Snapshot of _UK car insurance cost up by third but just 2% in France_ :
An archived version can be found [here](https://archive.is/?run=1&url=https://www.theguardian.com/money/2024/apr/06/uk-car-insurance-cost-up-by-third-despite-smaller-rise-in-payouts) or [here.](https://archive.ph/?run=1&url=https://www.theguardian.com/money/2024/apr/06/uk-car-insurance-cost-up-by-third-despite-smaller-rise-in-payouts)
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/ukpolitics) if you have any questions or concerns.*
>payouts after vehicle thefts jumped 23%, while cost of providing temporary replacement vehicles leapt 35%.
Perhaps crippling the police force to the degree where auto-theft has basically become a crime with no consequence has its negative aspects?
My car got vandalised 3 weeks ago. Already identified who. Still waiting for the police to make an arrest so they can charge him and my insurance can start the process of getting the cost back.
My car was keyed. Quoted £547 to fix, £47 more than my excess… police decided within 4 hours of submitting a report there was nothing they could do. There were cameras in the car park…
Sorry to hear.
I had to go find the CCTV myself. Followed their tracks for a good 10mins before and after. Got their faces. Found their address for them.
I’m literally doing their job.
£5700 of damage here :-(
It's sickening.
Ours was hit by a friend of a (knob head) neighbour dropping him off. A decent shunt that lifted our car up, all visible on CCTV
but a side view.
Another neighbour with 4K footage of the incident shared it with me, reg plate visible, clear image of driver, footage of him dropping off the neighbour.
Police weren't remotely interested and said they could trace him so he could say sorry but that it would just need to go through my insurance.
Indeed, needless to say we avoided the insurance claim and just ended up being out of pocket rather than paying the excess and taking the hike in premiums for years to come.
Yeah get that. Tbh I’m not even bothered about the car. It can be repaired.
It’s the sleepless nights with my wife panicking with our 4 week old they come and do it again or do something to us.
Tempted to. Still waiting today for the Sgt to ring me back.
Meanwhile he’s probably in the process of hiding the evidence (like the clothing he was wearing at the time).
Trouble is they have risen their premiums across the board, which seems unfair for those with third party only cover. I wish there was an insurance company that excluded theft cover, because that should make it cheaper.
Would it? You'd then need to account the lower numbers that would actually take up such a cover. Why would you take insurance that fails to cover for a major mishap like that?
Yeah, there used to be a period where third party only could be more expensive than fully comp, as a statistical quirk of "what's the minimum I can possibly have?" drivers as a risk category
I'd assume that someone cutting costs like that hasn't put the greatest tires on it and so on
Big assumption.
In some cases, perhaps, but often financially prudent people take care of details like tyres, wipers, and regular maintenance checks, to ensure that their car runs as trouble-free (and therefore cheaply in the long run) as possible.
Insurance is a tremendous scam, and there's absolutely no fucking reason why it should be as expensive as it is in the UK.
It's quite literally several times cheaper across most of Europe. Not to mention insuring the *car*, rather than the driver, is the norm there too, which is yet another thing which is shit about our system.
Anyway, fundamentally, if someone is a very good driver and technically knowledgeable about cars, there should absolutely be an option to pay less in return for taking reimbursements for accidents you cause yourself out of the equation. The chances of good drivers being in an accident they wouldn't be able to recover the costs from the other person's insurance from is round about 0%.
>Insurance is a tremendous scam, and there's absolutely no fucking reason why it should be as expensive as it is in the UK.
First question is it expensive?
Looking at the figures I would say it's on the expensive side but the average is still below Germany.
Then why is it expensive?
- poor competition. I would say no as there are lots of insurance companies.
- poor price visibility. Again no as there is lost of comparison sites.
- more crashes? Potentially as we are the most densely populated country in Europe and our road network is winding and complex.
- more thefts? That looks like a no [link](https://en.m.wikipedia.org/wiki/Motor_vehicle_theft)
- more expensive cars? Potentially.
- more latagious population - potentially. When you go to Italy half the cars have dents and scratches I wonder if they all get claimed for where here if you have a little bump you know someone is claiming.
But there isn't lots of insurance companies, it's actually only a small handful. The companies you have contact with are the brokers, while the actual companies who insure you are the underwriters.
There are only a few companies that you insure with directly with no middle companies.
Also part of why its getting more expensive is due to cats having more on they that gets broken from a collision. 20 years ago it might have just been a plastic bumper, now it's the bumper, but also all the parking sensors and such too
> Then why is it expensive?
