Women Face £362 Rise In Car Insurance

[winkie]

Car insurance in the UK used to be relatively cheap.....you could almost guarantee that if you did not make a claim one year your premium would be reduced the following year and so on.....what has helped hike it up is the, blame claim industry, suspect whiplash and other injuries that did not happen.....insurance companies selling personal details onto third parties in order to generate business that only pushes up premiums annually for everyone else.....about time a stop was put to all this unethical profiteering.

What we are finding now is because of the high cost of learning to dive and driving especially insurance for our young people, and the utterly dismal state of our public transport in some parts of the country, even if they did manage to secure employment they couldn't afford to pay the cost of transport to get to work....not everyone can cycle or would be brave enough to ride a motorbike to work.

[Redcellar]

Obviously a lot of people on here who have no understanding of how the insurance industry works or the fundamentals of Insurance as a risk transfer mechanism. As a Chartered Insurer and someone who has worked in the London insurance market my two pence worth:

One of the biggest challenges for insurers is "investment income" which is pretty much non existent and has been since the good old recession. Motor insurance simply makes no underwriting profit (premiums minus claims) and has not done so for years and therefore "profit" relies on "investment income" which is gained through "speculating" with the pool of premiums, the goal being to try and generate a profit over the underwriting cycle. This is typically done as a very short term investment and one of the challenges is the choice of investments which are often limited but also heavily influenced by Capital Adequacy requirements for the insurers.

Yes it is wrong to penalise based upon age / sex / race, but the bottom line is that motor underwriting engines are built up over years and years of data and they know who is more likely to have an accident. Unfortunately this can mean that a young Asian male gets severely penalised versus a middle aged white woman.

Im not saying it is right, but I'm not really sure what the solution is. Should we just charge everyone the same no matter how old, what sex etc? Would this work out better for the consumer in the long run? Personally I think there would be far to greater moral hazard in doing something like this.

Glad we have someone in the business commenting.

One question though, did you really mean 'moral hazard' as I fail to see how your point relates to it - undue risk being taken by a party who does not pay the costs should the risk occur.

A model that discriminates on sex is a problem because it's not a factor a person has chosen, has control over nor is it a factor that everyone has exposure too. Half of the people are male and will be all their lives. Age is fair as we are all young and we all become old. That's my take on it.

The proposal is to alter the current model to simply take sex out of the equation, you can leave the rest of the demographics in there. Location for example.

I would also suggest that insurance companies should not be in bed with the claims companies as that is unscrupulous. They have contributed towards these excessive charges by being complicit with the dodgy companies in passing on details enabling them make fake claims of injuries. That is just plain indefensible. Yet the majority of the big players appear to have been at it, making money on the side.

EDIT: I will add, I see that removing sex as a risk indicator should not mean more money in the overall insurance pot. The claims are going to be the same. So it should mean womens insurance increases and mens declines. But I bet the insurance companies don't do that. They will take the opportunity to just increase womens rates and therefore prove equality.

[porca misèria]

I don't drive, I don't drive to work. I sign on and claim benefits. I will work jobs in walking distance that allow me to be marginally better off than the dole, but they are few and far between.

Get a bike ferchrissake!

[porca misèria]

'

I only had 2 accidents in about 30 years of driving.

That "only" betrays an attitude I find seriously alarming.

[Self Employed Youth]

Get a bike ferchrissake!

I've got one. It doesn't make much difference to my 'work radius'.

Not having a car isn't the end of the world, but it does restrict you from quite a few things.

[Frank Hovis]

Obviously a lot of people on here who have no understanding of how the insurance industry works or the fundamentals of Insurance as a risk transfer mechanism. As a Chartered Insurer and someone who has worked in the London insurance market my two pence worth:

One of the biggest challenges for insurers is "investment income" which is pretty much non existent and has been since the good old recession. Motor insurance simply makes no underwriting profit (premiums minus claims) and has not done so for years and therefore "profit" relies on "investment income" which is gained through "speculating" with the pool of premiums, the goal being to try and generate a profit over the underwriting cycle. This is typically done as a very short term investment and one of the challenges is the choice of investments which are often limited but also heavily influenced by Capital Adequacy requirements for the insurers.

