VAN INSURANCE NEWS ROUNDUP: 7 DAYS ENDING 12 SEPT 2014:
Van insurance and car insurance firms love to point the finger at high claims volume when it comes to rising rates, but how accurate is that really?
There’s nothing quite so depressing as hearing from a major provider of car insurance and commercial van insurance that it’s going to be come much more expensive soon to insure your vehicle. And this is exactly what some major insurers have said, which means the low rates we’re experiencing right now are likely at an end – but the reasons these rates are rising might surprise you.
Most insurers will say that it’s because their outgoings are outstripping their incomes. In fact, insurance giant Aviva recently said this week that a full 74 per cent of premiums collected from its customers go right back out the door to pay for insurance claims. This is also, not so coincidentally, why insurers constantly whinge about how claims fraud drives them mad because it increases the amount of money they have to spend on claims overall – and Aviva just reiterated this. They also said that if anyone is going to complain about increasing rates they should point the finger at road traffic accidents instead.
Meanwhile another major insurer said that it might be the industry’s fault itself that rates are about to rocket upwards. In a rare flash of honesty, large-scale British insurer Admiral said that the rampant price war that’s been driving premiums down over the past few years is likely playing a serious role in why rates are about to get pricier.
Apparently Admiral says that it’s simply not pulling in enough cash to pay for its operating costs, even though it’s been growing its market share rather considerably. The driving force behind this is the cut-rate premiums it’s been offering to new customers, and since every other insurer is trying to remain competitive it means that the majority of firms are likely in the same boat.
So there you have it – it might not just be the fault of claims activity and fraud. It’s really the fault of the industry as a whole, as their greed outstripped their common sense when it came to market share. Apparently none of these insurance providers have anyone working for them that took a bloody economics class in university.