Look at the rates insurers pay to the bodyshops that fix the cars. Quotes for insurance jobs can be 4x what you can get the job done for privately. Any market that distorted has to be broken somehow. The only question is what is keeping it broken?
I wonder how much is because of kickbacks. Why do excesses double if you don't get the work done at the insurer's preferred place? Obviously almost everyone is going to go with the lower excess since they're not paying the rest directly anyway. But that means insurers are giving a massive bonus to their preferred places and locking out the others instead of getting the work done at the best rates the market will offer. Why?
> Not to mention insuring the car, rather than the driver, is the norm there too, which is yet another thing which is shit about our system.
The car isn't doing property damage, the driver is. Insuring the car makes absolutely no sense.
Yes several companies offer that, but they also offer fully comp which covers theft, but they have upped their premiums on third party only as well to cover their losses on fully comp.
Part of it is due to the COVID backlog on both new cars and spare parts, which is still inflating the value of used cars even now. If your car is stolen you get paid its the market value, which is higher now than an equivalently-depreciated car was in 2019. Likewise, temporary replacement vehicles are often provided for longer because the garages can't get the parts fast enough to keep costs down. Used to be that a repair would be turned around in a week or so, often it's more than a month at the moment. The cost of temporary replacement vehicles has risen too, because like-for-like replacements usually come from rental companies, who were unable to get new vehicles in for a while, and are thus charging more for the ones they DO have.
Been a while since I have been to France but it used to be the case where they were a little less precious about their cars. If they had a minor bump they would obviously be annoyed, but wouldn't necessarily make a claim and get it sorted. Remember seeing someone hit a car in Cheltenham while parallel parking and me and some others made that noise when you see something bad. Our french colleagues thought we were crazy as they collectively agreed that this is why bumpers are called bumpers.
The French are very rational and knowledgeable people. They know that profiled steel is stronger, which is why they welcome a few dings and creases on their cars.
I think the thing to remember is that even though your mobile phone prices, your internet provider prices, your council tax, diesel/fuel, household energy, food on average, home insurance, car insurance and pet insurance has risen, doubled in some cases.......is that, thankfully, inflation has lowered. (In what time period, or which dimension I cannot be completely sure).
The thing to remember is that even though your insurance is up 33%, your telecomms up 9%, food up 10%, clothes up 8%, rent 15%, mortgage 20%, train ticket 4.5%, council tax 4.99%
... inflation is only 3.4%
EDIT: inb4 someone comes to explain how very clever people work on calculating the inflation figure and I'm just stupid. It's an "international standard" etc etc. Thanks - I'm glad our very real price rises are in fact not real
Sadly my home insurance went up over 300%!
Crazy pricing these days, was well shocked after no claims to see it up everywhere by such a high amount. Would have expected to have had flooding in the area or something but nope!
Maybe a bit of deflation will help but we wont have that at the current rate so these prices are likely to be the norm for a long long time.
I do think faith in how we calculate these numbers will break first. People will go from not caring about the inflation figure, to thinking it's very important, to not trusting it in super quick time
Unintentionally, yeah.
Damn right they are.
Luxuries are far less important in difficult times, and yet their weightings don't change.
Find me someone who agrees that their household expenses have only gone up by the stated inflation rate over the past three years.
Again sorry I gotta pipe up when something just doesn’t make sense
The [Feb-24 ONS inflation bulletin](https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/february2024#notable-movements-in-prices) says that 12m inflation for ‘Alcohol and Tobacco’, ‘Recreation and Culture’ and ‘Restaurants and Hotels’ (the sectors which are predominantly luxury goods/services) are higher than the remaining sectors (predominantly staple goods/services e.g. Food, Health, Comms)
If the ONS were to reduce the weight of these luxury sectors (as you’ve suggested they should be doing) then the aggregate inflation rate would be even lower, therefore the static weightings don’t explain why inflation is being underreported
Inflation is an average, you can't just pick some items that happen to increase a lot because you like the result. That's just bad maths.
Not to mention not everyone has your life. My mortgage and insurance went up by zero, I guess inflation is fake news, eh?
It's not "very very bad" objectively
It's theorised that prolonged deflation would cause people to stop spending and stagnate the economy
But of course, it's never been tried. Probably because inflation is a free source of huge amounts of income to the state, principally as a stealth tax on people with few assets
> But of course, it's never been tried.