Yes it is wrong to penalise based upon age / sex / race, but the bottom line is that motor underwriting engines are built up over years and years of data and they know who is more likely to have an accident. Unfortunately this can mean that a young Asian male gets severely penalised versus a middle aged white woman.

Im not saying it is right, but I'm not really sure what the solution is. Should we just charge everyone the same no matter how old, what sex etc? Would this work out better for the consumer in the long run? Personally I think there would be far to greater moral hazard in doing something like this.

The solution is surely (I worked in Lloyd's and a couple of reinsurers, though defer to your expertise as I am a bit out of date) that everybody gets rated individually based upon their own claims record and age. So if you are 18 and haven't driven before you pay a serious amount of wedge. If you are 30 and have been driving for 12 years without a blemish then you pay a lot less.

It does mean buidling up a proper database of individuals' driving and claim histories from dot and it is a better way, for the insurers as well, to rate people. There should be more interest in the indviudal's own track record than whether they are a man or a woman. This removes the grouping basis and makes insurers rate people properly based upon you, not the group you fall into. Obviously postcode, where the car is parked, and occupation will continue to influence premiums, but I agree (this time) with the EU that rating by sex is too broad brush.

Point totally accepted about investment income, the brokers must be having a very hard time of it.

[porca misèria]

Point totally accepted about investment income, the brokers must be having a very hard time of it.

In other words, the insurers are subsidising motorists from investment income, but most of that subsidy has evaporated as interest rates went to zero.

[Frank Hovis]

In other words, the insurers are subsidising motorists from investment income, but most of that subsidy has evaporated as interest rates went to zero.

Yes, you do something stupid with interest rates and there are all manner of unexpected ways in which inflation takes off.

[MongerOfDoom]

link

Two amazing things about that article:

It does not mention the losers are men who save for their retirement, and to a lesser extent women who don't. Just how it makes sense to tax pensions for the benefit of boy racers, I shall never comprehend.

It says insurers should offer a "black box" product. This is just an insanely complex way of avoiding a self-inflicted problem, and should in any case be illegal as the whole reason it would work is that it is just a proxy for gender. Some might suggest I have this backwards, but I don't think I do. The whole point of the legislation is to declare that from now on everyone is to ignore the reality when it comes to pricing insurance. So anything that restores reality must be illegal.

[Ruffneck]

Well , this is what the militant feminists wanted.

They can't complain now they have got equality can they?

Lets hope the next step is the childrens/divorce courts , thats one place where equality is seriously lacking.

[porca misèria]

It does not mention the losers are men who save for their retirement, and to a lesser extent women who don't. Just how it makes sense to tax pensions for the benefit of boy racers, I shall never comprehend.

At least retirement ages are equalising.

Wonder if they'll move towards giving us all a medical when we come to draw our pensions, so they can give us individual life expectancies?

[Self Employed Youth]

Two amazing things about that article:

It does not mention the losers are men who save for their retirement, and to a lesser extent women who don't. Just how it makes sense to tax pensions for the benefit of boy racers, I shall never comprehend.

It says insurers should offer a "black box" product. This is just an insanely complex way of avoiding a self-inflicted problem, and should in any case be illegal as the whole reason it would work is that it is just a proxy for gender. Some might suggest I have this backwards, but I don't think I do. The whole point of the legislation is to declare that from now on everyone is to ignore the reality when it comes to pricing insurance. So anything that restores reality must be illegal.

This whole insurance thing is a joke. The NHS cares for the people whom are injured. When people die, the payouts are more of an insult than anything else.

If the state enforces car insurance, perhaps the poorest young men should get a payment for the increased likelihood of murder they face since the state enacted policies of the 1980s onwards. Early pension for those whom are now destined to die before 18,21,25,30,35 (the murder rate has fallen for people older than 35, and for women of all ages except those below the age of 1, where it has risen quite dramatically.)

