hels – Member

Isn’t it a legal requirement to have car insurance in the UK ?

Actually it isn’t.
You can instead pay a bond to the courts or a magistrate or something to be used in the event of a claim against you.
I believe the minimum is £500,000.

I have no loyalty for my trade whatsoever. [/I]
Assuming you work for an insurance company, your defence suggests otherwise. The truth is that car insurance is profitable. They take people’s money, they invest it, they make some payments, then end the year with more money than they started it with. That’s a profit making enterprise just like a bank, a building society, an airline or a cinema. Your loyalty is apparent because no one who works for those other industries claim they’re not making a profit.

Why aren’t you running an insurance company?

I could do but I wouldn’t last long. It looks like my inability to claim I was making a loss in the face of overwhelming evidence to the contrary would see me out on my ear.

To back up Danny’s statements

Soaring claims from personal injuries such as whiplash has meant the UK motor insurance market hasn’t made an underwriting profit for about 15 years and relies on other income, such as investment returns, according to the Association of British Insurers.

Full article in the The Telegraph

If you think logically about it, actually Insurance companies really don’t make that much money on car insurance. I’ve only been driving a few years, wrote off a car last year and had a £5000 payout. My premium has gone up £300. Even over 5 years, they haven’t made the money back from me.

So now you say “well my premium has gone up”. Really? £30? Come on. That’s inflation rate. And even so. Most people are ‘old’ and pay £500 a year MAX for car insurance. Even if you don’t claim for 10 years, then claim for a £5000 car, there’s the money they took off you, gone.

So basically, I can actually believe they make no money on car insurance. Sure, it’s hard to believe, but it’s way more likely they make 100x more on house insurance – I don’t know a single person who has claimed off their house insurance. Obviously it’s a considerably bigger payout, but I think the point still stands.

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.

They do make money, sometimes, just very rarely as an underwriting profit on car insurance. It’s not a difficult concept to grasp, and the odd snippet from a single quarter of profit from the odd insurer doesn’t really dispel that…

No business that makes a loss continues to trade

That’s true. However as very few insurers just write motor, commercial or personal, it’s a moot point. Although as premium income is pretty big most of the big boys can (and have) been making losses for several years now. Aviva have recently announced 2,000 redundancies though, they’re not making the billions the armchair analysts seem to think, with any luck KPMG will look here next time they do a recruitment drive.

Going back to the OP, one possibility is somebody else of the same name. My son had a minor collision, gave the other driver my name & address, as the policy holder, and we heard nothing for 3 months. Turned out the other driver’s insurer had not bothered to use the address details but looked up my name on a database, found a matching name on the other side of town and had been pursuing a claim against him.

We had this – our car reg was taken as a red renault laguna that was in an accident in Yorkshire – we live Highlands…and again we could prove no damage and recipts to show where we had been all day.
The insurance company sorted it all after a bit of faffing that made us feel ‘in the wrong’, but in hindsight they were just making absolutely sure.

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.

If they would stop sending me 4 letters every time they think my car insurance is due (on the wrong date, and they should know from the first time they quoted me that I’m a pretty new driver and they don’t cover me, or at least their quote is still well over £1000 more than all the others on the comparison sites), and another 4 letters every time they think my home insurance is due (to a house that they won’t insure because of the listed status, which they should know because I asked them), all just because they gave me 7 free days insurance some years ago, they could perhaps save some money!