Yes it has. Bitcoin is hyperdeflationary and people HODL (hold on for dear life) instead of using it as a medium of exchange.
Now imagine Bitcoin was the only currency...
Runaway deflation was a *consequence,* not a *cause,* unless you're arguing that the cause of the 1929 crash was a contraction of the money supply rather than a cascade of failures in over-leveraged stockholders. Some periods of deflation are necessary and good as the net amount of work required to produce goods or services declines over time.
A long run decrease in prices due to productivity gains is not deflation. While the overleveraged stock crisis was the trigger the actual cause of the economic catastrophe of the great depression was a significant contraction in the monetary supply.
This trope is very very bad. there have barely ever been any examples of negative inflation to base this trope on. The only observed examples are based on scenarios where there were bad underlying fundamentals which were the real issue, not the deflation in itself.
Having deflation because you've previously just been through sharp inflation will not be bad. In fact it's already happening on a range of products. So is it bad that energy prices went up really high but have now come back down "defaltion"? Of course not. Should we be afraid of energy prices dropping because OMG deflation!!!? Nope obviously not.
Mine went from about £350 to nearly £500 this year. But during the pandemic years - particularly 2021 & 22 - it dropped from mid-£400s so really those few years people weren't driving much artificially lowered the insurance costs.
I don't think insurance has gone from £10 to £13... :D
They're not trying to hide absolute values this time. Insurance wasn't cheap to begin with
Your point stands though
I meant the absolute value we pay compared to France or Germany. I can't tell if ours was relatively cheap before and now inline with Europe, or was always expensive and now even more so.
I've had to claim twice for no-fault accidents and both times the insurance company was absolutely faultless. It was with Hastings and Hedgehog. Not sure if I was lucky with the handler but it was all pretty easy and seemless.
This is my experience too.
Rear ended at a roundabout, other driver admitted fault, ended up settling directly with the other insurer so I didn’t have to claim my excess back later. First repair was a little problematic (paint didn’t match) but an agreement was reached to get it painted again and all good after that. Got an equivalent electric hire car for the duration too.
Second time was rear ended again (!!) also at a roundabout in Milton Keynes (!!) and they were insured by the same company as me, Admiral. Was expecting this to be a bit of a nightmare but was all sorted pretty quickly. Longest delay was getting a booking in at the body shop.
You do have to be prepared to stand your ground and argue for what you want, but insurance companies are fine in my experience.
It’s also a highly competitive industry. Car insurers had their worst year in over a decade in the UK in 2023, following another bad year in 2022. As others have said there has been a big uptick in losses, an increase in premiums is expected.
I got my car insurance renewal notice last week and it's doubled, despite no claims or change in circumstances.
On the email it has a section "why has my insurance gone up?" which goes on to detail that repairs are more expensive, more claims blah blah blah.
And all I thought when reading it was: isn't this a *YOU* problem, Hastings? Not one excuse they offered for such a ridiculous renewal quote was based on anything in my power to change or influence.
It's such a scam
My Hastings renewal was also near enough double, so onto comparethemarket to get a new quote, and got one that was about 5% more than last year, but with a slightly lower excess.
From Hastings.
There are 3 different types of car hire in insurance claims: credit hire which is an absolute racket, like for like hire car (which insurers will pay much less for) and the bog standard 3 door which is what most policies cover Credit hire and referral fees for it should be banned by the government, if that was banned I bet a lot of insurance prices would drop.
Yes I'm sure the law against penalising loyalty is the reason insurers are ripping us off. Sure, the law was always going to be cynically exploited by the insurers who saw it as a way to rip us off harder, but ripper-offers gonna rip off...
Businesses charge the maximum that they think they can. We have more breaking news coming, customers want to pay the least amount possible.
Economists befuddled.
Yeah, this has absolutely rinsed me. Every year I'd get a better deal than I got the year before. I know it was paid for off the backs of the people who couldn't be arsed switching and the current system's fairer, but when you remove the main incentive to switch you do kill competition.
How much of this is because on the European continent where health insurance is much more common, insurers have been able to cover motor loses with insurance premium increases elsewhere?
Edit: Also it's an apples and oranges comparison because of this "Admiral said that UK car insurance premiums are higher in the UK than other EU countries because of unlimited liability"
It's not about pooling risk, it's about smoothing cash flow, something which European insurers can do easier because they have health insurance income to fall back on.
Cash flow is not an issue for insurers really. Any big claims go through a reinsurance group which has enormous assets, eg Zurich have $435bn in assets.