[Sir Sidney Ruff-Diamond]

not at all.

if it was as random as a coin toss then the statistics would show that it is 50/50.

if the statistics show that it isnt 50/50 on a regular basis e.g its 60/40 it might indicate that the coin for example is weighted in some way.

so if you have an accident that wasnt your fault, and this was just a random event , the statistics would show this, and your premiums would remain the same.

if there is a correlation that people involved in a claim are more likely to claim again then its not random. i.e perhaps your not as innocent as you make out the first time round.

maybe quite often the fault is weighted 70/30 towards the person who caused the accident rather than 100%.

*Sigh*. Let's start again. Insurance companies are making a claim that (probabilistically speaking), if you are hit by another driver and you make a no-fault claim, you are more likely to make another no-fault claim. Therefore your premium should rise. But actually, what they mean is that statistically speaking, that is more likely. But the issue is that while statistically heads should come up 50% of the time only, probabilistically, there is nothing abnormal about getting say ... ten heads in a row or even a hundred. And there is nothing wrong with you being hit by dopey driver ten times in a row - it should not imply fault on your behalf at all. Only that's not how they treat it. They say that if you get hit, you should get penalised.

Listen, either you get statistically significant vs. probabilistically significant or you don't.

I have training in statistics, and use statistical techniques (especially those which serve to identify relevant factors, out of a collection of other factors which may not be relevant) in my work on a regular basis.

I must confess, though, that I haven't the faintest idea what you mean by this (or by your other attempted explanations between "probability" and "statistics").

While it is true that if you spin a coin and get heads 10x, then if the coin is unbiased, you are equally likely to spin a head or tail on the next round.

However, this is because individual coin spins are independent of each other - there is no connection between one and the next.

Now consider the an experiment with drivers. Take 100 drivers who had a no fault accident in the last year, and 100 drivers who had no accidents in the last year. Then after a 12 month period see how many have had accidents. If your hypothesis held true, then they would have equal numbers of accidents. In reality, the groups have greatly different numbers of accidents. The probability of having an accident is highly dependent on whether you have already had a no-fault accident.

The insurance companies are well aware of this and can prove it, which is why they use it as a weighting factor for calculating premiums.

You are looking in aggregate. But every case is different right? Wrong - insurance companies use weighting based on aggregated statistics only when they profit from not looking at the individual circumstances.

So (coming back to the topic of this thread) the insurance companies are happy to profit from female drivers against this ruling by charging them an extra £360 but then male drivers only get a miserly what ... thirty pounds refund?

That's how they are using the confusion that some people have between statistical and probability outcomes.

To put it another way, statistically I am highly unlikely to win the lottery after winning it once. but in terms of probability, my earlier win makes no difference.

Either you get it, or you really don't. And unfortunately there are an awful lot here who don't and that's why insurance companies make so much money. It's sad but you deserve it.

I do understand it and I don't.

[SEW247]

Glad we have someone in the business commenting.

One question though, did you really mean 'moral hazard' as I fail to see how your point relates to it - undue risk being taken by a party who does not pay the costs should the risk occur.

A model that discriminates on sex is a problem because it's not a factor a person has chosen, has control over nor is it a factor that everyone has exposure too. Half of the people are male and will be all their lives. Age is fair as we are all young and we all become old. That's my take on it.

The proposal is to alter the current model to simply take sex out of the equation, you can leave the rest of the demographics in there. Location for example.

I would also suggest that insurance companies should not be in bed with the claims companies as that is unscrupulous. They have contributed towards these excessive charges by being complicit with the dodgy companies in passing on details enabling them make fake claims of injuries. That is just plain indefensible. Yet the majority of the big players appear to have been at it, making money on the side.

EDIT: I will add, I see that removing sex as a risk indicator should not mean more money in the overall insurance pot. The claims are going to be the same. So it should mean womens insurance increases and mens declines. But I bet the insurance companies don't do that. They will take the opportunity to just increase womens rates and therefore prove equality.

I guess what I was getting at in regards to moral hazard was that if we were all charged the same then some people would drive like nutters knowing there would be no consequences other than a few points and a few £££ fines. There needs to be consequences to influence how one behaves, hence the threat of higher insurance premiums if you drive like a twonk.

