Policy Renewal Time Again

[Escapeii]

It's that time again.
This year my policy has increased by 10%, despite another years claim-free sailing.
So which one of you is responsible for the 3 times inflation increase?

Any suggestions of good insurance companies would be gratefully received.


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[Oldhand]

Have same increase and ask same question, who is causing the increase in claims used as an excuse for the increase?

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[dickh]

I use the brokers K C Powell & Partners at Leigh on Sea - Tel No 01702 2470035 - reasonably priced, but never had to claim yet so don't know how good they are in reality. Insurance is actually with Royal & Sun Alliance.

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I'd rather be sailing... /forums/images/icons/smile.gif

 

[Twister_Ken]

Should I get a survey

I'm insured with Pants, which has come in for a severe kicking around these parts lately.

My renewal doesn't come up until late-July. Last time I tried to get an alternative quote the 'new' insurers wanted a recent survey before they would consider me.

Given that Indigo is currently out of the water, would it be good policy (whoops) to get a survey done, so that if I do feel the need to shop around when July comes, I've already got a survey in the chart table, and don't need to get the boat lifted?

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[david_e]

Re: Should I get a survey

Give them (pants) a ring and explain boat situation, suspect they will have a policy/guidelines somewhere about inspection intervals. Save a bit to get it done now would think.

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[Plum]

What? Only 10% increase?

You are doing well! Mine has just gone up 19 percent. I am with Haven Knox-Johnson but they have agreed to insure me for singlehanding at night, which most insurers refuse, so I may have to stay with H K-J.

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[Celena]

Have you tried Saga? For me they are something like 30% cheaper than anyone else. They ought to be OK (reputation etc) Underwriting insurance Company is Groupma, which is pretty well known. You have to be over 50 (years old - not feet!) Is that why they're cheap? Anyone else had experience with Saga? Or are you afraid to admit your age!

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[stubate]

my little grey fiesta van

used to cost me 150 quid fully comp any driver. last year it was 700 quid, excuse, its mr white van man, all those drongos in white vans who think they are vimportant and are on a race track caused so many claims that the price for commercials has gone thru the roof.
exactly the same is happening in the marine world, all the loud as you likes from drunken hooray henrys to trogs on jetskis to wazooks in pbs have caused that many claims that the price is rising
stu

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[NigelW]

I was insured by Pants, but they increased the premium by 40%. They blamed it on Sep 11th.

I could not inderstand what terroist threats have to do with insuring my yacht! It seemed that they were trying to recoup costs of other insurance losses through me.

Went to K C Powell and had a discount on the original Pants cost. Included sailing at night single handed.

I will admit tht Pants were very good at sorting out our 1 claim, shredded spinnaker. New policy does not cover sails though.

Good luck.

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[BrendanS]

Here goes another long explanation.

There are very few actual insurance companies at the end of the day. There is a long chain of companies who offset risk against each other. You are often insuring with an agent or broker.

Many of the insurance companies have taken huge losses over several years while fighting for 'market share'. In other words they have been selling insurance to customers at less than cost, to try and build up a customer base. They have been hammered in recent years, and have laid of hundreds of thousands of staff to try and keep afloat.

Various things have happened to turn the insurance market into a nightmare. For example, the general downturn in the stockmarkets worldwide has had a huge effect on insurance companies. Insurance companies are amongst the biggest holders of stock market shares in the world. Here in the UK, insurance companies must (by regulation by the FSA) hold at least 4% more assets than liabilities.

When the UK stockmarket (FTSE) reaches about 350 or below, that is a trigger points where UK insurance companies have to start selling shares, even if at a loss, and reinvest in safer eg gilts and bonds. This has happened recently, and in fact went lower

The FSA is currently allowing exceptions to these rules to companies which can show they are otherwise healthy, as so many shares being dumped on the the market drives the price of the shares down, and so the stockmarket drops even lower, and more insurance companies have to sell shares.

Most insurance companies are having a hard time, and the only way they can continue to operate is to increase premiums.

The same is true of the car insurance market where competition drove prices down below cost for several years and they accepted this as 'loss leaders'. Now the insurance companies are losing their assets and reserves, they have to charge a realistic price that covers the insurance they are providing, so premiums have gone up sharply in the last year or two.

Very simplistic explanation, but at the end of the day, if the insurance companies can't cover costs, they won't survive as a business, so your insurance premiums are going up.

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[Observer]

To add a little to Brendan's explanation, insurers have two ways of making a profit: underwriting and investment.

Insurers often price their business to break-even on underwriting account - that is to say that they seek to ensure that the sum of the premiums they receive will more or less equal the sum of the claims they pay. So how do they make a profit - because they can invest the money received in premiums (in equities (= stockmarket), bonds or gilts) until they have to cash in the investments in order to pay claims.

Because the stockmarket has experienced a sustained run of falling values, investment returns have been very small or negative so they have had to increase premiums in order to stay in business - they have to make a profit like any other business. Whether one describes it as chasing past losses or ensuring future profitability is academic.

It may seem unfair that the cost of insurance is dictated by returns on the stockmarket. However, it is a fact of life. It could, with some justification, be said that we have in the past enjoyed low insurance costs because high investment returns have subsidised unprofitable underwriting accounts.

