Question for insurance workers...

[indebtstudent]

We appear to have got off on the wrong foot. I'll be honest I do have a pretty dim view of insurance, I mean it provides cover for things we couldn't possibly handle ourselves but there seems to me a general lack of transparancy. In its most basic form "the man who sued God" shows the problem, a simply term like fully ocmprehensive doesn't mean what you think it would.

It my be beneficial to introduce myself. I work for Nationwide and come here to assist (initially) because I was shocked by the attitude of some to those who had incurred charges. I believe my companies stance is wrong and frankly embarrassing considering we are supposed to exist for the benefit of our members.

I realize, with regard to insurance, I am totally unaware of the opposing view. For example some have pointed out that insurance is a binding legal contract. I can see the value in this but I think there is much that the industry needs to do to address this. Are price comparison webistes useful or not? They give you a clear price comparison but (as I found out) all insurance is not alike in quality or fairness.

What I'm looking for really is a counter weight to my own expereince. There must be people who have really tried it on, or some rules that exist which are there for the benefit of both parties.

I've noticed somereference being made to the economics of insurance I would be interested to learn a bit more about this. Do policies not make much in the first year?

Any input welcome, I shall endeavour not to offend, my first step is to clarify the comment I made elsehwere that all insurance is acon. I did not mean that insurance in unnecesary, quite reverse. I meant that IMO the industry is not doing itself any favour by making insurance any more complicated than it has to be or being unreasonable with regard to claims.

If this is correct this is by no means an isolated phenomenon, IMO the financial services industry has a similar trust/good faith issue, which is not helped by the laughable arguments advanced to defend penalty charges.

But I digress, over to you guys educate me!

[cazzaswfc]

On motor insurance ( from the stats I've being given) makes very little until the 3rd/4th renewal. In complete honesty any retail insurance (home motor etc) does not make huge profits, claims and costs are normally equal to the premium taken.

Like any bank, assurance co's etc, the premium taken is invested elsewhere etc, thats where the profits come from.

plus the other side of it. you sell a motor policy to an 18 year old and keep him for say 4 years, he then takes out his first home policy with you, payment protection,mortgage,life insurance ( and so on) the latter do make money ( or at least much more than retail insurance)


I understand all your points, again I'm not saying I agree with everything an insurance company does, but like you, I do get to see the bigger picture and yes, the not so nice customers who lie and cheat ( putting everyone elses insurance up!)

as for price comparison sites, personally I don't use them, most look for the CHEAPEST price, now as you've stated before nobody reads the terms and conditions, so when are you going to find out you don't have legal cover and an excess of £1000!! Do it by phone ( or the larger firms websites which tend to go into more detail about cover) by phone it may cost you more but you can ask questions etc and get the right cover that you need.

[Darkangelsdelite]

Fully comp cover is pretty much standard across the board. In essence your own car is covered in the event of a claim, you get cover for TP liability and you also get windscreen cover. 99.9% of companies will include these things as standard on a comp policy, where you'll find it differs is with the optional extras like courtesy cars. E.G. Tesco and Direct line charge you about £22 a year extra for guaranteed hire car cover for 14 days whereas the pru and nationwide don't, you get it free for the duration of the claim.

At the end of the day, insurance is a business and therefore is there to make profit. Obviously motor insurance is the one people all know about as its a legal requirement, as cazza stated, most standard policies aren't really that proffitable, its the extra bits that make the money (legal cover/breakdown cover/courtesy cars etc) Hence why you will find most consultants will offer you all these bits and bobs when you take out cover. Also they rely heavily on cross selling, so if you have a motor policy, they will offer you a home/travel/life/pet quote etc because they don't have to send you leaflets or telly adds to attract you to them, they already have your business.

As far as people trying it on go, for the most part, people are wising to the fact that if you tell a few fibs to your insurance company, it'll come back and bite you in the arse eventually, this is usually minor stuff like "forgetting" about the points on your licence then when you claim and we find out, you have to pay an extra premium before we'll pay out.
Obviously you do get the right dodgy characters that are blatantly trying it on, but these are the exception rather than the rule.