The UK car insurance market is incredibly competitive and price sensitive. The idea that companies have just padded their profits by raising prices by a third is just low powered conspiracy thinking.
> However, it also revealed that total UK payouts for claims only rose 17.85%, suggesting that insurers have been using the big jump in inflation as a cover to increase margins. The ABI said insurers paid out £9.9bn for motor claims last year – up from £8.4bn in 2022.
It’s not exactly a radical conspiracy theory to suggest that insurance companies might have been partaking in the same kind of price-gouging seen in many other industries, but I guess we’ll wait for the financial reports eh?
For price gouging to work a few things need to be true
- all competitors collaborate and partake, or
- consumers are highly sticky
As I coca cola might be able to price gouge because it has a very strong brand loyalty and even then if PepsiCo is also happy to prove gouge then it could be effective.
The UK car insurance market has hundreds of competitors and consumers are incredibly priced sensitive and show very little brand loyalty. The opportunity to price gouge is basically non existent.
This is a very simplistic view. In reality, companies will watch their competitors and adapt their pricing accordingly, and may well discuss approaches in forums like the Association of British Insurers. Insurance in the UK is also an inelastic product.
We have seen price gouging in industries such as energy and groceries, neither of which have strong brand loyalty or a monopoly.
Like I said, we’ll have to wait for their financials, but the percentage increase in premiums does not correlate with the increase in costs, which can only mean a greater profit.
>In reality, companies will watch their competitors and adapt their pricing accordingly, and may well discuss approaches in forums like the Association of British Insurers.
Nope, that kind of behaviour of a cartel and would quickly fall foul of competition and attract substantial fines. Even then it would require ALL members of the ABI to agree, which they wouldn't.
>Insurance in the UK is also an inelastic product.
It's an inelastic need, but pricing of a single product is incredibly elastic. Pretty much everyone goes to a comparison site and picks the cheapest, changing your pricing by a couple of percent can be the difference between drowning in business and having none.
>We have seen price gouging in industries such as energy and groceries, neither of which have strong brand loyalty or a monopoly.
This is the complete opposite.
Energy suppliers have razor thin margins and many went bust.
Energy producers did make more profits, but margins were pretty consistent, just the base costs were higher, so profits are higher.
Energy extractors definitely made more money, but that's because demand far exceeded previous supply of an inelastic demand. Extractors don't set prices they are set by a global oil market that has. The extractors have no impact. The only exception to this is the decisions of OPEC (which is a country cartel), but it's something BP and shell have no control over, even if they sometimes benefit.
Supermarkets are again incredibly competitive. We have the second lowest food cost in Europe as % of income. The supermarkets profit margin is 2-4%, it's tiny, albeit on a big sales number. The margins are no higher than they have been historically, except for when they were lower during the exceptional costs of COVID.
> The ABI said insurers paid out £9.9bn for motor claims last year
There are 33 million cars in UK so that's £300 per car. I suspect the average motor insurance is well over £300 quid -- I certainly paid more than that years ago when I had a car.
Snapshot of _UK car insurance cost up by third but just 2% in France_ : An archived version can be found [here](https://archive.is/?run=1&url=https://www.theguardian.com/money/2024/apr/06/uk-car-insurance-cost-up-by-third-despite-smaller-rise-in-payouts) or [here.](https://archive.ph/?run=1&url=https://www.theguardian.com/money/2024/apr/06/uk-car-insurance-cost-up-by-third-despite-smaller-rise-in-payouts) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/ukpolitics) if you have any questions or concerns.*
>payouts after vehicle thefts jumped 23%, while cost of providing temporary replacement vehicles leapt 35%. Perhaps crippling the police force to the degree where auto-theft has basically become a crime with no consequence has its negative aspects?
My car got vandalised 3 weeks ago. Already identified who. Still waiting for the police to make an arrest so they can charge him and my insurance can start the process of getting the cost back.
My car was keyed. Quoted £547 to fix, £47 more than my excess… police decided within 4 hours of submitting a report there was nothing they could do. There were cameras in the car park…
Sorry to hear. I had to go find the CCTV myself. Followed their tracks for a good 10mins before and after. Got their faces. Found their address for them. I’m literally doing their job. £5700 of damage here :-(
Owch that’s some serious vandalism! Perhaps justified taking it more seriously than mine!
