The great white hype

edmund_f

Boggle wrote:

First point: The insurance companies are entitled to discriminate agaoinst any minority or group they like as long as they can back it up statistically.

Really? So if i can prove, for example, that all Nigerians have a lower standard of english than, say australians, i can refuse to hire them in a customer service position? love to see the SI to back that one up


Agree pretty much with everything else you say, although i do think that if people (all people) wish to reduce their preimums, they should start looking at the costs they are paying on behalf of the insurance companies?

Boggle

It was the verdict of some age discrimination case a while back. The EU were going to ban ageism but the ins inductry put them under too much pressure and they dropped it.
Edit: think it only counts for insurance industry. I can look up the ruling if you need - although probably read it here...

Agree pretty much with everything else you say, although i do think that if people (all people) wish to reduce their preimums, they should start looking at the costs they are paying on behalf of the insurance companies?

Likewise I do agree with this and in particular the legal costs associated with peremium rates. I would suggest, however, that they are not financially under pressure. Reather they are justifying relatively high rices to older drivers(i.e. higher than EU average... much higher) by charging young drivers hugely exaggerated premiums. No evidence to back it up though - business wise its what I'd do if I was in a situation where I was selling a product that legally you have to have in order to drive... (Oh and the massive profits they make)

edmund_f

Really?.. did not know the only people in the world that can discriminate are insurance companies. I just cannot believe a 21 yr old with 3 year driving experience will be quoted EU3000 and a 40 yr old with no driving experience will be quoted EU1000

It would not surprise me to hear they went to the european court to protect this, nice to see out insurance money being well spent

Boggle

http://www.equalitytribunal.ie/htm/press_releases_publications/2003/031003.htm

The respondents claimed that the refusal was not unlawful as it fell within the exception provided for the insurance sector by the Equal Status Act for difference in treatment based on actuarial or statistical data and which is reasonable having regard to the data or other relevant factors.

The EU bill only got to draft stage as it was quashed due to pressure from member states (i.e. insurance companies pressuring the govt's).
Here's a link: HERE

Merrion

Saying that all drivers should be charged the same premium is like saying all the horses in a race should be placed at the same odds.

Is it discrimination that older people have to pay much higher premiums for term life and critical illness cover?

Diabetics and narcoleptics have to pay higher premiums because they represent higher risks - perhaps that is discrimination?

I agree that insurance companies make large profits - so do supermarkets, oil companies, pharmaceutical companies, builders, airlines, IT hardware manufacturers, Microsoft, electricity companies, bookmakers, cinemas, retailers, mobile phone companies, stud farms, organized religions, etc.

Boggle

Is it discrimination that older people have to pay much higher premiums for term life and critical illness cover?

I think so, yeah. The point of insurance cover is that everyone throws a little into the pot so that eventually when someone needs it it's there. Basically you are happy to take people's money for insurance, but only as long as they don't need it. What if, after paying insurance all their life, a person turns 60 and can no longer afford insurance - just when they may need it. Is that fair?

Diabetics and narcoleptics have to pay higher premiums because they represent higher risks - perhaps that is discrimination?

Hard one to call.

Saying that all drivers should be charged the same premium is like saying all the horses in a race should be placed at the same odds.

Didn't say that. It should be based on how much experience you have or whether you have a good driver history(NCB). Not on your age or sex.

Capt'n Midnight

Bogger77 wrote:

Again, L drivers driving illegally on M-ways, without a qualified driver etc. would probably be called grey drivers, as in illegal but tinged with legality, cos insurance cover is present.

Just because insurance companies pay out doesn't make it legal :mad:
Strictly speaking they could refuse to payout on the basis that you are ONLY covered if you hold a valid license. A provisional is not a valid license ona motorway. BTW: in Northern Ireland you aren't allowed on a motorway or drive over 45mph for the first year after you have passed your test.

Down here people expect to be allowed to drive on motorways at over 70mph without having sat a test. Up there you could get done for going 50mph even after passing your test.

Could we have a class action suite against the insurance companies on the basis that the way they continue to cover provisional drivers is affecting road safety (at the very least in the numbers of cars on the road) and meaning that the rest of us have to pay more.

Dades

edmund_f wrote:

if you assume 2:1 ratio of claims to costs based on emperical knowledge

thus ratio of preimum is 4/9 to claims and 2/9 to costs/profit to company

that would mean slightly over 20% of your preimum goes directly to the compay to pay wages & profit?.

While this may not affect the 30+ group much (e.g. cost of insurance = EU500 = > cost of company + profits = EU100)

but for the 21 and under where insurance can cost, for example, EU3000 => money going directly to company for cost & profit is EU600

Do you know for a fact that this ratio is consistant across all catagories of drivers? I'm just asking. It's a very creative assumption otherwise.

Problem is there is plenty of competition in the insurance market. It's open to any insurer to offer lower premiums and capture the younger demographic. Why hasn't anyone done this? Maybe it's just not profitable to do that - and if you run a company that engages in policies that are not in the in the interest of profit, your shareholders will hand you your P45. It's just business.

Merrion

The point of insurance cover is that everyone throws a little into the pot so that eventually when someone needs it it's there.

No - that's the welfare state you're thinking of.

The purpose of insurance is to pay a small payment to a company to indemnify yourself against having to pay out a large amount if an accident occurs.

mike65

Merrion wrote:

Broker commision is typically about 25-30%. This used to be capped much lower but the government removed that restriction due to it being against EU rules.

