Got home today and there are emails, texts and phone message from my car insurance company.

Apparently I was involved in an accident on the 17th April. Which is odd as I travelled to Brighton on the train, spent the day in a meeting, came home on the train, got picked up by my wife in her car then went to bed.

I can prove all of this with train tickets and testimonies from a reputable company etc… But I am wondering what the scam is? May be coincidence, but I had a quote done for some minor scratch repairs yesterday..could they have tipped off a scamster who reports matching damage?

Police, then relax

My wife had a similar letter many years ago. Turns out the person who owned the car in the accident lived two streets away. Same make and model of car and the reg was identical bar one digit! In our case, it was a genuine mistake and everything was sorted with a letter.

Got home today and there are emails, texts and phone message from my car insurance company.

Apparently I was involved in an accident on the 17th April. Which is odd as I travelled to Brighton on the train, spent the day in a meeting, came home on the train, got picked up by my wife in her car then went to bed.

I can prove all of this with train tickets and testimonies from a reputable company etc… But I am wondering what the scam is? May be coincidence, but I had a quote done for some minor scratch repairs yesterday..could they have tipped off a scamster who reports matching damage?

No, you can prove that you were in Brighton – what has that to do with your car?

I had a similar call a couple of years ago. I said to them it wasn’t me and texted a photo of my car to show no damage, but also suggested that they could have noted the reg wrong – as a ‘number’ either way is the same make and colour. Never heard anything else.

It’s probably your insurance company trying to make a bit of extra money.

They’re not making enough money from inflated premiums so they’ve decided to be a bit more subtle and have moved onto demanding with menaces.

Just one thing before you post them a picture of a burning cross…. Your wife wasn’t driving about that day was she? I’m not suggesting she’s untrustworthy but I remember I got a UK parking ticket when I was in the states once. I laughed down the phone at them and told them how wrong they were. Turns out a girl (my sister), had stolen my car for the day.

I think she shags the milkman at work samuri to save petrol. Maybe someone smashed into the car on my drive which was probably my fault for leaving it there.

OP – Have a chat to your insurance co and explain that there is some mix up somewhere and you can prove it (unless you have kids who are capable, though not necessarily legally able to drive, who weren’t with you in Brighton and who had access to the keys).

@Samuri – actually, insurance companies lose money on car insurance – really. Not defending the way they behave some of the time but make money they do not.

If you look at the COR for most car insurance books (Combined Operating Ratio) you will see that it is well over 100%. They sell it as a loss leader effectively.

(Technical bit – COR money in from premiums against money out from all expenses; staff costs, property etc, reinsurance costs, claims payments. So, you bring in £1m in premium and payout total expenses of £800000 your COR is 80% = good. However, you bring in £1m in premium and pay out £1.2m in expenses gives a COR of 120% = bad.)

Cheers

Danny B

Danny B, you seem to know what you’re talking about so I’m not saying you’re wrong, but that does surprise me. I spend more or car insurance than all other insurance put together, and I think that will be the same for many people. A loss leader that’s more than 50% of total business doesn’t seem very cost effective! Where do they make their money?

I can confirm Danny’s right, no one makes money on car insurance.

The amount of premium isn’t the issue if the claims outstrip it.

Danny B, you seem to know what you’re talking about so I’m not saying you’re wrong, but that does surprise me. I spend more or car insurance than all other insurance put together, and I think that will be the same for many people. A loss leader that’s more than 50% of total business doesn’t seem very cost effective! Where do they make their money?

Or that you don’t buy insurance for anything else…

actually, insurance companies lose money on car insurance – really. Not defending the way they behave some of the time but make money they do not.

What a load of rubbish. If they were really losing money on car insurance they’d stop offering it.

EDIT: here you go third quarter 2012…

Direct Line has hinted that they will stop insuring risky drivers if that helps keep their profits up and shareholders happy.
The firm made £92.5 million profits in the quarter – that’s a £1 million a day, every day, despite the industry’s constant moaning about fraud and excessive legal fees for drivers claiming compensation for whiplash injuries.

And Admiral car insurance 2011…

The company, which insures more than one in 10 cars on Britain’s roads, made a profit before tax of £299m last year, up 13% from 2010.

Take photos of your car (hi-res) showing it in its current condition- all 4 corners etc. If its dirty- a real bonus. Get the pics of dirty alloys etc.

Repaired cars tend to be given a clean too.

Its a minor point but it helps build a weight of evidence if needed?

I can prove all of this with train tickets and testimonies from a reputable company etc… But I am wondering what the scam is? May be coincidence, but I had a quote done for some minor scratch repairs yesterday..could they have tipped off a scamster who reports matching damage?

It’s not up to you to prove anything. Issue them with a letter acknowledging their letter & denying any involvement. Any further correspondence entered into will be charged at £££/per hour, whatever you charge your services out at.

£0.02

D.

@phil.w – both Admiral and Direct Line offer other types of insurance and that’s where the money is hence the profits. The articles you quote whilst mention car insurance do not say they make their profits from it. Careful wording on the part of the writer / editor there to get motorists backs up.

They sell it at a loss as shareholders expect top line money in as well as bottom line profit.

