Don't Renew Your Car Insurance Until You've Read This!
If like me you've recently had you car insurance renewal documents land on your doormat, you might be in for a very unpleasant financial surprise!
How Much!! You've got to be joking!!
Nothing had changed as far as I was concerned, the car is the same, the road I live in is the same, I still do the same job - the risk hasn't changed at all.
The only difference is that I'm one year older and I thought cover was supposed to get cheaper the older you got!
So what can you do to avoid the rate hikes?
I asked my friend and underwriting expert Dave Healey for some advice. Here's what he said....
The cost of car insurance premiums are expected to rise dramatically in 2010 with some major insurance news sites predicting up to 20% in premium hikes as the industry adjusts to large losses and claims in recent years
However the competition remains fierce and those who bother to take the time shopping around and comparing prices from different companies will benefit while those who cannot be bothered will pay the price at renewal.
You have probably heard the phrase 'brand new customers only' applied to the television adverts that constantly bombard us with deals and offers for cheaper cover.
Nearly all the major car insurance providers in the United Kingdom are offering incentives to get you to move from your current insurer and take out a policy with them. You will need to check out these offers carefully and be prepared to take the time and effort to understand the 'catches' if you want to successfully reduce your premium each year.
There is no logical reason why your premiums should rise at renewal unless you have had claims, but if you stay with the same insurance company year on year out of inertia, you can virtually guarantee that you will be paying more to cover the costs of the incentives offered to the 'new business or the claims of other people who are insured with the same company.
In the UK car insurance companies seem only concerned with how much volume of new customers they can attract and once they have your premiums you are no longer of interest to them. So if you want to save money on your car insurance it is necessary to change insurer every year!
About a month before your renewal date you should receive from your existing company an invite to renew, which in most cases will be automatic unless you cancel the policy. This is the time to start looking elsewhere for cheaper quotes for the same level of cover. Most quotes are legally valid for thirty days from the date they were given, which will allow you plenty of time to compare the car insurance market before cancelling your policy and obtaining cover elsewhere. The invite to renew document will also contain proof of your no claims driving history and the number of years discount you are entitled to. Keep this document safe as you will be required to produce it when moving to another insurance company as proof of no claims.
Compare and Move!
The best place to start looking for cheaper car insurance is on the Internet Car Insurance comparison sites of which there are many. Choose at least three different price comparison websites to get quotes from; they usually only take a few minutes to complete all your details to get a range of quotes.
Be aware that the number of comparisons they make and the premiums quoted often vary dramatically from one car insurance comparison website to another.
Often the comparison sites may have negotiated different rates with the insurance companies for certain types of customer or car as all car insurance companies have target markets.
To find one which may be more suitable for your needs it is advisable to search online for compare car insurance for your particular make of vehicle. If you have a poor driving history, drive an unusual or classic car or need specialist cover there are now many smaller specialist comparison sites that cater for all these needs.
Once you have found an alternative cheaper provider, make a note of the quote and return to the website just prior to when your existing cover runs out. Be sure to clear down the cookies on your computer's browser, otherwise the company will know you have been quoted before and only offer you the same deal. That way you ensure that you will get any of the latest incentives and discounts when you purchase the cover.
Car insurance can be bought to start from your renewal date and you should return your certificate of insurance to the old insurer once you have found alternative cover. Telephone your existing Insurance company and tell them you are cancelling the cover and will not be renewing. Without doubt they will ask for your reasons. Tell them that they are too expensive and that you have found cheaper cover elsewhere. If you have been a good customer and not claimed, you may be surprised that many will offer to beat or at least match the premium you have been offered elsewhere, which would save you the trouble of moving and cut your motoring costs!
Public Sector Employees Facing Redundancy Should Consider Unemployment Insurance
With the recession officially over and 0.5 percent growth in the last quarter of 2009 you might be fooled in believing that unemployment is a thing of the past.
The grim truth is that every day up and down the country people are still losing their jobs in the thousands.
For the Public sector this must be a worrying time. Whoever gets into power come the elections in May, will make public sector job cuts their first priority in order to reduce the massive National debt accrued by so called quantitiive easing.
Civil Servants need to ACT NOW! if they are to protect themselves from redundancy come the Summer of 2010.
Dennis Haggerty Fellow of the Chartered Insurance Institute (FCII) from lifestyle protection company iprotectinsurance explains.........