Government levy is 1%
Government Tax is 2%

So more than 1/3 of your cost of insurance is nothing to do with the insurance company.

Blimey which broker are you using? Mine charges about 40 euro.

Mike.

Merrion

Ah - I meant brokerage rather than "independant broker"..i.e. like AA, Tesco etc.
The back end policy is provided by the insurance company (large, faceless and often American)
The brokerage does the dealing with the public stuff.
The commission goes to them from the premium written amount...i.e the bit that appears on your bill as "premium".

Boggle

No - that's the welfare state you're thinking of.

The purpose of insurance is to pay a small payment to a company to indemnify yourself against having to pay out a large amount if an accident occurs.

Yet if other people didn't throw money in then this wouldn't work - as you wouldn't have put enough in to cover an accident and it'd be a lossmaker. ergo quit arguing semantics for the sake of of it.

Merrion

It's not semantics - it is the basis of how insurance works.

Banks alter their rates of a loan because this has a bearing on how likely they are to get the money back. Insurers alter the premium due too the risk factors involved because this has a bearing on how likely they are to pay out.

edmund_f

so banks base rates on the market,

e.g. i will give you a 1% deposit rate and a 4% loan rate (or whatever)

how do you equate or check insurance rates?

Merrion

Insurance companies sell each other risks (reinsurance). The rates they use in this market are pretty much what they use as the basis for their retail rates.

Note that lending institutions give a different rate depending on the risk - for example home owners and professionals get a better rate than unemployed non home owners with CCJs etc.

edmund_f

yes, would that rate be a factor,?

e.g. 40 yr old EU500
20 yr old Eu4000

factor x 8

e.g. i get a 10% personal loan (home owner, no CCJ's etc)
a person with CCJ's and no house will get a loan rate of 80%?

again question 'how do you equate or check insurance rates?'

Merrion

I only worked on rating table software in the UK, but I can assure you that no factor was as high as 8 times and would be very suprised if that is what you are getting when age is the only factor.

Typical personal motor insurance is:-
Amount insured x (fSex + fAge + fLocation + fVehicleClass +fNCB)
Of these, vehicle class is the highest factor, then no claims bonus (or insured claims free years) then age, sex and lastly location.
However this is complicated by the fact that with motor isnurance you are insuring a diverse set of risks: Third party indemnity, theft and own damage.
The risk factors for each of these vary and age is only a factor in third party and own damage...in fact, for the same vehicle age was an inverse factor in theft category (younger people tend to lock their cars).

Now one of the most common misconceptions is to think that the amount insured is the just the replacement value of the car. This is not the case. The amount insured is also the liability limit of the policy (usually between €1M and €10M, set by national regulations).

Boggle

Now one of the most common misconceptions is to think that the amount insured is the just the replacement value of the car.

Don't be silly - you'll never get the value of your car back!

Typical personal motor insurance is:-
Amount insured x (fSex + fAge + fLocation + fVehicleClass +fNCB)

You make it seem like they aren't out to screw everyone - maybe I'm wrong after all! :eek:

:rolleyes: Yeah right...!

Seriously though, I'm bein too hard on you - you worked in the UK after all where the ins is much better than here....

edmund_f

the x 8 factor was just to show how insane the costs of insurance are over here. If anyother service industry (remember that is all they are.. a service) tried to do this and hide behind a particular sector they would be sorted out pretty quickly. The main reason they are not is because they have so much of (our) money. money = power.

i do like the fromulas coming out..

here is one for you to ponder on

if insurance preimums were retrospective.. i.e. you paid insurance for the year passed, ignoring any loadings

preimum = (cost of claims + cost of running insurance (lawyers etc) - money made by investments) / no of policies.

if you wish to load based on a factor (e.g. age, sex, hair colour whatever) this factor should be shown to be directly attritibutable (in my head that is a real word) to a section of the costs.

for example you can say 60% of all claims paid were due to accidents on major roads, and 40% on minor roads, if you could show that your car was only used on minor roads you should get a reduction?

inversly, the insurance companies should be forced to publish their loadings, as they should all be the same, based on the fact that all the statistics are the same?. I cannot believe there is a set of statistics out there which would justify that someone is EU3000+/year more expensive, some how based on their age, with no reference their training?.

Macy

Merrion wrote:

I only worked on rating table software in the UK, but I can assure you that no factor was as high as 8 times and would be very suprised if that is what you are getting when age is the only factor.

You can't use the same formula in the UK for here. When I moved back here my insurance was 5 times the amount for 1 litre (with 5 years no claims) as it was when I was first insured as an 18 year old in the UK for a 1.4.

Young male drivers are the most profitable for the insurance companies, so in my mind you can quote any stats back you want. The highest risk shouldn't be the most profitable - it should be the other way around. (As someone out of the high risk grouping now).

Merrion

Young male drivers are the most profitable for the insurance companies

Why then do some companies not insure drivers less that 21 years old - surely their shareholders would be upset that they are missing out on a lucrative market?

for example you can say 60% of all claims paid were due to accidents on major roads, and 40% on minor roads, if you could show that your car was only used on minor roads you should get a reduction?

Yes.
Any way you can show an insurance company that you are reducing the risk should (and probably would) get you a reduction. Hence limited milage policies, second car discount (you can't drive both cars at once hence the risk per car is less) and so on.