I would also comment, as a general observation, that too many "insureds" tend to treat insurance as a form of maintenance service contract (i.e. they seek to claim for losses which really should come under the heading of "maintenance costs"). Also, how many times have we heard friends or acquaintances talk of "inflating" insurance claims in order to cover uninsured losses, or that little dink last year which would have been below the policy excess. Further, and I think this is an apposite analogy, there is a tendency to think that there is a "right" to recover insurance premiums paid by inflating a genuine claim here or there, in the same way as, I am afraid, many employees seem to believe that they have a "right" to 'x' days paid sick leave.

It is of course self-evident that the more such attitudes persist, the more insurance premiums will rise - to the great cost of the honest and careful and the ultimate profit of the dishonest and careless.

Isn't that just life?



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[LadyInBed]

Excuse me while I shed a few crocodile tears . . .
They treat long standing customers as an easy touch while offering discount prices to attract new custom. Loyalty is a thing of the past, so if I can get a lower quote by shopping around, I will take it. If enough long standing customer’s switch when faced with excessive increases maybe the insurers will get the message, but I won't be holding my breath.

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[BrendanS]

Sadly the days of shopping around we've enjoyed for many years have gone. It's not about better rates for new customers anymore, the rates for everyone are going up. 15% is about average for boater owners of all sorts.

The market is such now, that you'll have to accept market rate premiums . Some companies will always give a better deal than others for a specific type of sailor, whether sail or power.

What's changed is that rates will go up, never mind what the competition are doing. Everyone will have to accept that their premiums will go up by more than inflation. If your lucky it will be 5-8 %, if your average it will be 15-18%, if you're in an unlucky category it will be 150% or more.

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[BrendanS]

That makes a grand total of two in the forum that understand the present insurance situation. Everyone one else will take any increase in premiums as a personal insult?

Brendan

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[Twister_Ken]

Bizarre then

That by shopping around I managed to reduce the insurance premium for the car.

2003 is cheaper than 2002 (and about £120 cheaper than 2002's insurer wanted for 2003)

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[Observer]

Re: Bizarre then

Not necessarily bizarre, Ken. Perhaps you just got lucky (with a bit of effort).

I'm not an expert but it seems reasonable to suggest that insurance pricing is more elastic ("commoditised") than commonly perceived. If a particular insurer/underwriter takes the view he is underweight in a certain type of risk, he may reduce prices tactically to attract the volume of business needed to balance his position. Once that's achieved, the price will go back up. This is not necessarily visible on a day to day basis at the individual policy level and is probably affected by wider considerations such as re-insurance capacity and prices or even cashflow demands.

The insurance market is, I believe, quite "efficient" in the economic sense.

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[BrendanS]

Re: Bizarre then

Your looking at this from the perspective of one transaction out of an industry where the turnover is in billions. There are always going to be good deals available, but that doesn't detract from the overall trend.

Lots of reasons why this will happen in a rising market.

The first is that car premiums started going up two years ago, and are now starting to approach a cost effective level for some companies.

Another is that car insurance is volume driven. Many companies target certain profiles ,and price higher to discourage people outside that profile. If your profile fits the company you've reinsured with, you'll obtain a cheaper premium than the company you were with last year.

Many companies lower premiums for new customers to entice them in, safe in the knowledge that many people do not shop around every year, so you obtain a cheap premium in the first year, which is ramped up in following years. (It's very expensive to obtain new customers, and much cheaper to retain them, so if you'd taken the cheaper quote back to your existing insurer, you may very well have found that they'd have matched it.)

Many other reasons too boring to list.


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[Escapeii]

Thank you for the explanations.

They prompted me to make a few more comments & questions.

I appreciate that any business dependant upon the stock market will have had a rough time recently, but I do not remember a corresponding reductions in premiums when the stock market was soaring.

I am not surprised that there are only two contributors to the forum who understand the insurance situation. It would be one sad yachting forum if we were all insurance experts.
As a consumer I do not wish to have a detailed knowledge of the financial structures in the insurance industry. I just want a policy that provides the cover I need at a fair and stable price.

If my insurance company slapped a 40% premium increase on me without any attempt to explain it I would feel quite entitled to take it as an personal insult.

Being collectively one of the largest holdings of shares, with automatic sell triggers etc. the insurance industry is perhaps as responsible for the current stock market falls as anyone. Partly creating their current financial problems as a result.

Are the days of shopping around really over? Each year (including this year) I make a couple of enquiries with other companies and there is always a 20% to 25% difference between the lowest and highest quote for the same cover.

Cheers



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[LadyInBed]

Re: Shopping around

Just renewed SHMBO car ins. The Co. that she has insured with for many years quoted £199 TPFF to renew.
Shopping around got Fully Comp for £137 and its a lower (£100) excess.


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[LadyInBed]

Re: Bizarre then

<<Many companies lower premiums for new customers to entice them in, safe in the knowledge that many people do not shop around every year, so you obtain a cheap premium in the first year, which is ramped up in following years. (It's very expensive to obtain new customers, and much cheaper to retain them, so if you'd taken the cheaper quote back to your existing insurer, you may very well have found that they'd have matched it.)>>

You are reiterating the point I made earlier.

It pays to shop around!


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