Up until now, Public Sector jobs have largely escaped the ravages of the recession. Although for Defence related jobs, budget cuts have already begun to bite. Because of this, many Mortgage Protection and Income Protection Insurance providers are currently turning down applications from people who work in the Defence industry, believing they now represent an exceptional level of risk. What is meant by risk? The Underwriters think in terms of the number of redundancies made by a specific employer proving much higher than average. The same view is taken about people working for several Councils currently implementing staff reductions.
"Therefore, it is probably the last chance for the majority working in the Public Sector to buy this type of insurance, before the deep post election budget cuts begin."
State benefits are pitiful compared to the real cost of living for the average family or young couple living in the UK today. When denied their ability to earn a living wage by accident, sickness or unemployment, everyone needs money to fall back on. The fortunate have savings, however the majority will find themselves in real financial trouble within weeks. Research published in 2008 established that most people of working age have less than 2 months wages saved, with 25% reported to have nothing at all. This applies equally to Public Sector employees. Therefore, having an insurance policy that covers all important bills whilst out of work, makes a great deal of sense. For those that need this insurance, get it now before the Underwriters say 'no thanks' to all Civil Servants, Local Authority and Health Service employees.
For anyone employed full time (at least 16 hours per week) in the Public Sector and where there are not any reports of any impending threats to jobs, it would be prudent to consider getting a quote right now. If a Government Department or Council for example, has made an announcement regarding cut backs, a recruitment freeze or layoffs, it is probably too late to buy this cover. Without any doubt, now is the time to get a low premium deal, rather than wait for this cover to rocket in price, or applications to be simply denied altogether.
Even those who already have this type of insurance, perhaps just covering a mortgage or a single loan, should check if they have sufficient benefits. For working couples, particularly where the main wage earner is employed, say, by a Local Authority, it could be prudent for them to take out additional low cost cover whilst it is still on offer.
Mortgage Payment Protection Insurance (MPPI) is designed to cover monthly mortgage payments and can usually be increased by up to 25% to contribute toward other expenses related to the home.
Income Protection Insurance (often called Lifestyle Protection) is very similar to MPPI, however it is designed to replace the majority of net income if the person insured is unable to work. As it pays out for up to a year it is more accurate to describe this as short term income protection insurance. It is not limited to mortgage repayments. However many providers cap their maximum monthly benefits at £1500, some £2000. It is rarely more because the Underwriters make the assumption this would be enough for most buyers to pay their monthly bills.
Most buyers tend to be only be interested in unemployment cover in the mistaken belief health related benefit is less important for them. However there are relatively few providers of unemployment only cover and frequently their competitors will offer full Accident Sickness and Unemployment cover for less! More importantly with 2.4m people in the UK claiming Disability Benefit (Dept of Work and Pensions 2008) the risk of health related claims is greater than many think.
The best rates are available on line where Income Protection and Lifestyle Protection Insurance can be bought without the expense of telephone sales or high commission to inflate the price. Moneysupermarket are a good source of comparison quotes, however the summary of cover should always be read very carefully to ensure what each provider offers for the price, really is like for like.
A web based comparison service is provided by the FSA. This is entirely independent and not trying to sell anything. Their tables also include quality measures, although as a result they are quite complex and therefore not easy to use. However they represent a good place to research a shortlist of suppliers to compare quality as well as price.
Applying for Income Protection, Mortgage Protection or Payment Protection Insurance on-line is a great way to save money. However the acceptance criteria applied by different underwriters varies. If applying on-line does not work out, it may simply mean the applicant is one of many who need advice regarding what to buy.
UK Earthquake Insurance - Make Sure Your Buildings Insurance Covers It!
With all our thoughts over the last month focused on the devastation caused by the earthquake in Haiti, Insurance blogger has investigated the risks to UK homes and property from earthquakes.
You might think that because we do not live in a littoral area of plate tectonic activity, that seismic activity would be minimal, and the risks would be negligible....
However recent trends in the UK have shown the importance of making sure you have this peril covered as part of your basic buildings insurance policy.
On 28th April 2007 an Earthquake measuring 4.3 on the Ricter scale hit the small coastal town of Folkestone in Kent.
The earthquake's shallow depth and proximity to Folkestone resulted in structural damage in the town, and one woman suffered minor injuries.
Following the earthquake, a total 474 properties were reported as damaged with 73 properties too badly damaged for people to return to, 94 seriously damaged, and 307 suffering from minor structural damage. The Association of British Insurers estimated claims to be in the region of GBP30 million. Only 40 percent of the properties damaged were insured!
