WTF is the point of insurance?

[Bwana]

<deleted>

[Paddy]

After my first year of having a car here the insurance company sent me a form to fill in about how many kilometres I had done, and did anyone under 23 drive it regularly?

When I answered with a lower number of km than the estimate I made when taking out the policy and said no the latter question, and said I had a secure garage they sent me a substantial refund.

I couldn't imagine a UK insurance company ever sending a refund voluntarily.

Oh, if you have a rather fast car that you intend to let your son or daughter drive, the driving schools here have things like souped up Golfs to learn on, so they come out of their lessons knowing how to handle something swift.

Reminded me about a friends claim in Austria. His mother had lit candles on the Christmas tree resulting in a fire in the living room. An estimate was sent to the insurance company who responded with a visit. The insurance inspector said the estimate is inadequate and he doubled the pay out.

[Sysman]

<cynic>
The point of insurance is to extract money from the customer whilst creating the illusion that it covers them against loss. Insurers want to maximise the perceived cover whilst minimizing the actual legally-enforceable cover, so that they can wriggle out of paying up in the event that the customer tries to claim.
</cynic>

Even if they do pay out, they have had your money (and everyone else's) up front and have invested it.

The fact that there are so many insurance adverts on British telly tells its own story.

[Sysman]

Reminded me about a friends claim in Austria. His mother had lit candles on the Christmas tree resulting in a fire in the living room. An estimate was sent to the insurance company who responded with a visit. The insurance inspector said the estimate is inadequate and he doubled the pay out.

A different world, eh? As an old friend once put it, "You can make decent money in the UK, but the UK is one of the most difficult places to hang on to the stuff".

[suityou01]

Loosely related to DaveB's thread http://forums.contractoruk.com/gener...ml#post1282784

Mortgage Insurance that doesn't pay out if people get redundancy. My mate's car insurance won't pay out because his car was opened using a hacked electronic key, so the doors weren't broken; they nicked the built in satnav and ripped out the whole bloody dashboard. My travel insurance and my health insurance won't pay out for my visit to a fully qualified doctor in Tanzania because he's not on their PSL.

Those that have worked in insurance know how to shake the tree. Get your mate to read the policy doc and find the missing semi colon, then write to them asking them to explain again why they won't pay out.

<true story>
A friend of ours ran a corner shop, Nisa/Spar or summat. Aaanywho, there was a fluctuation in mains supply (brown out) that destroyed the compressors on their fridges. This in turn destroyed the stock. An engineer's assessment confirmed the brown out had damaged the equipment.

The scumbag insurers dismissed the claim saying they were not covered for failure of electronic equipment. They were wary of spending even more money on a lawer so I wrote a letter for them, after having read the policy documentation and found the missing semi colon.

Electrical equipment failure - not covered.
Electrical equipment damage due to external influence - not even mentioned.

So I wrote to them asking why this was not mentioned in the policy document.

They coughed up the whole fraking lot.

And you know who got a nice drink out of it.

True story.

</true story>

[AtW]

There are two good reasons to get insurance:

1) to comply with regulation (ie 3rd party car insurance)
2) peace of mind (which is of course an illusion)

HTH

[Paddy]

There are important differences in the legal meaning of words such as

Should verses Must verses Shall.

Eg “Should take due care” is not the same as “Must take due care” or "Shall take due care"

[norrahe]

You do have to read your T&Cs, I suppose I do it having worked in underwriting years ago so know about the tricks they will pull regarding clauses and restrictions in your policy.

Travel insurance is a right b*gger though, I damaged a camera in China years ago and they would only pay the claim if I had proof of original purchase, which I didn't recall reading the the T&Cs.

[Clever Hans]

Mortgage Insurance that doesn't pay out if people get redundancy.

Mine did. Unfortunately it became a bit of an albatross as it is tied to JSA, and I was reluctant to apply for roles unless I was absolutely sure about them due to losing the money if the job/contract didn't work out, or if I turned it down after interview.

But the insurance company were absolutely fine, no complaints from me.

Mind you, they went out of business.

[Freamon]

Most insurers in the UK don't make money on the insurance they sell. Car insurers typically lose money on their book of business. They make their money on the "extras" (legal cover, hire car cover, stretching the premium out over 12 monthly payments and charging a huge APR of interest, etc).

So you can assume the reason car insurance is so expensive and seemingly useless isn't because insurers are making loads of money at your expense.

In fact, the reason it's so expensive is because insurers pay out so much in claims. They are currently paying out far more in claims than their actuaries had forecasted (due to "crash for cash" and other such things), so much so that actuaries are having to rewrite their models.

There are potentially a number of reasons for this. Personal injury claims make up a significant amount of payouts these days, but I think the reason is that the incentives of the medical examiners are all skewed, if they can convince the insurers to pay out more in personal injury claims, they know at least some of that money will come back to them in treatment. Similarly legal fees make up quite a bit of claims, because lawyers are so expensive. You could, of course, blame the insurers for paying out so much to these people in the past, and that's probably fair.

This problem is only going to get worse. EU legislation on age/sex discrimination is currently being brought into in English law, such that insurers will no longer be able to make risk ratings based on your age/sex. This is likely to make car insurance significantly more expensive for anyone who isn't a young male.