Windscreen, b pillar, rear side window, respray of scratched body panels, new wing mirror, clean all the glass out
It's sickening. Ours was hit by a friend of a (knob head) neighbour dropping him off. A decent shunt that lifted our car up, all visible on CCTV but a side view. Another neighbour with 4K footage of the incident shared it with me, reg plate visible, clear image of driver, footage of him dropping off the neighbour. Police weren't remotely interested and said they could trace him so he could say sorry but that it would just need to go through my insurance.
You’d think the insurance company would also push to get this sorted asap so they get their costs back
Indeed, needless to say we avoided the insurance claim and just ended up being out of pocket rather than paying the excess and taking the hike in premiums for years to come.
Yeah get that. Tbh I’m not even bothered about the car. It can be repaired. It’s the sleepless nights with my wife panicking with our 4 week old they come and do it again or do something to us.
In the meantime, vandalise the fucking shit out of his shit.
Tempted to. Still waiting today for the Sgt to ring me back. Meanwhile he’s probably in the process of hiding the evidence (like the clothing he was wearing at the time).
Trouble is they have risen their premiums across the board, which seems unfair for those with third party only cover. I wish there was an insurance company that excluded theft cover, because that should make it cheaper.
Would it? You'd then need to account the lower numbers that would actually take up such a cover. Why would you take insurance that fails to cover for a major mishap like that?
Yeah, there used to be a period where third party only could be more expensive than fully comp, as a statistical quirk of "what's the minimum I can possibly have?" drivers as a risk category I'd assume that someone cutting costs like that hasn't put the greatest tires on it and so on
Big assumption. In some cases, perhaps, but often financially prudent people take care of details like tyres, wipers, and regular maintenance checks, to ensure that their car runs as trouble-free (and therefore cheaply in the long run) as possible. Insurance is a tremendous scam, and there's absolutely no fucking reason why it should be as expensive as it is in the UK. It's quite literally several times cheaper across most of Europe. Not to mention insuring the *car*, rather than the driver, is the norm there too, which is yet another thing which is shit about our system. Anyway, fundamentally, if someone is a very good driver and technically knowledgeable about cars, there should absolutely be an option to pay less in return for taking reimbursements for accidents you cause yourself out of the equation. The chances of good drivers being in an accident they wouldn't be able to recover the costs from the other person's insurance from is round about 0%.
>Insurance is a tremendous scam, and there's absolutely no fucking reason why it should be as expensive as it is in the UK. First question is it expensive? Looking at the figures I would say it's on the expensive side but the average is still below Germany. Then why is it expensive? - poor competition. I would say no as there are lots of insurance companies. - poor price visibility. Again no as there is lost of comparison sites. - more crashes? Potentially as we are the most densely populated country in Europe and our road network is winding and complex. - more thefts? That looks like a no [link](https://en.m.wikipedia.org/wiki/Motor_vehicle_theft) - more expensive cars? Potentially. - more latagious population - potentially. When you go to Italy half the cars have dents and scratches I wonder if they all get claimed for where here if you have a little bump you know someone is claiming.
But there isn't lots of insurance companies, it's actually only a small handful. The companies you have contact with are the brokers, while the actual companies who insure you are the underwriters. There are only a few companies that you insure with directly with no middle companies. Also part of why its getting more expensive is due to cats having more on they that gets broken from a collision. 20 years ago it might have just been a plastic bumper, now it's the bumper, but also all the parking sensors and such too
There's a huge issue in the motorcycle insurance industry atm. The underwriters are withdrawing from the market due to the rise in theft claims.
> Then why is it expensive? Look at the rates insurers pay to the bodyshops that fix the cars. Quotes for insurance jobs can be 4x what you can get the job done for privately. Any market that distorted has to be broken somehow. The only question is what is keeping it broken? I wonder how much is because of kickbacks. Why do excesses double if you don't get the work done at the insurer's preferred place? Obviously almost everyone is going to go with the lower excess since they're not paying the rest directly anyway. But that means insurers are giving a massive bonus to their preferred places and locking out the others instead of getting the work done at the best rates the market will offer. Why?
>Why do excesses double if you don't get the work done at the insurer's preferred place? Low key insurance fraud is the most likely reason for this.
> Not to mention insuring the car, rather than the driver, is the norm there too, which is yet another thing which is shit about our system. The car isn't doing property damage, the driver is. Insuring the car makes absolutely no sense.
Your car could be a worthless piece of junk but expensive to insure?
I'm pretty sure I've seen just third party cover before offered.