It was the largest earthquake experienced in the UK since the 2002 earthquake in Dudley in the West Midlands, and the strongest in the active English Channel / Dover Straits region, since a magnitude 4.4 earthquake in 1950.
The strongest recorded British earthquake was the 1931 Dogger Bank earthquake which measured 6.1 on the Richter scale. Shock waves were recorded across the continent of Europe and Tsunamis hit the East coast of Britain and extended as far as Calais in France causing localised flooding and property damage.
The most destructive earthquake on record in the UK occurred in 1884 in Colchester in Essex. In total the earthquake damaged around 1200 buildings and killed five people.
In 2009 Folkestone was shaken by a smaller magnitude 3.0 quake, located in the same area as the 2007 quake.
Depending upon the intensity of the quake and the following effects are typically experienced in UK earthquakes.
European Earthquake Intensity Scale
3 - Felt by few
4 - Felt by many indoors, windows and doors rattle
5 - Felt by most indoors, small objects fall over
6 - People run out in alarm, slight damage to buildings (plaster cracks)
7 - Moderate damage to buildings (chimneys fall, cracks in walls)
In the UK the areas where risk is higher than average include the West Highlands of Scotland, an arcuate zone running from west of the Pennines from Carlisle to Pembroke, NW Wales and W Cornwall. to the East, keny and East Anglia experience the most shocks.
Distribution of Earthquakes and their magnitude in the UK
The places in the UK with lowest seismic hazard are Northern Ireland (especially the western counties), NE England and outlying parts of Scotland, including the Orkneys and Outer Hebrides.
All UK Building Insurance policies cover Earthquakes as a basic peril and inlude total loss cover.
Getting Married? Wedding Insurance May ReduceThe Pre-Nuptial Stress
Insurance Blog would like to congratulate one of our regluar contributors Kris Oldland and his new Mrs, who recently tied the knot and took the plunge!
Well we couldn't let him get away with not writing about his experiences so as soon as he got back from honeymoon we asked him ..........
Is wedding insurance a worthwhile product or is it just another expense to add to the list?
Well, as a newly wed here is my first piece of advice for those who have decided to take that stroll down the aisle.
Within reason don't think about the expense, this is a once in a lifetime (hopefully!) occasion, the happiest day of your life and the memories that you make on this magical day are memories that will last you a lifetime.
The second piece of advice is for crying out loud get yourself insured!
The average wedding in the UK is now apparently £17,000 you can pick up a fairly robust premium for a cost starting at around just £30. This ladies and gentlemen really is a complete 'no-brainer'.
Set a date, make the necessary bookings, arrange your wedding insurance cover and then start paying your deposits.
Get it done early and it is one less worry. Trust me there will be plenty of other things to worry about during the build up and on the day!
Even if you are thinking of not spending quite so much then a specialist wedding policy is still worth very serious consideration - you may be planning a small, intimate affair, but it is probably fair to assume that you will be buying some of the most expensive dresses, outfits and meals you have ever bought.
However, as with any form of insurance it is important to understand what your existing exposure to risk is before purchasing additional cover.
One suggestion is that to make payments on credit card where possible (although always make sure you can clear the balance immediately). Any payment between £100 and £30,000 can be claimed back through section 75 of the Consumer Credit Act if there is a problem with goods or services.
Also, many home contents insurance policies increase cover for a month either side of the wedding of someone in the household to cover wedding gifts and sometimes items bought for the wedding. Check your home insurance policy documents for details.
What you really need to be looking for in your wedding insurance policy is cover for loss of damage to the wedding attire, such as the wedding dress, as well as presents, the wedding cake, rings, flowers and gifts for the guests.
Most often cover starts a set period before the wedding and finishes a set period after - from seven days before to 24 hours after for wedding gifts, for example - but this will vary depending on the policy. Also you'll be relying on wedding services from a range of providers so make sure your wedding insurance can cover any extra costs you incur up to the policy limit if things don't go exactly to plan.
Wedding insurance also covers you for deposits you can't recover or the cost of arranging alternatives if suppliers go bust (but don't forget that you would already be covered by section 75 if you paid by credit card so do not pay an unnecessary premium if you have an option to opt out.)
