It’s never a nice time of year when your car insurance is up for renewal. I’ll be getting my renewal premium notification in the next week or so………
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@Craig - How insurance companies arrive at their premiums is very much a mystery to pretty much all of us. Adding business use to your policy would cause the premium to increase, but I doubt it would add much to the overall price. However, even if personal circumstances and vehicle we drive are the same as before and we’ve not made a claim, premiums can change - and will probably go up rather than down for the majority of us.
A brain dump of some of the things that no doubt impact the premiums we pay, even when we don’t make a claim. And before anyone asks, no I don’t work for an insurance company
, but I know people who either do or have done;
- Basic insurance principle; the losses of the few are paid for by the contributions of all policyholders. So even if we as individuals haven’t made a claim, part of the premium we pay will help fund the payment of claims of others.
- Insurance company business objectives - growth or profit; a growth strategy might mean lower prices to attract customers, a profit strategy might mean higher prices for (many?) customers.
- New claims trends / risk profile changes an insurance company may spot during ongoing account performance analysis might result in price changes.
- Very complex premium calculation algorithms use multiple risk factors. We might not automatically associate some of those factors with car insurance, but they might impact the price we pay - e.g. a person’s credit rating.
- Insurance company not meeting its own profit objectives (so unable to pay its shareholders a nice fat dividend payment
), so premium rates increase.
- Vehicle repair costs increasing faster than the general rate of inflation, impacting overall claims costs;
-much of the tech in modern cars is very costly to repair / replace
- increasing energy costs, paint costs, material costs and labour costs associated vehicle repairs
- High write off rates of certain types of vehicle (e.g. EV’s) due to the cost, complexity, length of repair time and / or lack of technical knowledge or equipment needed to repair.
- Insurer overheads - e.g. heating / lighting, buildings maintenance, employee costs.
- Legislative changes and government policy - e.g. increased employer NI contributions. These are unlikely to be absorbed by the insurance company, but will be passed onto policyholders.
There will no doubt be many other associated costs that are factored into the premiums we pay.
Always worth shopping around at renewal to see what prices other insurers are quoting. There’s usually no reward for being loyal, although it can also be worth asking your current insurer what their best price is. However, I find it really irritating if the current insurer hasn‘t quoted their best price in the first place!
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From a personal perspective I stick to insurance companies I‘ve heard of that have good customer
reviews, and I never go with the cheapest; if a company is the cheapest, it might be they’ve cut costs to the bone and customer service is poor as a result. I want good customer service when it counts - i.e. if I’m unfortunate enough to have to claim…….
; not by much - only an £18 reduction compared to my current premium but nevertheless, still a reduction.