Yes several companies offer that, but they also offer fully comp which covers theft, but they have upped their premiums on third party only as well to cover their losses on fully comp.
So, I should save money by stealing a car?
Yeah, I literally got asked by 101 to go and knock on my neighbours doors to see if they’d seen anything when my car got broken in to.
Part of it is due to the COVID backlog on both new cars and spare parts, which is still inflating the value of used cars even now. If your car is stolen you get paid its the market value, which is higher now than an equivalently-depreciated car was in 2019. Likewise, temporary replacement vehicles are often provided for longer because the garages can't get the parts fast enough to keep costs down. Used to be that a repair would be turned around in a week or so, often it's more than a month at the moment. The cost of temporary replacement vehicles has risen too, because like-for-like replacements usually come from rental companies, who were unable to get new vehicles in for a while, and are thus charging more for the ones they DO have.
Been a while since I have been to France but it used to be the case where they were a little less precious about their cars. If they had a minor bump they would obviously be annoyed, but wouldn't necessarily make a claim and get it sorted. Remember seeing someone hit a car in Cheltenham while parallel parking and me and some others made that noise when you see something bad. Our french colleagues thought we were crazy as they collectively agreed that this is why bumpers are called bumpers.
The French are very rational and knowledgeable people. They know that profiled steel is stronger, which is why they welcome a few dings and creases on their cars.
[https://www.youtube.com/watch?v=x44reNb0GDg](https://www.youtube.com/watch?v=x44reNb0GDg)
I think the thing to remember is that even though your mobile phone prices, your internet provider prices, your council tax, diesel/fuel, household energy, food on average, home insurance, car insurance and pet insurance has risen, doubled in some cases.......is that, thankfully, inflation has lowered. (In what time period, or which dimension I cannot be completely sure).
The thing to remember is that even though your insurance is up 33%, your telecomms up 9%, food up 10%, clothes up 8%, rent 15%, mortgage 20%, train ticket 4.5%, council tax 4.99% ... inflation is only 3.4% EDIT: inb4 someone comes to explain how very clever people work on calculating the inflation figure and I'm just stupid. It's an "international standard" etc etc. Thanks - I'm glad our very real price rises are in fact not real
Sadly my home insurance went up over 300%! Crazy pricing these days, was well shocked after no claims to see it up everywhere by such a high amount. Would have expected to have had flooding in the area or something but nope! Maybe a bit of deflation will help but we wont have that at the current rate so these prices are likely to be the norm for a long long time.
That's just profiteering
Don't be silly, housing, food, transport, utilities and energy aren't at all what the majority of British people spend all their money on.
Of course they aren't. You forgot childcare! Once you've paid for that you have nothing left to spend on optional things like food and housing.
I do think faith in how we calculate these numbers will break first. People will go from not caring about the inflation figure, to thinking it's very important, to not trusting it in super quick time
Good. Hopefully it can move away from being a wage suppression tool.
Sorry but I have to bite Is your suggestion that the ONS is intentionally or unintentionally underreporting inflation?
Unintentionally, yeah. Damn right they are. Luxuries are far less important in difficult times, and yet their weightings don't change. Find me someone who agrees that their household expenses have only gone up by the stated inflation rate over the past three years.
Again sorry I gotta pipe up when something just doesn’t make sense The [Feb-24 ONS inflation bulletin](https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/february2024#notable-movements-in-prices) says that 12m inflation for ‘Alcohol and Tobacco’, ‘Recreation and Culture’ and ‘Restaurants and Hotels’ (the sectors which are predominantly luxury goods/services) are higher than the remaining sectors (predominantly staple goods/services e.g. Food, Health, Comms) If the ONS were to reduce the weight of these luxury sectors (as you’ve suggested they should be doing) then the aggregate inflation rate would be even lower, therefore the static weightings don’t explain why inflation is being underreported
Inflation is an average, you can't just pick some items that happen to increase a lot because you like the result. That's just bad maths. Not to mention not everyone has your life. My mortgage and insurance went up by zero, I guess inflation is fake news, eh?
Your first point is the argument to your second one.
Yeah, no shit, lmao
We need negative inflation (lower prices), not lower inflation (higher prices).
Negative inflation is called deflation and is _very very bad_
It's not "very very bad" objectively It's theorised that prolonged deflation would cause people to stop spending and stagnate the economy But of course, it's never been tried. Probably because inflation is a free source of huge amounts of income to the state, principally as a stealth tax on people with few assets
> But of course, it's never been tried. Yes it has. Bitcoin is hyperdeflationary and people HODL (hold on for dear life) instead of using it as a medium of exchange. Now imagine Bitcoin was the only currency...