The other important area to have covered by your wedding insurance is personal liability for injury to third parties or loss or damage to third party property. Again this is often covered either by your home insurance or the hotel's own cover etc but this can be quite important if you have the wedding in a public place such as a beach or park etc.
There are additional areas of cover, some policies offer legal expenses, personal accident or even stress counseling but these really need to be tailored to your party's individual needs.
The Internet has made it easy to purchase and Compare Wedding Insurance online, and you can save money both by shopping around and by visiting a specialist events insurance company, who often have better value for money products with a wider range of wedding insurance covers.
Compare Caravan Insurance with new quote comparison website
With the evenings starting to get longer and the ice melting it is time to think about your Summer holidays!
for those of us who take to the open road every year or own a holiday static van by the coast, Caravan Insurance is a modern must have...
Hope fully Caravanners will be able to save lots of money this year with the launch of a new site that allows users to compare caravan insurance quotes from over 20 suppliers.
Insurance comparison website specialists, Insuretec Ltd, have announced the launch of a new site that compares Caravan Insurance quotes from multiple UK suppliers. All risks cover for static and touring caravans is available through the online system
Compare Caravan Insurance
FOR IMMEDIATE RELEASE
PR Log (Press Release) – Jan 18, 2010 – Getting the best quote for Caravan Insurance should now be a whole lot simpler thanks to a new website http://www.caravaninsurance.info
The website compares caravan insurance quotes from all the major suppliers and independent specialist insurance brokers and allows you to purchase cover instantly online.
Dave Stacey, caravan insurance director at Insuretec said,
"In the past it has not been easy for owners of touring and static caravans to get the best deal for their caravans, and in some cases not even the best or adequate cover. This was due in part to the fact that many owners bought their caravan insurance directly through the the club or association to which they belonged and were discouraged from shopping around for insurance deals. Insurance brokers at large, did not have access to these specialist schemes and were not able to offer their caravan owning customers the best cover."
"Our online system is simple to use and you can obtain a quote for your caravan in under a minute. You simply have to enter your caravan's details once and a few facts about how you use the caravan and our system passes the data to a central electronic exchange to retrieve the very best rates and covers, for virtually every make and model of caravan on the UK market."
"Large online discounts are available and incorporated in to the quotes returned. There are additional savings to be had if you are a member of a recognised caravan club or have improved caravan security. "
We estimate our customers will save in excess of twenty five percent of their current annual caravan insurance premiums!" He added.
To try out the new caravan insurance comparison system for yourself, where you can also purchase cover for mobile homes, park homes and towing vehicles; visit the website at http://www.caravaninsurance.info
How Insurance Companies Use Your Credit Rating To Decide Your Premiums
UK Insurance Companies have been using credit scoring to determine policy acceptance, flag potential claims risks and load premiums for over ten years now.
What this means for the consumer is that if you do not fall into the credit/lifestyle brackets determined by the credit rating companies and identified by the Insurance Companies as the most profitable people sectors for their particular products, you will be either declined cover or offered it at a loaded rate commensurate with the amount of extra risk that the lifestyle group that you fall into presents, and designed to deter you from taking up cover.
In other words if you aren't what the insurance companies are looking for.... they don't want your business!
Here are the examples of the Experian Groups of type of person that YOU are! These are used for what is known as 'customer segmentation'. For Insurance purposes these are then grouped into four quadrants.
Low Conversion / Low Risk of Claims - An Insurance Company's desired customers
1. Wealthy Retirement
2. Mid Life Affluence
3. Surviving Singles
4. Elderly Deprivation
Low Conversion / High Risk of claims - An Insurance Company's least preferred customers
1. Ageing workers
2. Happy housemates
3. Credit Hungry Families
4. Advancing Status
High Conversion / High Risk of Claims - The customers an Insurance Company would like to be rid of
1. On The Breadline
High Conversion / Low Risk of Claims - An Insurance Company's most preferred customers
1. Gilt Edged Lifestyles
2. Modest Mid Years
3. Successful Starters
4. Flourishing Familes
So.....which one are you?
In the UK credit scoring was first introduced in the household and car insurance markets in the late 1990's.
It is important to remember that credit scoring in the UK as carried out by 'big brother' credit scoring company Experian plc, is postcode and not people centric.
Where you live is the database primary key!
Nothing much has changed in the last decade with regards the database structures with the exception of the amount of data that Experian holds on each and every one of us and how the data Experian holds on each and every one of us is used!
