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Now Ye're Talking - to an Insurance Underwriter

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  • 06-01-2015 8:36pm
    #1
    Dav
    Closed Accounts Posts: 8,840 ✭✭✭


    Hello all and welcome to 2015 :)

    This week we have a professional feline in to answer questions about his job as an insurance underwriter and the insurance industry in general. It's one of the most misunderstood businesses around I think (in a past life I wrote insurance software, so I know a little bit about it) and of course, as it's mandatory for cars, most people hate it. But it seems fitting to follow an AMA with a Car Designer with an AMA from an Insurance person. Might see if we can hit up someone in the petrol business next...

    So anyway, please welcome Business Cat to the forum. As before, I was going to make some puns about his time being at a premium and how you could rate his answers, but that's not my policy...


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    #2
    368100
    Closed Accounts Posts: 2,067 ✭✭✭368100


    Hi,

    Great idea for a thread!

    Does information like "mileage driven per year" and "is car is kept on driveway or garaged" really make a difference to a quote? They don't seem to.

    And if not, why do insurance companies collect that data?

    Thanks!


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    #3
    [Deleted User]
    Posts: 16,720 ✭✭✭✭ [Deleted User]


    What do you look for when shopping around for car insurance?


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    #4
    Cookie_Monster
    Registered Users Posts: 24,473 ✭✭✭✭Cookie_Monster


    Why is insurance in ireland so insanely expensive, esp compared to other countries?


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    #5
    fred funk }{
    Registered Users Posts: 6,827 ✭✭✭fred funk }{


    Does it matter what value I state my car as or do you pay what you think it's worth regardless in the event of a write off.


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    #6
    Macker2001
    Registered Users Posts: 53 ✭✭Macker2001


    Cookie_Monster wrote: »
    Why is insurance in ireland so insanely expensive, esp compared to other countries?

    You couldn't possibly mean car insurance?


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    #7
    Falcon L
    Closed Accounts Posts: 891 ✭✭✭Falcon L


    Why is there a reluctance to accept NCB earned in another European country?

    Why do I lose my NCB after 2 years insurance lapse? Am I suddenly considered a dangerous driver?

    Why can't my NCB be used on a second vehicle, as it can in other European countries?


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    #8
    mirrorwall14
    Closed Accounts Posts: 6,751 ✭✭✭mirrorwall14


    What sort of cases get referred to the underwriter? Is there any way to ensure that your claim is as straightforward as possible?


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    #9
    aphex™
    Closed Accounts Posts: 2,338 ✭✭✭aphex™


    Why do we need actuaries? Why not use flat price car insurance like they do in other countries (usa, poland) where most people pay the same price for insurance? Most insurance companies seem to settle disputes between each other from what I can see anyway.


    Thanks!


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    #10
    Liam McPoyle
    Closed Accounts Posts: 14,846 ✭✭✭✭Liam McPoyle


    368100 wrote: »
    Hi,

    Great idea for a thread!

    Does information like "mileage driven per year" and "is car is kept on driveway or garaged" really make a difference to a quote? They don't seem to.

    And if not, why do insurance companies collect that data?

    Thanks!

    Mileage may make a difference in premium calculation if its very high eg in excess of 40,000 KM per year however for the average driver it does'nt.

    Likewise with asking where the car is kept at night.

    The main reason for requesting mileage, where the car is kept and other non rating questions are for use in the event of a claim.

    Eg, someone gives their mileage as circa 10k per annum but they clock up 30k. They are involved in an accident. The question must be asked where did the extra mileage come from.

    Does their occupation correlate with the miles clocked up?. Ive seen cases where someone would have occupation as student but on the side they were delivering take aways. Delivery drivers are outside of acceptance criteria for most insurers and the way it is, alot of people know that so they take a chance and dont declare it when buying a policy.

    The mileage question can help give the insurer a better level of understanding and protection in the event of an accident where there may be a question over liability or when trying to decline a claim that they know happened on a fraudulently obtained policy.


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    #11
    Dozen Wicked Words
    Closed Accounts Posts: 10,325 ✭✭✭✭Dozen Wicked Words


    Is crash for cash a problem in Ireland?


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    #12
    Liam McPoyle
    Closed Accounts Posts: 14,846 ✭✭✭✭Liam McPoyle


    Dónal wrote: »
    What do you look for when shopping around for car insurance?

    The main things people (myself included) should look for in an insurance policy are

    Excess - how much is the policy holder liable for in the event of a claim?

    Breakdown assistance - Are there restrictions on it? Some insurers have the stipulation that you must be at least 1km from home before it takes effect. Some will not cover you for flat tyres or if the wrong fuel gets put in your tank.

    Windscreen & glass cover - Is all glass covered - ie wind screen, side and back windows. Some insurers have an issue with panoramic wind screens so if your car has one you should make them aware of this. Is there an excess on glass claims, are there recommended repairers that must be used.

    Driving of other cars - what level of cover applies ie comprehensive or third party only (usually third party only)

    Price - Price shouldn't be a major consideration when buying insurance. Of course its very important however the cheapest does'nt mean the best and in a lot of cases, its the cheapest for a reason. Could be an excess, restrictions on covers etc.

    Always read the fine print!


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    #13
    Liam McPoyle
    Closed Accounts Posts: 14,846 ✭✭✭✭Liam McPoyle


    Cookie_Monster wrote: »
    Why is insurance in ireland so insanely expensive, esp compared to other countries?
    Macker2001 wrote: »
    You couldn't possibly mean car insurance?

    At Cookie, Im presuming as Macker indicated your query in the main relates to car insurance.

