Loading on insurance?

muffler

So my mate got his renewal through from Liberty and one of the additions is a loading for payment method. He doesnt know what it is and I dont know either so maybe one of the experts here might be able to enlighten us. Thanks in advance.

thebiglad

Are they paying by instalments - I have seen Aviva in the past increase base premium (in addition to any interest on instalments) if that option is selected.

That's quite a hefty loading though.

drury..

They'll load for installments

muffler

Thanks guys. Yes, he pays by instalments. I thought it may have been that but wasnt sure.

I look after all this stuff for him and he wouldnt be the best when it comes to dealing with this stuff by phone so I do as much as I can online for him. This wasnt on last years renewal so I might email Liberty and query it. I'll post up a screen grab of last years notice.

muffler

I see where they are charging €71.87 extra for paying in instalments which is fair enough but to add 25% of the base premium on top of that is really taking the p1ss.

HorseSea

It's a loading based on the payment method, the insurers logic is that if you can't afford to pay the premium in one lump you are more likely to not keep the vehicle in tip top condition and be more likely to claim, even for a smaller amount. I worked in the industry for years and always felt this was very unfair, however I have seen the claims stats on both frequency and average claims cost and they were definitely both higher for people paying by instalments, so there must be something in it. Thankfully I am long away from all that crap now.

thebiglad

https://www.boards.ie/discussion/comment/122364858#Comment_122364858

I'd rather see the loss ratio on that portion of the book, there could be as many instalment paid policies with no claims that you would not see in the claims department.

As a few insurers do it then we can only assume that their internal analysis supports the higher risk but really, someone paying by credit card and then taking months to clear their bill is really no better of a risk, the insurer is just not aware of their payment schedule in this case.

HorseSea

https://www.boards.ie/discussion/comment/122365012#Comment_122365012

Of course the risks with no claims are included in the analysis - they might be miserable feckers but they are not stupid. I never mentioned the claims department, they would not be doing that type of work. Actuarial and Pricing gurus do all that type of stuff.

Sinbad311

To me it looks like the customer is being penalised twice for paying in instalments?

1. Plus- Loading for payment type €301.48

2. Plus - Monthly instalment charge €51.23

Bit Irish that! €350 extra for monthly instalments..although there's a healthy no claims bonus discount, are they clawing that back with instalment fees?

muffler

https://www.boards.ie/discussion/comment/122365079#Comment_122365079

Thats what it looks like to me also.

muffler

The first image is this years renewal and the second one is last years and doesn't show any loading just the interest charge for paying in instalments.

Sinbad311

https://www.boards.ie/discussion/comment/122365118#Comment_122365118

Exactly, also noticed there's no online discount this year, maybe you or your friend could seek an online renewal quote?

muffler

https://www.boards.ie/discussion/comment/122365729#Comment_122365729

Yeah I done that last year and managed to save him a few quid so I'll do the same this year after I get him a couple of other quotes.

Brian201888

Is that an actual screenshot of the quote or something you've done up?

As much as they'll use it as an internal rating factor I've never seen that revealed to the customer with any other policy. There's something wrong there anyway, even if they are loading the risk for the payment type it's definietly not going to be a 25% load for it

diceyreilly

Does he have penalty points.

Seems a normal rate of loading for 6 PP

muffler

https://www.boards.ie/discussion/comment/122365825#Comment_122365825

That's a screenshot of the renewal quote.

I've been looking after his insurance for the last 3 or 4 years and I have never seen that before. I have never seen it on my own renewal either although I generally pay up front most years. As you pointed out it may have been a mistake by Liberty in displaying it.

muffler

No penalty points but he did have a claim against him about 5 years ago I think so he has been working his way up the no claims bonus ladder.

Eggs For Dinner

There is a significant rate of defaulted payments related to direct debits on motor insurance. Unlike other services, there is a highly regulated process insurers must undergo to either rectify the situation or come off cover. A huge amount of resources are involved. Insurers treat the choice to pay by direct debit as a rating factor, alongside items such as age, location, driving history etc

diceyreilly

They dont use choice of payment as a rating factor.
They charge interest on the portion left to pay after youve paid your deposit.

muffler

https://www.boards.ie/discussion/comment/122366122#Comment_122366122

That is probably the case but as he has always paid in instalments I'm wondering why did it not show up in previous years or was it built into the base premium.

I'm also wondering if he did decide to pay up front would Liberty drop the loading. Just asking to see if anyone was in a similar situation.

muffler

https://www.boards.ie/discussion/comment/122366238#Comment_122366238

Have a look at the renewal notice I posted which differs from your assessment. My mate is being charged interest as you pointed out but he is also being loaded to the tune of 25% of the base premium less his NCB discount.

diceyreilly

Yes i read it. Its not for paying by installments.

How about you ( i mean your mate ) ring the insurance company and ask

muffler

https://www.boards.ie/discussion/comment/122367975#Comment_122367975

First of all you say that it's for paying by instalments and now you say it's not. That is some contribution to the thread.

beachhead

https://www.boards.ie/discussion/comment/122365918#Comment_122365918

5 years ago should be dismissed by now if the 5th anniversary was before his renewal date.Or are Liberty a 6 year stroker

diceyreilly

https://www.boards.ie/discussion/comment/122368212#Comment_122368212

https://www.boards.ie/discussion/comment/122368212#Comment_122368212

never said loading was for instalments.

Learn to read

HorseSea

https://www.boards.ie/discussion/comment/122366238#Comment_122366238

Yes they do and I know that for a fact, read the full thread carefully. Maybe not all insurers do it, but definitely some do and certainly on the example shown by OP. Interest charges for instalments is a separate thing and not a rating factor.

Eggs For Dinner

https://www.boards.ie/discussion/comment/122366238#Comment_122366238

That's wrong, they do.

cml387

I've just renewed with 123 and there is a box to tick if you wish to pay by instalments with a specific warning that this will result in a loading on the premium.

muffler

To conclude the thread. I finally convinced the mate to ring Liberty and the agent confirmed the loading was in respect of paying by instalments. If he was to pay up front the premium would be 550 which is a huge saving on the original quote of 809 for paying by instalments.