Car insurer to shareholders – ‘Just to let you know we’re going to stop writing car insurance which brings in £1b premium per year…’

Not going to happen really.

Cheers

Danny B

Keep a very close tab/eye on this – you don’t want to get a year down the line and find out a payout was made.

Should the OP forbid them from paying anything out? Can you do that?

Check your T&C’s – but no you can’t stop your insurer from settling however if its a false claim/your car wasn’t involved the OP should involve the Police (basically bloody everyone) and send a huge weight of evidence to the insurer, call daily- basically keep ontop of it.

My brother had something very similiar, we’re reasonably sure it all came from a number plate error tbh- he drove a wee combi van, the vehicle involved was a “white van” but since it bent a flatbed truck in half it wasn’t a combi, unless it was a combi with a battering ram fitted

Common sense seemed to win- he supplied current photos of the van showing that it obviously hadn’t been in a massive crash. But it was on his policy as a claim for ages so if he’d had to renew his insurance it’d have caused problems. Took a long time to sort.

Happened to my wifes friend. She had seen the accident when a rider went onto a roundabout too fast and dropped the motorbike. She was a good 100 yards in front when she saw this happen in her mirror. She stopped and walked back to check the rider was OK. Spoke to the other rider who had pulled up after to make sure the lad in the accident got himself checked over.
She was more than surprised to receive a notification through that she had caused the accident even though she was no where near the rider. She took it to the police only to find out it an off duty police officer and suddenly they were 3 other witnesses when they had only been her originally. She ended up with the claim against her, a driver awareness course and a mental breakdown whilst trying to prove her innocence.
OP, make sure you get your facts together, witnesses etc and don’t leave to case of mistaken identity.

I spoke to the insurance company today and the accident was a T-Bone in Bridgewater miles from where we live and my car will have none of the symptoms stated like bashed panels. They think it should be straightforward to sort out and it is in their interest to do so as they don’t want to pay out. We’ll see. But thanks for the advice.

Keep on top of it though, even if its a call every other day.

What if the other party swears blind its your car/that reg and says they have witnesses and the admin/person at your insurers passes it through?

Sounds mental however I’ve seen a fair few posts on Pistonheads saying ‘I’ve just seen my renewal has a claim paid and at the time of settlement it wasn’t disputed’.

Should the OP forbid them from paying anything out? Can you do that?

no you can’t 😡

What a load of rubbish. If they were really losing money on car insurance they’d stop offering it.

They do lose money on it. Car insurers make their money on other lines of insurance and investment income from premium revenue. Car insurance is a loss leader. Virtually impossible to make underwriting profit on a car insurance.

Now I’m confused. if I had a business that sold apples and pears and I made profit from selling apples but not pears, I’d stop selling pears.

I’m not some business genius though so i might have missed an incredibly intricate nuance of the insurance game here. Do they use the car insurance business to write off tax or something?

Either way, it certainly sounds like there’s something rather underhand going on there.

Now I’ve had a quick look on the internet and in between all the car insurances companies putting in a huge amount of effort into selling me insurance that they lose money on, I found this.

http://news.bbc.co.uk/1/hi/wales/south_east/8544715.stm

“Chief executive Henry Engelhardt said the UK car insurance business remained “central to our success”, producing a pre-tax profit £206.9m. “

Now obviously he’s not got a clue what he’s talking about but he certainly suggests that there might be a small amount of money to be made in car insurance.

if I had a business that sold apples and pears and I made profit from selling apples but not pears, I’d stop selling pears.

And if your customers all went to a different shop, because they wanted to buy both apples and pears, you would no longer have a business. Have you never had your car insurer try and flog you all manner of other insurances once they’ve got your motor business? Is not one of the first questions they want to ask you “When is your home insurance renewal date?”

Look up “loss leader” if you need further clarification on this concept.

Does anyone buy their house insurance from somewhere just because they got car insurance there?

Cover, price and likelihood of lack of hassle if you do have to claim – brand loyalty in financial products is not wise.

Isn’t it a legal requirement to have car insurance in the UK ? What if all the car insurance companies stopped providing it ? Could I get away with not paying it ? Huge rip-off, in more than 20 years of driving I made my first claim a few months ago when somebody took the mirror off my (parked) car. So they have made plenty of money from me. If I had a choice I would take out the cheapest third party fire and theft only policy I could find. But of course you can’t buy those anywhere it’s expensive fully comp only.

Huge gouge, massive con game, armpit deep in fraud. In fact, I say ban car insurance, nobody ever wins.

Now I’m confused. if I had a business that sold apples and pears and I made profit from selling apples but not pears, I’d stop selling pears.

Premium investment is where it’s at. Think of the billions paid in premiums all earning returns through various investment. A quick google gives direct lines income at 26.5 billion. Profit about 4%. It’s only the scale of the business that makes the profits seem high. And they can be wiped by payouts from a large event.

I honestly don’t buy ‘we make a loss selling car insurance’.

More whiplash claims? = the person claimed against, their premiums go up for years. Its a merry go-round, anyone with a claim on their record will go to another insurer who will load their premiums.