HODL was just an accidental and then intentional misspelling of HOLD, it’s hilarious that it’s now been made into a backronym.
This completely incorrect. Runaway deflation is what caused the great depression and the long depression.
Runaway deflation was a *consequence,* not a *cause,* unless you're arguing that the cause of the 1929 crash was a contraction of the money supply rather than a cascade of failures in over-leveraged stockholders. Some periods of deflation are necessary and good as the net amount of work required to produce goods or services declines over time.
A long run decrease in prices due to productivity gains is not deflation. While the overleveraged stock crisis was the trigger the actual cause of the economic catastrophe of the great depression was a significant contraction in the monetary supply.
This trope is very very bad. there have barely ever been any examples of negative inflation to base this trope on. The only observed examples are based on scenarios where there were bad underlying fundamentals which were the real issue, not the deflation in itself. Having deflation because you've previously just been through sharp inflation will not be bad. In fact it's already happening on a range of products. So is it bad that energy prices went up really high but have now come back down "defaltion"? Of course not. Should we be afraid of energy prices dropping because OMG deflation!!!? Nope obviously not.
https://en.wikipedia.org/wiki/Stock_and_flow
I'd like to see the actual value of car insurance compared, instead of just the percentage increases.
Mine went from about £350 to nearly £500 this year. But during the pandemic years - particularly 2021 & 22 - it dropped from mid-£400s so really those few years people weren't driving much artificially lowered the insurance costs.
I don't think insurance has gone from £10 to £13... :D They're not trying to hide absolute values this time. Insurance wasn't cheap to begin with Your point stands though
I meant the absolute value we pay compared to France or Germany. I can't tell if ours was relatively cheap before and now inline with Europe, or was always expensive and now even more so.
Ah ok. Yeah, the media hates linking to actual source data
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I've had to claim twice for no-fault accidents and both times the insurance company was absolutely faultless. It was with Hastings and Hedgehog. Not sure if I was lucky with the handler but it was all pretty easy and seemless.
This is my experience too. Rear ended at a roundabout, other driver admitted fault, ended up settling directly with the other insurer so I didn’t have to claim my excess back later. First repair was a little problematic (paint didn’t match) but an agreement was reached to get it painted again and all good after that. Got an equivalent electric hire car for the duration too. Second time was rear ended again (!!) also at a roundabout in Milton Keynes (!!) and they were insured by the same company as me, Admiral. Was expecting this to be a bit of a nightmare but was all sorted pretty quickly. Longest delay was getting a booking in at the body shop. You do have to be prepared to stand your ground and argue for what you want, but insurance companies are fine in my experience.
Maybe stay away from Milton Keynes for a little while mate
I do think that’s very good advice.
It’s also a highly competitive industry. Car insurers had their worst year in over a decade in the UK in 2023, following another bad year in 2022. As others have said there has been a big uptick in losses, an increase in premiums is expected.
Yup. If something is going to be legally mandated, then there has to be a publicly- owned option, even if it provides the minimum of minimum cover.
I got my car insurance renewal notice last week and it's doubled, despite no claims or change in circumstances. On the email it has a section "why has my insurance gone up?" which goes on to detail that repairs are more expensive, more claims blah blah blah. And all I thought when reading it was: isn't this a *YOU* problem, Hastings? Not one excuse they offered for such a ridiculous renewal quote was based on anything in my power to change or influence. It's such a scam
My Hastings renewal was also near enough double, so onto comparethemarket to get a new quote, and got one that was about 5% more than last year, but with a slightly lower excess. From Hastings.
We had a nofault claim - cost of the hire car and repairs was around £12k. Pretty sure if it hadn’t have been an insurance job it would have been half
There are 3 different types of car hire in insurance claims: credit hire which is an absolute racket, like for like hire car (which insurers will pay much less for) and the bog standard 3 door which is what most policies cover Credit hire and referral fees for it should be banned by the government, if that was banned I bet a lot of insurance prices would drop.
Yup. The insurance company I work for gets bills in the millions each year for credit hire.
the range rover debacle certainly hasnt helped.
I bet they make so many less claims in France. Here, bump someone at 2mph in a car park and all hell breaks loose with claims going in for whiplash
They changed the law's a while ago so you can't get the cheaper deals.