When a customer applied for home insurance in the 1990's, the insurance company collected the data regarding all new policyholders and sent the extract overnight to Experian. Experian then took the extract and applied it to its credit scoring database and sent the file back a day or so later with the credit scores for the applicant attached. The Insurance companies could then use the database to see the likelyhood of claims by the type of people they'd underwritten the policies for.
At renewal those likely to make a claim could have their premiums loaded to discourage renewal and in theory protect the fund.
That is if you believe the Experian categorisation of propensity to claim!
When I first was asked to design these systems I thought that propensity to claim by lifestyle had some merit, for example young drivers, but to judge someone by the house the live in, job they do, credit cards they hold, and nowadays even by the school reports they were given... as being rational variables in a model to determine propensity to claim....was complete and utter bullshit... and I still do!
Yes Big Brother Experian even holds your school reports these days and it won't be long before they get your medical records as well.........
Thanks to the Internet and Experians new offshoot company Hitwise, all these things can be done online and the decision to offer insurance made instantly.
If you'd like to see an interesting if flawed analysis by Experian of the UK Insurance Industry online for 2009, but more importantly an excellent demonstration of how Experian data is used by UK Insurance companies to bracket and categorise each and every one of us before deciding how much to charge us in premiums...... - watch this!
UK Insurance Mergers & Acquisitions: Could HSBC sale see Marsh and Aon on par again in 2010?
As 2010 warms up Insurance Blog has let resident Insurance journalist Kris Oldland give his UK Insurance insiders view as he plays Nostradamus with HSBC Insurance Brokers.....
In a year that has seen considerably less Insurance Mergers & Acquisitions activity than we had become accustomed to in the latter half of the noughties, the UK Insurance press at large has seemed occasionally a little desperate for gossip. So when one company keeps returning to the forefront of the latest trade press pages we can’t be blamed for thinking that we may have heard it all before…
However there is a certain persistence in the continuing rumors that Marsh are intent on purchasing HSBC Insurance Brokers to make me think that there could be just the tiniest hint of truth behind all this.
Of course from a strategic point of view it would make absolute sense for Marsh to make a bid also.
The market speculation is that Marsh has offered to buy the bank’s broking arm, HSBC Insurance Brokers. The inference that is being made in somewhat hushed tones however, is that this is all just part of a wider strategy by Marsh to get the banking giants on side. The long-term aim it is suggested is then to broker an affinity deal with the bank.
To date both companies have refused to comment on the speculation despite the rumor being reasonably widespread for some time now.
What is clear though is that a decision of HSBC to sell the division would fit in with plans for a wide reaching shake up of its insurance operations. In the previous financial year the bank disposed of its insurance operations based in Malta, Guernsey and Bermuda. The latter being perhaps the most telling move of all that the bank sees insurance as becoming non-core to their overall strategies.
Then as if further re-enforcing this position HSBC Insurance made the announcement that it was to cease underwriting motor insurance completely, swiftly putting HSBC Insurance (UK), its UK motor insurance vehicle into run-off.
It was at this time - when HSBC made the announcement that the corporate strategy was now to be focusing on pensions, investments business and life insurance and moving away from (motor) underwriting in the UK, that tongues really started to wag regarding the other insurance elements.
Various suitors have been referred to in the insurance press ever since, however for me, the fact that through this one acquisition Marsh could make a serious dent in the gap between themselves and their largest and oldest rival, super broker Aon (who of course pulled a similar trick last year when they bought Benfield) would suggest there is more than idle gossip involved here.
Based on the figures produced by IMAS corporate advisors earlier this quarter, the gap between these two giants of the broking sector is currently at £214m. HSBC Insurance Brokers are currently ranked ninth in the UK and should there revenue of £146m come under Marsh control then the gap between Aon and Marsh would come down to a rather more competitive £68m. What this would mean for the rest of the UK Insurance Brokers market is a topic for another article entirely though!
So for Marsh the attraction of picking up HSBC Insurance Brokers, especially from a parent company who appear keen to exit this sector, could be a little to tempting to resist? Well add into this mix the fact that the current CEO of HSBC Insurance Brokers, Phillip Gregory is an ex Marsh man. (CEO Europe, Middle East and Africa)
So with a tailored made CEO to oil the process of transition, should the question perhaps be when rather than if this deal is going to go through?
Well I’m not one to gossip but….
Interesting analysis Kris!
We'll keep you posted here of any developments.
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