or catastrophic injury happening to a passenger in a convertible is considerably higher than if they were travelling in a standard car.

Liam McPoyle

Zebrano wrote: »

What in your opinion can the central bank do to improve.
Would you ever work in the central bank.
Do you have any dogs.

More regular audits, unannounced on site visits and harsher penalties / sanctions for the guilty parties would be a good start I think.

I'd certainly consider it if the right opportunity came along, sure.

Alas I don't have any dogs where I'm living at the moment due to lack of space but my folks have three that I adore.

Liam McPoyle

dulpit wrote: »

What would happen in a scenario where you get crashed into by somebody else, your car is mangled and the other dude is either un-insured or does a runner? Are you stuck claiming on your own policy, and do you lose your NCB?

Accidents involving hit and runs or uninsured drivers are covered by the MIBI. Approx 2% of the levy you pay on your premium goes into a group pot for the MIBI.

In general the way it would work would be that your insurer would sort your car out then seek recovery from the MIBI.

It shouldn't effect your bonus as it would be considered a non fault claim.

Pete123456

Does it make a difference when calculating a renewal premium on a car whether your previous insurance was tpft or fully comp? i mean if i pay the extra now for fully comp will the renewal premium be lower than if i had payed for tpft? then again i spose the extra cost would outweigh any saving...

bren2001

Business Cat wrote: »

Accidents involving hit and runs or uninsured drivers are covered by the MIBI. Approx 2% of the levy you pay on your premium goes into a group pot for the MIBI.

In general the way it would work would be that your insurer would sort your car out then seek recovery from the MIBI.

It shouldn't effect your bonus as it would be considered a non fault claim.

About 3 years ago I was a named driver on my sisters policy. Our car was crashed into, parked outside the house. The driver drove off. We started the insurance route but were told we would lose our NCB and be loaded if we went through with it. We pulled out and just paid for it ourselves about 1100e to fix, they were giving us 1800e as an economic right off. I've two questions:

1. Should we have lost our NCB if we went through as you are saying it was a non fault claim.

2. Do I declare this as being involved in an accident when getting re insured?

To Elland Back

Enjoying the responses Business Cat, very clear information

strobe

Business Cat wrote: »

The big one's thats currently on the naughty list would be late 90's / early 00's VW Passats & Bora's.

The new model Mini's are also another one that insurers have a problem with and that are rated quite highly.

What's the reasoning for this do you know? What specifically is it about those vehicles that results in them being considered higher risk?

dulpit

strobe wrote: »

What's the reasoning for this do you know? What specifically is it about those vehicles that results in them being considered higher risk?

Re. Boras & Passats, you see a lot of young eejits bombing about the roads in them. Guy I know (he's a thick) has boasted about how quickly he can hit 100 mph out of his 00 bora. :mad:

Greenmachine

Is it standard to charge Class 17 insurance on a motorbike, because it is a grey import?

Liam McPoyle

H3llR4iser wrote: »

Hi Business Cat,

I have a couple of questions I am surprised no one asked:

1 - What kind of data is used for the "risk assessment" process of car insurance, where is it available for viewing and if it is not, why is it secreted? As a lot of people do actually question its accuracy and suitability if not its very existence, wouldn't some transparency help everybody involved?

Risk assessment is based on actuarial data that an insurance company has gathered over the course of literally years.

Risk assessment, in its simplest terms, is trying to put a fair price for an insurance policy based on the facts as they are presented, or declining to quote and being able to give a valid reason why.

The most common risk assessment criteria are

Age
Licence type
Car type
Any previous convictions
Number of years NCB
Claims experience
Has the person ever had a policy cancelled and if so, why
Occupation
Location
Class of use

Using the above data to assess the driver will give a pretty good indication of what premium should be charged.

Of course it isnt fool proof. There are drivers that would tick all the boxes in terms of car type, licence and bonus but are lunatics and like wise you could have a 20 year old with one years bonus and they could be an excellent driver but based on the information available and historic claims experience, certain answers will generate a referral. While there are exceptions to every rule, for the most part its pretty accurate.

Im not sure what you mean by the information been secreted, its available on every insurance website there is in the form of the online questionnaire you fill out when getting a quote, thats the risk assessment.

H3llR4iser wrote: »

2 - Why do most insurance companies double the premium for EU license holders, in many cases to the levels of Irish Learner's permit holders, when the process for acquiring a license was stricter and longer outside of Ireland up until recently?

Honestly, I dont know. Id be of the opinion that a full licence is a full licence, regardless of where it was issued from. You could argue the case for drivers coming from countries that drive on the left hand side of the road getting loaded but for right hand drivers, its pretty unfair imo.

H3llR4iser wrote: »

- What amount of "accident fronting" (e.g. father claiming he was driving at the time of the accident while it was clear it was the son, husband trying to take the blame instead of the wife and so on) do you see?

I don't deal with the day to day claims side of the business, thats a totally different section to myself but I can honestly say Ive never encountered such a scenario. Im sure it does happen, particularly with young drivers but I reckon it would be very much in the minority.

Liam McPoyle

Pete123456 wrote: »

Does it make a difference when calculating a renewal premium on a car whether your previous insurance was tpft or fully comp? i mean if i pay the extra now for fully comp will the renewal premium be lower than if i had payed for tpft? then again i spose the extra cost would outweigh any saving...

Sorry mate, I have no idea what you are asking me.