I agree about claims / referals companies, they are an absolute CANCER that need to be stopped. I thought the Tories were going to do something about them, but alas one general anaesthetic, 4 wisdom teeth later (for me) this week every other goddam advert on daytime TV is "have had an accident?" "were you mis-sold a loan / PPI"

I often blame everything on Labour, and to be fair they are not wholly responsible for all ills in this world, but IMO they really didn't think the whole "Equality Act" thing through properly.

And for the record if I ever come across that Harriet Harperson, I will her a good old fashioned "sit-down bitch" slap, just like she needs

[mfp123]

*Sigh*. Let's start again. Insurance companies are making a claim that (probabilistically speaking), if you are hit by another driver and you make a no-fault claim, you are more likely to make another no-fault claim. Therefore your premium should rise. But actually, what they mean is that statistically speaking, that is more likely. But the issue is that while statistically heads should come up 50% of the time only, probabilistically, there is nothing abnormal about getting say ... ten heads in a row or even a hundred. And there is nothing wrong with you being hit by dopey driver ten times in a row - it should not imply fault on your behalf at all. Only that's not how they treat it. They say that if you get hit, you should get penalised.

Listen, either you get statistically significant vs. probabilistically significant or you don't.

You are looking in aggregate. But every case is different right? Wrong - insurance companies use weighting based on aggregated statistics only when they profit from not looking at the individual circumstances.

So (coming back to the topic of this thread) the insurance companies are happy to profit from female drivers against this ruling by charging them an extra £360 but then male drivers only get a miserly what ... thirty pounds refund?

That's how they are using the confusion that some people have between statistical and probability outcomes.

To put it another way, statistically I am highly unlikely to win the lottery after winning it once. but in terms of probability, my earlier win makes no difference.

Either you get it, or you really don't. And unfortunately there are an awful lot here who don't and that's why insurance companies make so much money. It's sad but you deserve it.

I do understand it and I don't.

no, your assuming that their view of the probability of you getting into an accident was correct in the first instance.

lets say your true probability of getting into an accident is 5%. but your premium is priced on the probability of 1%.

the probability of you getting into an accident has gone up in terms of what the insurance company thinks 1%>5% , but your true probability (5%) remains the same.

so your premium can go up to reflect a more accurate measurement of your high probability that you will get into an accident, not the change in risk.

youre saying the probability of you getting into an accident remains the same - 5%, yes thats correct. but in the insurers view it has changed, its gone up from 1% to 5% to reflect reality.

[Sir Sidney Ruff-Diamond]

the probability of you getting into an accident remains the same - 5%, yes thats correct. but in the insurers view it has changed, its gone up from 1% to 5% to reflect reality.

So reality and what is correct are different? Or is it that they were charging 5% in the first place and then they want to raise it to 10% or 15%? That seems much closer what has actually happened. The idea of a symmetric relationship between risk and premium is utterly false - the OP example where female premiums go up £360 but male premiums go down £30 is an excellent demonstration. Why doesn't the male premium simply go down by £360? Because the insurance companies are only interested in statistically justifying rises in premiums rather than probabilistically justifying cuts to premiums. It's really very simple.

BTW you ... erm ... don't work for an insurance company by any chance do you ... ?

[MattW]

Interesting...

Getting estimates for insurance quotes as my policy is due at the start of next month. Circa £150 cheaper than last year's policy (c.£300).

Quite what made a 7/8 year old Nissan more desirable to scrotes last year than this year is beyond me.

[ChumpusRex]

The idea of a symmetric relationship between risk and premium is utterly false - the OP example where female premiums go up £360 but male premiums go down £30 is an excellent demonstration. Why doesn't the male premium simply go down by £360? Because the insurance companies are only interested in statistically justifying rises in premiums rather than probabilistically justifying cuts to premiums. It's really very simple.

The original article says men should expect their insurance cost to go down 10%. The average cost of a car policy for a man is actually well over £1000, not £300 as the article's arithmetic seems to suggest. So, if the 10% claim is correct, which seems reasonable, I would expect the saving to be over £100.

Finally, don't forget that more car insurance policies are held by men than women. It's still more common in single-car households that the car and its insurance in the man's name, than the other way around.

