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Motor Personal Lines Insurance - Why Premiums are rising


Sheefa
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For those that are interested following a strategy event we had today:

 

1) In 1980, third party bodily injury (TPBI) and third party property damage (TPPD) costs used to account for 35% of overall motor claims. In 2012 that figure now stands at 75%

 

2) In the last 5 years there has been a 40% increase in bodily injury claim frequency (numbers reported massively up) when the actual number of car accidents have fallen dramatically

 

3) Unfortunately there is a greater awareness by the Joe Public of "cash for claims" and this trend is not going away anytime soon, hence pricing models for all insurers have to be adapted accordingly to cater for the increased costs.

 

4) the UK Motor Personal Lines Market in 2010 had a Combined Operating Ratio of 123% and this continues to rise. Quite simply for every £1 of premium insurers take in, they end up paying £1.23 out after claims, expenses, claims inflation costs etc

 

5) How YOUR motor insurance risk is rated by insurers:

- Full Postcode Rating

- Dual Peril Rating - Part rated on Own Damage and Windscreen claims and the other on TPBI and TPPD risk

- Vehicle Purchase Date - the older the vehicle the greater the risk you pose to insurers. New vehicles are highly unlikely to be involved in staged accidents

- Credit Scoring - Public Credit checks (CCJs, Insolvency, Bankrupcy)

- MID/Claims Experience

 

6) The WORST accident claims and policies to write are those who do limited miles (typically sub 5,000 a year) and there is a definitive trend that most applicants here provide false information.

 

All in all, not great news for Supra owners, especially those who have limited mileage policies.

 

Greg

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TOP FIVE HIGHEST-RISK POSTCODES FOR MOTOR INSURANCE

 

1 BD3 0 Inner City Bradford

2 OL1 2 Oldham

3 M14 5 Fallowfield, Moss Side, Ladybarn, Rusholme (inner city Manchester)

4 L1 3 Liverpool city centre

5 B9 5 Bordeseley Green (Inner city Birmingham)

 

 

TOP FIVE LOWEST-RISK POSTCODES FOR MOTOR INSURANCE*

 

1 TR16 6 Redruth, Cornwall

2 IV2 5 East Inverness, Scotland

3 TR18 3 Penzance, Cornwall

4 DD7 6 Angus, Scotland

5 HS9 5 Isle of Barra, Scotland

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TOP FIVE HIGHEST-RISK POSTCODES FOR MOTOR INSURANCE

 

1 BD3 0 Inner City Bradford

2 OL1 2 Oldham

3 M14 5 Fallowfield, Moss Side, Ladybarn, Rusholme (inner city Manchester)

4 L1 3 Liverpool city centre

5 B9 5 Bordeseley Green (Inner city Birmingham)

 

 

TOP FIVE LOWEST-RISK POSTCODES FOR MOTOR INSURANCE*

 

1 TR16 6 Redruth, Cornwall

2 IV2 5 East Inverness, Scotland

3 TR18 3 Penzance, Cornwall

4 DD7 6 Angus, Scotland

5 HS9 5 Isle of Barra, Scotland

 

Is there a way of checking to see how high your own postcode is ellis ?

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The postcode thing while sometimes good is full of holes. I live in a nice neighbourhood on the edge of town full of nice houses and nice middle class families. 2.4 children and there dog/cat and there new bmw's, volvos and runabouts. Yet it's apparently a high crime area according to the postcode. And when they released that crime map data last year my area showed 2 instances.

Yet when I lived in the centre of town (NN1) with no driveway and a hundred yards from the local pub crawl route it was the same risk

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Greg,

 

Thanks for taking the time to post this, all of this makes sense especially with the PI claim.

 

Is the industry doing something about this? I personally think no one should be able to claim a PI unless it is an actual serious injury.

 

I have heard of claims (I know a couple of guys who ran accident claim companies before), where the accident collision speed was roughly 5mph and all 5 occupants claimed for whiplash which equaled to £2,500 per passenger. Obviously this cost the other party a lot more as you would need to pay the solicitors too and the repair or value of the car. The example I used would have cost easily £20,000 which in the past would have been just a simple repair which would have cost less than £1,000.

 

Such a shame though :(

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Mine is C yet I have never heard of a crime in the area I live in !!! Just checked this postcode crime rating site here, was highly suprised at the statistics on there. Apparently I live in downtown Baghdad :blink: even though there is not one crime on my street or any of the surrounding streets ....

Edited by Tyson (see edit history)
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Mine is C yet I have never heard of a crime in the area I live in !!! Just checked this postcode crime rating site here, was highly suprised at the statistics on there. Apparently I live in downtown Baghdad :blink: even though there is not one crime on my street or any of the surrounding streets ....