Liam McPoyle

strobe wrote: »

What's the reasoning for this do you know? What specifically is it about those vehicles that results in them being considered higher risk?

dulpit wrote: »

Re. Boras & Passats, you see a lot of young eejits bombing about the roads in them. Guy I know (he's a thick) has boasted about how quickly he can hit 100 mph out of his 00 bora. :mad:

Pretty much what dulpit said re the VW's. They are now the chung fellas motor of choice and as a result have been involved in some heavy claims (that tragedy in Donegal in 2010 with 8 fatalities involved a Passat).

The Mini's are rated quite highly as the are a relatively powerful but relatively flimsy car. A Mini involved in any kind of a mid to high speed impact is going to be pretty much goosed which means severe damage/write off to the car and as a result to the drivers/passengers.

Liam McPoyle

Greenmachine wrote: »

Is it standard to charge Class 17 insurance on a motorbike, because it is a grey import?

Im afraid I have no experience whatsoever with motorbike insurance so I cant answer that Greenmachine, soz.

DANNY2014

Love the thread it's quiet informative... Now Does it work much when ya tell your insurance company ya got a better quote elsewhere as in do they bother to match or are they sick of hearing this one liner... And what's the most common way of gettin it down a few quid... Cheers...

Liam McPoyle

DANNY2014 wrote: »

Love the thread it's quiet informative... Now Does it work much when ya tell your insurance company ya got a better quote elsewhere as in do they bother to match or are they sick of hearing this one liner... And what's the most common way of gettin it down a few quid... Cheers...

If you are talking directly to an insurance company then probably not. The agents will have strict guidelines for discounting and cannot/will not go below them.

Brokers on the other hand are worth fighting as they will usually have a fee on the premium they send you that can be deleted. They are getting paid commission by the insurance company for every policy they sell/renew so its in their interests to hold on to your business, even if it means deleting the broker fee.

What I used to find would be that people would ring up and say they wanted 50, 60, 100 quid off. That level of discounting is a rarity so what I would say to people that are haggling with their insurer to compromise.

Say your insurance went up 10% on last years renewal premium and you are unable to find a cheaper alternative.

Call your insurer and say

"I know insurance rates have increased but I cannot afford to pay an additional 10% on my policy this year. If you can reduce the increase to 5% on last years premium I will renew with you now"

It may not work for everyone but its giving the agent a sense that you understand they are in a tough spot but that they now understand you are also in a tough spot too.

People that used to come on the phone to me ranting and raving would get nowhere, even if I had discount to give, I wouldn't give it if they were been a bolox.

You have to remember, the person you get speaking to has likely had hundreds of calls over the previous couple of days giving out to them about price. If you are nice and speak to them in a respectful way then invariably they will go out of their way to help you out if they can.

martigk

Thanks for your answer re pletplan, but can you tell me if an insurance company are meant to show loading as a separate amount on the renewal quote ? Also, I had higher claims on my previous lab who unfortunately had a huge amount of allergies so had a supplement each month costing €26 along with vet bills a couple of times a year but I was never loaded so that being previous experience with same company why am I being targeted now ?

Zebrano

Why is occupation such a big factor

Liam McPoyle

martigk wrote: »

Thanks for your answer re pletplan, but can you tell me if an insurance company are meant to show loading as a separate amount on the renewal quote ? Also, I had higher claims on my previous lab who unfortunately had a huge amount of allergies so had a supplement each month costing €26 along with vet bills a couple of times a year but I was never loaded so that being previous experience with same company why am I being targeted now ?

There is no onus or requirement on an insurer to advise of claims loadings.

As I said in my last answer, Ive no experience in pet insurance so Im not in a position to give an accurate answer.

At a guess, it would appear that on your first policy you werent penalised for claiming but a new claim for a different pet resulted in an increase. In that scenario it looks like there was some sort of "no claims bonus" attached which when you made the claims was then deleted, when a second claim came in that caused the increase.

Using the example of car insurance, someone could crash their car but not be penalised, they could crash another car under the same policy and get penalised/loaded for that.

As I said though, the above is purely a guess. Your best bet is to ring your insurer and ask them directly.

Sorry I couldnt be of more help.

Liam McPoyle

Zebrano wrote: »

Why is occupation such a big factor

Most occupations are absolutely fine tbh.

Its the ones with large potential exposure that are the issue.

An occupation like a sales rep means they are going to be clocking up alot of miles, could be carrying valuable stock/samples etc, danger of driver fatigue etc mean it is a risky occupation for a company to cover.

Likewise for motor trade related occupations - mechanics, tyre fitters, panel beaters etc. Most insurers will give driving of other cars as standard on their policy. If someone is say a mechanic, they could be potentially driving 10 different cars a day. As a risk that is impossible to quantify for a private motor insurer so they will usually shy away from motor trade related risks.

Likewise for taxi/hackney drivers. Massive potential exposure.

As I said though, most occupations are a non issue.

Miighty

How do insurance companies deal with car modifications such as remapping. Should I expect to see my insurance skyrocket if I remapped my car?

What happens in the case of major undeclared modding and claims?

Falcon L

I was with a very reconisable comedian once who, when hiring a car, answered 'plasterer' as occupation. Show biz is heavily loaded it seems. Well, he was a plasterer by trade in his old life

TrueIt

Omackeral wrote: »

Does this ad make you want to gouge your own eyes out with a dessert spoon?

https://www.youtube.com/watch?v=_1jltMLa-KA

Ohhhh wow