[Topher Bear]

In this the eu is wrong. When you look at accident statistics, whether it be number of of severity of, the male under 25 group is double any other category. Without individual record, insurance companies have to charge this group more. This factor is the single biggest impact in accident likely-hood, so he they can't charge on this basis, they might as well charge everyone a single same premium, whatever age, gender, experience or no claims bonus.

The talk of insisting on black boxes is also a red herring. There is currently a very simple, and more effective, way of reducing chance of an accident. That is through advanced driver training, either through the IAM or ROSPA. I am a member of iam. I get my insurance through their special provider, and just recently renewed, the best policy i could get with the same levels of excess and features was £275. My cost through iam is £205, so my £35 membership fee is worth it for that alone, and the training reduces my chances of having an accident.

If more people took this route insurance would be a lot cheaper, i mark myself out as a low risk without the need for an intrusive black box. The cost of their skills for life program is about £175, but a youngster is likely to save an awful lot more than that on his insurance.

We shouldn't listen to eu for road policy, our roads are a lot safer than theirs.

[mfp123]

So reality and what is correct are different? Or is it that they were charging 5% in the first place and then they want to raise it to 10% or 15%? That seems much closer what has actually happened. The idea of a symmetric relationship between risk and premium is utterly false - the OP example where female premiums go up £360 but male premiums go down £30 is an excellent demonstration. Why doesn't the male premium simply go down by £360? Because the insurance companies are only interested in statistically justifying rises in premiums rather than probabilistically justifying cuts to premiums. It's really very simple.

BTW you ... erm ... don't work for an insurance company by any chance do you ... ?

youre missing the point of what theyre doing. they can charge what they want, they can charge triple the price even if youre a safe driver if they want and they will if they can get away with it but no doubt youll go to a different insurer, and they lose the business.

they simply use statistics to make a business decision and decide whats the best price they can give. they have no obligation to give you a good price at all. they dont owe you anything or need to justify anything to you.

they could decide to raise your yearly premium quote by 30% just because they feel like it, if they really want, without using any statistics.

an insurer will charge both men and women higher prices if they could - theyre a business.

[rw42]

Basically, it is competition between insurers to get ever more granular levels of risk so they can get low premiums for low risks. In the end it obviates the whole purpose of insurance.

This.

Sounds a bit like game theory to me - if everyone accepted that what they would pay is total claims / total paying drivers, there wouldn't be an industry/competition (maybe a driver's insurance tax instead?).

As soon as someone starts to try to reduce their premium based on their age/gender/history/experience/location, someone else will have to pay more for theirs.

And of course, as soon as you have opaque methodology for the cost of insurance, they can raise the cost all round without anyone knowing why.

Talking in generals, it sounds 'fair' that i should pay less if i'm less likely to have an accident, but taken to extremes, it means that if i'm a perfect driver or very lucky, i pay sweet FA, but a high risk individual can't afford to pay, can't drive, and won't gain enough experience to ever become a low risk individual.

[Sir Sidney Ruff-Diamond]

youre missing the point of what theyre doing. they can charge what they want, they can charge triple the price even if youre a safe driver if they want and they will if they can get away with it but no doubt youll go to a different insurer, and they lose the business.

they simply use statistics to make a business decision and decide whats the best price they can give. they have no obligation to give you a good price at all. they dont owe you anything or need to justify anything to you.

they could decide to raise your yearly premium quote by 30% just because they feel like it, if they really want, without using any statistics.

an insurer will charge both men and women higher prices if they could - theyre a business.

No, that *is* the point. They don't have to justify price rises. And a person can't just go elsewhere because insurers act like a cartel - when insurers raise someone's premium, they put it in a shared database (to prevent fraud dontchaknow) - if you do go somewhere else, they'll then charge you the same or more.

And that's why the industry needs a regulator.

[Fool's Gold]

Have to say I'm with the EU on this one.

Insurance and particularly car insurance is a scam industry. They are actually unregulated petty criminals in cheap suits.

One of the metrics commonly used by car insurance companies is that if you have an accident, you are statistically more likely to have an accident again. This is commonly used by the industry to justify bumping premiums up and zeroing out no claims even for no-fault claims.