Again, i appreciate some of the points that you make, and yes you do make some good arguments.

I'm not a huge fan of the price comparison sites, yes they do give you different quotes to look at but as the old adage goes "you get what you pay for". Just cos its cheap, doesn't mean its any good. Look at swift cover as an example and see how many people on here are having problems with them.

The best advice i could give anyone who's taking out insurance is take the time to read the documentation carefully. Make sure you know what you are getting and that you are aware of any terms (canx charges/amendment fees etc) from the start so you have time to back out if you're not happy.
At the end of the day, when you're talking about insuring your house or you car, these are the 2 most valuable things you are ever likely to own so taking 20 mins out of you day to make sure they are covered adequately is a small price to pay should you claim and find out you're not.


DA

[craigwalton]

For me I do tend to go with my employers on the "we are not a charity" argument.

I have worked in Insurance Fraud - and have seen people blatantly make fraudulent claims, not even think about the story they are telling me.

But then again, I have seen the other side.. Where we know the claim is fraudulent, but passing the report to the underwriters they will pay the claim, as they are terrified of the FOS.

[beccus]

One of the hardest things with insurance is that there is no "product" as such, you are paying in case something happens and if (god forbid) nothing does happen, many people see it as wasted cash.

In terms of the price comparison sites - they seem to be a good jumping off point, especially if you fall into "normal" categories, but if there is something about your case which is different phoning around tends to be the best option.

Insurance does tend to be one of those things that people don't really understand, or want to understand, but we as a company are making steps to improve our processes, to become more transparent and (I really hate to use a tagline) try and make things easier for our customers.

Hope this makes some sense

Becca

[indebtstudent]

Good stuff here, exactly what I was looking for. In essence it is very similar to the mechanics of my industry. Generally speaking I would tell a friend to shop around since no provider is best for everything. In contrast virtually every company out there wants the opposite (understandably!).

Would I be right in thinking that almost all of the high streets banks in effect buy a certain amount of insurance? Or do they simply act as agents?

For example our home insurance was vastly improved in June of last year but I know the cover is provided by Churchill.

Taking up the point Beccus made there is a difficulty for the consumer since you can only really go by word of mouth to get an idea who is good or bad at handling claims.

I guess in practice the best a customer can do is look for the best value cover balanced against the company with the best reputation perhaps comparing three or four full quotes after doing a general search.

I would be reluctant to switch my home insurance because my current cover seemed a very good deal and I have reason to believe, should I ever need it, the service is very good.

Whoops look how much I've typed, my bad. I find it fascinating how the rational, cost effective thing for the customer to do is the EXACt opposite of the goal of companies. (I've been thinking a lot about unintended consequences lately).

Anyhow anyone else with input feel free to jump in

[Darkangelsdelite]

"Would I be right in thinking that almost all of the high streets banks in effect buy a certain amount of insurance? Or do they simply act as agents?

For example our home insurance was vastly improved in June of last year but I know the cover is provided by Churchill."


Yeah, we do/used to do most of the big banks however we've lost a couple over the years. We still have Nationwide and Lloyds TSB's insurance contracts for now. We did have Halifax up until a few years ago and we've just lost the Alliance and Leicester account to Equity as of last month.
I believe that NU Underwrite for some of the other banks, Beccus would probably know more about that though.
The thing you have to bear in mind is that there's only really 2 or 3 "big players" in the insurance industry (RBS, Norwich Union and Royal Sun Alliance are the main 3) and all the others are either underwritten by them or part of a subsidiary.


DA

[indebtstudent]

Intersting stuff, thanks

[indebtstudent]

Whilst things are quiet I have another question...

My bro has a friend who works for Chuchchill and I remember hearing something about no claims to the effect that you keep it for a certain amount of time - is this correct?

I had two years no claims but as this policy hasn't ran a year I won't get the usual certificate saying what my no claims is will I be able ot establish this in future (assuming I got a car in the coming year)?