Protected no claims? Another money maker. Do you know if you have a crash with protected NCD your premium still rises but you still get ‘that discount’.

If you have a crash and its NOT your fault, your premium still goes up for years (3-5) as you are perceived to be a higher risk (why? someone else was 100% at fault you idiots).

Then there are the people who never claim, pay annually a fee for nothing, 100% into the insurers bank.

Nice. Going back to whiplash claims, we are told we ALL have to pay more due to these claims, so thats the person who was involved in the accident found at fault, the whippe’s own insurance for future AND us who weren’t even involved in that one accident?

There may be innaccuracies in some of the above but for the main how can the insurer make a loss?

“Chief executive Henry Engelhardt said the UK car insurance business remained “central to our success”, producing a pre-tax profit £206.9m. “

Now obviously he’s not got a clue what he’s talking about but he certainly suggests that there might be a small amount of money to be made in car insurance.

There is money to be made from car insurance, but it’s not from underwriting profit. The profit will come from investment income from investing the premiums collected. Loss ratios will run at 100% on claims vs premium, and very often more, but having a shedload of cash to invest will generate the income stream. Similarly selling anciliary products eg breakdown cover, will have profit margin built in. They may have good years where they squeeze out some underwriting profit, but it’ll be offset by the bad years. Over a longer period of time it’ll certainly run around a 100% loss ratio.

Hora – that’s because insurance companies don’t do risk management they do premiums management. If you are associated with a claim, bang the premium up, because its easier than working out what the risk is – hence the not your fault, premium still rises conundrum.

Got home today and there are emails, texts and phone message from my car insurance company.

Apparently I was involved in an accident on the 17th April.

Are you Patricia Hodge, the governmnt lady who doored a cyclist, and said she was at fault.

@BoardinBob – you sound like a fellow underwriter.

@hora – don’t protect your NCD, have a claim and then see how much your premiums go up by!

I get to see the COR’s released by other insurers as part of my job and they are frequently in excess of 100% or very close to.

Aviva for example ran to 97% in 2012 across all classes they write. So £1000000 in for premium = a pre tax profit of £30k. Obviously their premium income is vastly higher but the profit margin is still very very small. One bad event like a nice bit of flooding or a poor run on liability claims and that’s gone.

They have massive reserves and as others have pointed out, investment income. This allows them to run at an underwriting loss for some years but at some point reserves run out and RoI’s aren’t great at the moment so either premiums go up or they cut what are perceived to be poor risks out of their book or a mixture of both because at COR’s of 95% + you ain’t got a lot to stick back into reserves.

Cheers

Danny B

Note this article:

http://www.deloitte.com/view/en_GB/uk/news/news-releases/1627badbb7e77310VgnVCM3000001c56f00aRCRD.htm

COR for motor insurance for 2011 as an average across all insurers was 106%. And note that’s an improvement from positions past (120% in 2010). Yes there are some writing under that but some a lot more.

Car insurance is not profitable business…

Cheers

Danny B

Car insurance is not profitable business…

I’m also guessing with the move to monthly premiums that meant they also took a hit with the investments, as less money upfront.

While I’ve paid out thousands in m/c and car insurance, I’ve never claimed. But now at £250 comp on a 3.0i, it’d cost more to insure my MTB 🙂

But my wife had 2 bumps in 2 years, with no damage to her car (Land Rover), and while her premiums have doubled it still will never cover the payouts, not in 20 years.

Proper LOL at this guys. Your loyalty to your trade is admirable but I’m glad you’ve admitted it.

So just like every other large scale money processing business on the planet, car insurance is profitable.
Just because the money paid for claims is equal to or greater than the money paid in, it doesn’t mean they’re not making a profit! That’s like the banks saying they run at a loss because the overdraft payments don’t cover their operating costs.

You almost had me shedding a tear then.

I have no loyalty for my trade whatsoever. Why aren’t you running an insurance company?

I’m also guessing with the move to monthly premiums that meant they also took a hit with the investments, as less money upfront.

Plenty of money to be made just in selling the finance on whatever it is you are actually selling. Motor insurance monthly apr’s aren’t up there with store cards but they are usually rather a lot more than apr on a credit card, car purchase or unsecured loan.

Insurance companies run at a loss: absolutely false.

Insurance companies make a loss on premiums vs payouts: often true, but as mentioned they make back more on investments on the premiums, and they don’t always make a loss; Britain’s biggest insurer Aviva certainly have made profits on premiums vs payouts in the past.

Why do premiums rise for non-fault claims? It is an unfortunate statistical fact that those who have been involved in an accident are more likely to have another claim than those who haven’t. Sorry Hora.

Spurious whiplash claims are responsible for raising premiums, the insurance companies tell us.
THEN STOP SELLING OUR DETAILS TO AMBULANCE CHASERS, YOU ‘TARDS.

Just for fun: Women have (had) cheaper premiums not because they are better drivers, but because they tend to crash at lower speeds and are far less likely to claim for minor damage. 😀

Why aren’t you running an insurance company?

Apparently I dont have enough money to give away to others via charity 😕

No business that makes a loss continues to trade. We can debate how they make their profit from the money they get but not whether they make a profit from it.