Stop and think about that determination. If I win the lottery, am I statistically more or less likely to win it again? Probabilistically, I am less likely. Statistically, my earlier win makes no difference. But insurance companies make 60% of pure profit based on this deliberately skewed logic.

The insurance industry desperately needs a regulator but with powerful lobbyists, is unlikely I think ever to get one.

As highlighted above, your comment is gender neutral and there may be strong statistical evidence to show that once a person of EITHER gender has an accident then they are more likely to have another.

Males are (naturally) more aggressive in everything and as a consequence of this, when it comes to driving statistically (I assume) it can be shown they are more likely to have an accident. However this point and the one above are NOT the same thing.

Buying a lottery ticket and winning is PURE chance. Accidents I would say are generally not the result of pure chance but a mixture of chance and human error. Chance in that say two vehicles are in the same vicinity at the same time, human error when the first car pulls out of a junction and hits the second car. There COULD have been no accident if the driver pulling out of the junction had taken more care, so I don't think comparing lottery wins and likelihood of recurring accidents is valid.

Personally I think insurance SHOULD discriminate however once you discriminate on gender then you must also discriminate on other factors too such as previous driving history and occupation.(other wise it just is not fair). I've been driving for 22 years now of vehicles large and small, my own car as well as company vehicles and have averaged 10,000 miles a year and have NEVER had an accident. My premium you'd have thought would be next to nothing, but it isn't and I do wonder if that's because I am male and that fact over-rides my exemplary driving history.

Who would you rather drive with, a newly qualified 17 year old girl driver or someone with 22 years driving history with no accidents and who just happens to be male?

[cock-eyed octopus]

*Sigh*. Let's start again. Insurance companies are making a claim that (probabilistically speaking), if you are hit by another driver and you make a no-fault claim, you are more likely to make another no-fault claim. Therefore your premium should rise. But actually, what they mean is that statistically speaking, that is more likely. But the issue is that while statistically heads should come up 50% of the time only, probabilistically, there is nothing abnormal about getting say ... ten heads in a row or even a hundred. And there is nothing wrong with you being hit by dopey driver ten times in a row - it should not imply fault on your behalf at all. Only that's not how they treat it. They say that if you get hit, you should get penalised.

Listen, either you get statistically significant vs. probabilistically significant or you don't.

I'm afraid it's you that doesn't understand statistics, or probability.

The coin flipping situation relies on perfectly symmetrical coins, flipped in exactly the same way. Drivers are not uniform in their properties. We do not know how these differences affect driving, but we can study the accident statistics & see if there is a group more, or less, likely to be involved in accidents.

This is how science works, in fact. Observations are made, we form a theory about the underlying patterns behind these observations, & test our theory by predicting the future course of events. Just as accident statistics tell you nothing about the behaviour of individual young male drivers, Maxwell- Boltzmann statistics tells you nothing about the behaviour of individual air molecules - but it accurately predicts the behaviour of a volume of air.

By your logic, the blind should be entitled to drive (with no difference in premium).

[SEW247]

No, that *is* the point. They don't have to justify price rises. And a person can't just go elsewhere because insurers act like a cartel - when insurers raise someone's premium, they put it in a shared database (to prevent fraud dontchaknow) - if you do go somewhere else, they'll then charge you the same or more.

And that's why the industry needs a regulator.

[/]

Do high street retailers have to justify the cost of their goods? Are they all cartels? What makes insurance any different? I think you'd find that most insurers could easily justify why your premiums are going up just by telling you their loss ratios for each class of their busines and their overal combined ratios.

The database you are referring to captures claims history, not premiums (I have used it at work). It's actually quite an effective way of capturing the thieving chav who "accidentally" drops his laptop every two years, gets a new one and changes insurers every year and fails to tell them he's made a claim.

The premium increases are a response to fraud / no win no fee which is absolutely rampant in UK personal lines insurance. Until people start to correlate the consequences of claiming £4000 compensation for a slipping on a grape at Tesco and their car insurance going up 25% a year then the upward trend will only continue I'm afraid.

If you don't like the cost of car insurance then I suggest next time you buy car insurance take out an Act Only policy and make sure you drive carefully.