 

I am surprised you guys have any crime, I used to say to my wife when I visited that the most dramatic thing that happens in Chesterfield is the swans have escaped! :D

 

Same here, we have had about 2,000 car crimes (past year) reported in Tower Hamlets but that is nearly 8 square miles of the most populated place in the UK! Well over 250,000 people living here!!

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I am surprised you guys have any crime, I used to say to my wife when I visited that the most dramatic thing that happens in Chesterfield is the swans have escaped! :D

 

Same here, we have had about 2,000 car crimes (past year) reported in Tower Hamlets but that is nearly 8 square miles of the most populated place in the UK! Well over 250,000 people living here!!

 

The problem is the school just down the road as the kids rob everything on their way home from school. The petrol station round the corner get robbed a lot too, I mean properly robbed too the last lot had guns. It's very unsettling to know that an armed robbery is going off about 100 yards from your house !! Plus my sister is a manager there too.

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The problem is the school just down the road as the kids rob everything on their way home from school. The petrol station round the corner get robbed a lot too, I mean properly robbed too the last lot had guns. It's very unsettling to know that an armed robbery is going off about 100 yards from your house !! Plus my sister is a manager there too.

 

Blimey!! I think I'll lock my doors now when I am in Chesterfield.

 

Round here we got so much police on the beat, the crime is lower if you divide by the number of people living here but high in number.

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Mine is C yet I have never heard of a crime in the area I live in !!! Just checked this postcode crime rating site here, was highly suprised at the statistics on there. Apparently I live in downtown Baghdad :blink: even though there is not one crime on my street or any of the surrounding streets ....

 

Mine has 150 crimes. So less than yours. Most are anti social behaviour. No car crime, very little burglary or theft.

And the insurance people rate it D(scale is a-f) which is higher than yours!

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Using postcodes can be a joke in my opinion, if you live on the

wrong side of a line could cost you big time or luckily in my case

save me a fortune.

 

My postcode in B'ham is rated at B i'm right on the border line for B38

which is rated at D and B14 which is on refer lmao

 

 

http://www.carinsuranceexplained.com/car-insurance-explained/car-insurance-postcode-risk-list.html

 

 

http://www.free-postcode-maps.co.uk/postcode-maps/towns/birmingham-postcode-map.php#.UQFagh26eSo

Edited by Dnk (see edit history)
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Greg,

 

Thanks for taking the time to post this, all of this makes sense especially with the PI claim.

 

Is the industry doing something about this? I personally think no one should be able to claim a PI unless it is an actual serious injury.

 

I have heard of claims (I know a couple of guys who ran accident claim companies before), where the accident collision speed was roughly 5mph and all 5 occupants claimed for whiplash which equaled to £2,500 per passenger. Obviously this cost the other party a lot more as you would need to pay the solicitors too and the repair or value of the car. The example I used would have cost easily £20,000 which in the past would have been just a simple repair which would have cost less than £1,000.

 

Such a shame though :(

 

It is a shame, but fear not there is a huge crackdown on this now.

 

There is new legisltation due to be implemented as part of the Ministry of Justice Reforms that proves to limit compensation paid and associated costs of the "No Win - No Fee" cowboys etc.

 

Did you know that we and other insurers estimate that whiplash claims alone add approx £90 a year to the average motor insurance policy! It's beyond a joke.

 

http://www.justice.gov.uk/civil-justice-reforms

 

Time is running for the scammers and scum that claim injury compensation when the truth be that they are perfectly fine.

 

About time us law-abiding motorists had a fair premium for cover.

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Why is it only now they're starting to crackdown?

 

It's not the insurers Scott, we have collectively been calling for action from the Government for years and years ever since the compensation culture flew its way int the UK from the States. The Government have been both complacent and quite ignorant of the issue.

 

Our own CEO was at this meeting with the Prime Minister.

 

http://www.number10.gov.uk/news/insurance-summit/

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It's not the insurers Scott, we have collectively been calling for action from the Government for years and years ever since the compensation culture flew its way int the UK from the States. The Government have been both complacent and quite ignorant of the issue.

 

Our own CEO was at this meeting with the Prime Minister.

 

http://www.number10.gov.uk/news/insurance-summit/

I understand that the Government is going to impose limits, what I don't understand is why insurance companies haven't been challenging these claims. Is it that there are just to many or is it just easier to pay out and put the cost of premiums up?

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I understand that the Government is going to impose limits, what I don't understand is why insurance companies haven't been challenging these claims. Is it that there are just to many or is it just easier to pay out and put the cost of premiums up?

 

What can they realistically do though as these con artists get club notes from their micky mouse doctors !

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The cost of defending civil litigation often exceeds the 'out of court' settlement. In essence anything up to about £2.5k is cheaper to pay out than defend.

It doesn't help with the burden of proof either.

Insurance companies could be more pro-active, but initially it would cost too much to set out their stall!

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