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Will We See A Reduction In Insurance Premiums Next Year?
22 Answers
With lock down there has been a drastic reduction in car theft and accident/incidents. Burglaries and robberies down too along with other such crimes.
Will we see a corresponding decrease in our Insurance premiums next year or will they hike up as per normal?
Will we see a corresponding decrease in our Insurance premiums next year or will they hike up as per normal?
Answers
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For those that insist on links, here is one. Others around if yo uwant to look, remember Google is your friend :-)
https:/
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It's a competitive market - just look on the comparisons sites, so there will be lots of companies who want to undercut others. It's actually a risky business with little profit margin- one serious accident can cost several million pounds if someone cannot work again or becomes a quadriplegic. Claims will have fallen significantly this year but maybe there will be some fraud as people see a possible way to raise money in desperate times. But next year's premiums will reflect next year's risk which if things get back to something like normal will mean normal premium levels.
There may also be an increase in uninsured drivers, and the cost of accidents they cause have to be borne by the MIB which means those who do have insurance.
There have been quite a few reports in the last few weeks of speeding drivers, car races and resultant crashed cars, and the common theme is bored young men who have flash cars but no insurance
There have been quite a few reports in the last few weeks of speeding drivers, car races and resultant crashed cars, and the common theme is bored young men who have flash cars but no insurance
//The insurance companies really took a hit earlier this year with all the flooding, too. //
only if they actually paid out.....
https:/
only if they actually paid out.....
https:/
No.
To give a little background, I work in Reinsurance (basically we provide insurance companies with insurance - for example if you had a £1m claim, your insurance company may only be responsible for a quarter of that; they would pay the whole claim and then claim back the three quarters from their reinsurance company), and I can confirm we are entering into a hard market, which means there’s less capacity in the market and therefore it’s becoming a sellers market.
Without going into too many boring details, a hard insurance market is driven by losses.
My field is financial liability (professional indemnity, bankers bonds etc) so I’m not an expert in motor insurance, but what I can tell you is that the motor insurance book of most companies has a combined operating ratio of over 100% - in other words, they pay more out in claims than they collect in premium, but they balance this out by their more profitable lines of business and by investing the premiums.
However, there’s been a bad run of consistent and big losses on their more profitable lines which puts pressure on rates. Many insurers provide motor insurance as a bit of a loss leader.
The hard market is likely to exist for two or three years, and once they return to consistent profits, more capacity will be created and rates will soften.
Now more than ever is a reason to shop around.
To give a little background, I work in Reinsurance (basically we provide insurance companies with insurance - for example if you had a £1m claim, your insurance company may only be responsible for a quarter of that; they would pay the whole claim and then claim back the three quarters from their reinsurance company), and I can confirm we are entering into a hard market, which means there’s less capacity in the market and therefore it’s becoming a sellers market.
Without going into too many boring details, a hard insurance market is driven by losses.
My field is financial liability (professional indemnity, bankers bonds etc) so I’m not an expert in motor insurance, but what I can tell you is that the motor insurance book of most companies has a combined operating ratio of over 100% - in other words, they pay more out in claims than they collect in premium, but they balance this out by their more profitable lines of business and by investing the premiums.
However, there’s been a bad run of consistent and big losses on their more profitable lines which puts pressure on rates. Many insurers provide motor insurance as a bit of a loss leader.
The hard market is likely to exist for two or three years, and once they return to consistent profits, more capacity will be created and rates will soften.
Now more than ever is a reason to shop around.
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