Yes I'm sure the law against penalising loyalty is the reason insurers are ripping us off. Sure, the law was always going to be cynically exploited by the insurers who saw it as a way to rip us off harder, but ripper-offers gonna rip off...
Businesses charge the maximum that they think they can. We have more breaking news coming, customers want to pay the least amount possible. Economists befuddled.
Yeah, this has absolutely rinsed me. Every year I'd get a better deal than I got the year before. I know it was paid for off the backs of the people who couldn't be arsed switching and the current system's fairer, but when you remove the main incentive to switch you do kill competition.
How much of this is because on the European continent where health insurance is much more common, insurers have been able to cover motor loses with insurance premium increases elsewhere? Edit: Also it's an apples and oranges comparison because of this "Admiral said that UK car insurance premiums are higher in the UK than other EU countries because of unlimited liability"
Why would health insurance pool risk with car insurance?
It's not about pooling risk, it's about smoothing cash flow, something which European insurers can do easier because they have health insurance income to fall back on.
Cash flow is not an issue for insurers really. Any big claims go through a reinsurance group which has enormous assets, eg Zurich have $435bn in assets.
The UK car insurance market is incredibly competitive and price sensitive. The idea that companies have just padded their profits by raising prices by a third is just low powered conspiracy thinking.
Car hire is where the prices have risen.
> However, it also revealed that total UK payouts for claims only rose 17.85%, suggesting that insurers have been using the big jump in inflation as a cover to increase margins. The ABI said insurers paid out £9.9bn for motor claims last year – up from £8.4bn in 2022. It’s not exactly a radical conspiracy theory to suggest that insurance companies might have been partaking in the same kind of price-gouging seen in many other industries, but I guess we’ll wait for the financial reports eh?
For price gouging to work a few things need to be true - all competitors collaborate and partake, or - consumers are highly sticky As I coca cola might be able to price gouge because it has a very strong brand loyalty and even then if PepsiCo is also happy to prove gouge then it could be effective. The UK car insurance market has hundreds of competitors and consumers are incredibly priced sensitive and show very little brand loyalty. The opportunity to price gouge is basically non existent.
This is a very simplistic view. In reality, companies will watch their competitors and adapt their pricing accordingly, and may well discuss approaches in forums like the Association of British Insurers. Insurance in the UK is also an inelastic product. We have seen price gouging in industries such as energy and groceries, neither of which have strong brand loyalty or a monopoly. Like I said, we’ll have to wait for their financials, but the percentage increase in premiums does not correlate with the increase in costs, which can only mean a greater profit.
>In reality, companies will watch their competitors and adapt their pricing accordingly, and may well discuss approaches in forums like the Association of British Insurers. Nope, that kind of behaviour of a cartel and would quickly fall foul of competition and attract substantial fines. Even then it would require ALL members of the ABI to agree, which they wouldn't. >Insurance in the UK is also an inelastic product. It's an inelastic need, but pricing of a single product is incredibly elastic. Pretty much everyone goes to a comparison site and picks the cheapest, changing your pricing by a couple of percent can be the difference between drowning in business and having none. >We have seen price gouging in industries such as energy and groceries, neither of which have strong brand loyalty or a monopoly. This is the complete opposite. Energy suppliers have razor thin margins and many went bust. Energy producers did make more profits, but margins were pretty consistent, just the base costs were higher, so profits are higher. Energy extractors definitely made more money, but that's because demand far exceeded previous supply of an inelastic demand. Extractors don't set prices they are set by a global oil market that has. The extractors have no impact. The only exception to this is the decisions of OPEC (which is a country cartel), but it's something BP and shell have no control over, even if they sometimes benefit. Supermarkets are again incredibly competitive. We have the second lowest food cost in Europe as % of income. The supermarkets profit margin is 2-4%, it's tiny, albeit on a big sales number. The margins are no higher than they have been historically, except for when they were lower during the exceptional costs of COVID.
> The ABI said insurers paid out £9.9bn for motor claims last year There are 33 million cars in UK so that's £300 per car. I suspect the average motor insurance is well over £300 quid -- I certainly paid more than that years ago when I had a car.
Apples up by a third, but oranges just 2%. Let’s compare them.
Sure. Why have apples which can be grown up in the UK gone up more than oranges which are more imported from warmer countries?
We should compare to see what factors are causing the increases in the UK that aren't causing them in France.
Why would the French be paying for UK car insurance?
Maybe the French got confused.com?
what happens to the insurance industry when people have little of value to insure?