[Chesterexpress]

Most companies only accept your no claims entitlement for 2 years from date last policy expired. After this point you lose it all.

[Darkangelsdelite]

NCD is valid for 2 years if you go to a different company (i.e from Direct Line to Norwich Union) but most companies will allow it for 3 years if you go back to them.
If you've only had a years "gap" then you've got nothing to worry about mate.
Under Data Protection Act most companies will hold your details on file for 4 years so getting proof of your no claims bonus isn't usually an issue as you simply call your last insurer up, confirm a few security questions and they'll send it to you. Then just simply forward it to your new insurer.


DA

[rudekid48]

An interesting thread this one, hopefully lots of people will read it as the main reason that people fall foul of Insurance is that they don't really understand what it is all about - not really their fault, but it does pay to have some understanding of where your money is going.

If I am reading things right, then most of the feedback so far is coming from an Insurer / Bank / Direct Writer perspective (apologies if this is incorect). I'd like to add some input from another angle which hopefully you will find releant to a lot of the complaints that I see on the forum.

I have been involved with general insurance for over 20yrs but do not actually work for an Insurer or Broker, so I have no particular axe to grind.

The one bit of info missing from the thread so far is the Broker perspective. I don't think that the public realy understand how brokers make their money and so sometimes perceive certain charges as a con. Let me give an example;

You buy a motor policy via Confused or any other aggregator for £200.

The Broker will probably earn around 10% of that figure as a commission - £20.00. However, they will have to pay the aggregator around £35 for supplying the sale. This means that at the pint that you buy the policy they are £15 down on the deal - before they pay their normal bills - staff, utilties, IT etc etc.

The only hope tha they have of ever making any money from the policy is if you buy optional extra's as mentioned previously - legal cover, breakdown etc. Or, if you renew the policy or if you make a change mid term, giving them the oppportunity toapply a fee.

This is the reason that cancellation charges are so high these days as if you then cancelled this policy aftersay 3 months, the Insurer will claw back roughly half of the brokers commission in the first year. So the broker is now £25 down on the deal - the aggregator wont give any of their fee back!

I could go on and give more examples and am happy to do so if you think it would help.

I just felt that this should be highlighted as there are an awful lot of disgruntled punters who have cancelled policies that they bought on-line, and can't understand why they are getting hammered with charges.

Sorry for waffling on...........

[Darkangelsdelite]

Very valid point, working for a direct insurer i only have a general knowledge of how the broker side of the industry works so its nice to learn something new.


DA

[indebtstudent]

Very intersting, my main perspective is as a customer and I think I speak for most customers when they say they don't really care if the broker makes a loss its not my problem. I realize on a large scale this means they need to make up the difference elsewhere, higher prices etc etc but I don't think the average person sees things that way.

Long may this thread continue, its been very interesting so far.

On an unrelated note can anyone help this person? HELP! CIS trying to rip me off

Seems in a bit of a tight spot!

[indebtstudent]

Oh and rude kid how well do you feel the average customers understands thier insurance?

I wonder if there is a similarity with mortgages (I'm speaking in VERY general terms here), it happens quite often where a customer comes into my work to ask for some facts about thier mortgage. I always ask if the advisor mentioned this as I know our staff would be in big trouble if this came to light. Many times the answer has been I went to an IFA and they didn't really give us much info. This concerns me a great deal, even though this view may well be unrepresentative and have more to do with the customers lack of interest at the time of taking the mortgage out.

[Darkangelsdelite]

I think its the same as any industry mate, i have to admit i never really knew anything about insurance until i started working for them. Its very easy to assume that just because something is obvious to you, everyone else must know too.
In regards to mortgages, I'm not too bad on them, same as most people, i put my trust in the guy selling it to me and hope that he knows what he's doing and so far its all gone to plan.
The one thing that still flummoxes me is pensions, i always spend ages reading through the T&Cs and i'm still non the wiser as to what i'm doing.


DA

[indebtstudent]

I find the Motley Fool a good place to get that kind of advice, pensions still confuse me too. All I know is its the wrong time to be young! lol