    Unfortunately there is no simple answer but I will give you some of the reasons as to why its higher than some of our counterparts.

    The main reason why insurance premiums are on the up is down to claims made and pretty much everything else is tied into it. The Irish insurance market is relatively small in comparison to the UK, Germany, France etc and as a result there is a finite amount of premium available.

    As there is limited premiums available for personal lines insurance, all the personal lines (car, home & home) underwriters in this country such as Aviva, Zurich, Liberty, FBD etc also write commercial lines (shops, pubs, tradesmen, etc).

    Insurance is essentially a pot where all premium paid goes in and all operating costs & claims goes out of the same pot.

    There are strict guidelines in place that insurers must adhere to, Solvency II been the most important one currently.

    What it basically means is that insurers must have a minimum fund in place at all times in order to off set any future claims. In 2014 Setanta Insurance did not adhere to this and as a result they went bust. At the back end of 2013 123.ie (underwritten by Royal Sun Alliance) announced that they had under reserved by something in the region of €250,000,000 and had to have capital injected by the parent company.

    Over the last 12 to 18 months as the Irish economy has turned a corner and more jobs have been created, that means there are more vehicles on the road than has been for the last couple of years, more vehicles means more claims.

    Weather wise we have been pretty battered over the last couple of years between flooding, storms and freezing conditions. All of these effects have resulted in huge property damage claims. Again, these claims all have to be paid out of the same pot.

    What people do not seem to appreciate is that one claim can literally cost millions of euro. I remember in a previous job I encountered a motor claim. The mother had gotten a policy for her son in her name but him as a named driver on some Jap import yoke. Son goes out one night and crashes the car which resulted in 2 fatalities. At the time I saw it over €1,300,000 had been paid out and the claim was still live. The accident a couple of years ago in Donegal which resulted in 7 or 8 people losing their lives, Ive no doubt that will end up costing upwards of €5,000,000 at a minimum.

    Again, the 2 above examples all have to be paid out of the same pot so it takes alot of €500 policies to balance the books!

    Insurance companies ultimately are looking to make an underwriting profit and have as low as possible a loss ratio.

    A loss ratio is simply put, how much money is been been taken in Vs how much is been paid out on claims.

    A loss ratio less than 100% means a profit is been made.

    A loss ratio more than 100% means a loss is been made.

    The non life insurance (personal and commercial lines) market in Ireland in 2012 had a loss ratio of 107% which basically means that for every €1 taken in, €1.07 was been paid out on claims. It has deteriorated since then so as a result premiums have to increase to stay within the solvency rules and to keep operating.

    Then you have to take into account operational costs such as wages, stationary, light and heat, etc

    Zurich Insurance for example recently released that they had not made an operating profit in 7 years!

    Claims experience and loss ratio's are the main reasons for the premium levels we have at the moment, and they are only going to increase Im afraid.


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    #14
    Liam McPoyle
    Closed Accounts Posts: 14,846 ✭✭✭✭Liam McPoyle


    fred funk }{ wrote: »
    Does it matter what value I state my car as or do you pay what you think it's worth regardless in the event of a write off.

    In the event of a total loss - ie a theft claim with the vehicle not recovered, destroyed by fire or written off in an accident - you will only ever get what the insurance company deem to be the market value at the time of the loss.

    Some insurance companies have a sophisticated system in place that when they enter the reg it automatically generates the market value. Its based on data from garages, motor websites etc.

    Some insurers will also charge you extra premium depending on the vehicle value however will still only pay out the market value.

    My advice would always be when entering the vehicle value yourself to over cast it by a couple of grand as that generally wont cost you anything extra but also gives you a cushion in the event of a total loss.


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    #15
    Omackeral
    Registered Users Posts: 32,956 ✭✭✭✭Omackeral


    Does this ad make you want to gouge your own eyes out with a dessert spoon?


    https://www.youtube.com/watch?v=_1jltMLa-KA


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    #16
    Liam McPoyle
    Closed Accounts Posts: 14,846 ✭✭✭✭Liam McPoyle


    Falcon L wrote: »
    Why is there a reluctance to accept NCB earned in another European country?

    The difficulty can be proving that it actually is a real bonus. Anyone can print something off the internet or get a template and fill in what ever they want themselves. When a bonus comes in from an Irish based insurer its a matter of picking up the phone to check its validity, not easy if it comes from some random European country.
    Falcon L wrote: »
    Why do I lose my NCB after 2 years insurance lapse? Am I suddenly considered a dangerous driver?

    This is something that I dont agree with I must admit, it doesn't mean that people have become bad drivers or anything.

    From a purely underwriting perspective, if someone said they had a bonus that expired 3 years ago Id ask a number of questions.

    Why havnt they been driving for the last 3 years?

    Were they possibly put off the road?

    Had they a medical condition that ment they couldn't drive?

    Were they in prison?

    In most cases its for genuine reasons but there are also cases where there are shady goings on.

    There would also be the argument that if someone hasnt been driving in more than 2 years that they are out of practice and there fore a bigger hazard than someone that has been driving regularly.
    Falcon L wrote: »
    Why can't my NCB be used on a second vehicle, as it can in other European countries?

    The argument there is that a bonus is earned by one person, one person = one bonus = one vehicle covered. If the industry allowed one bonus to cover more than one vehicle the risk and potential exposure increases exponentially. If there was a named driver on one of the vehicles then essentially 2 vehicles are on the road for one bonus.

    There would also be the issue of what would happen in the event of a claim. Do both bonuses get deleted etc.


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    #17
    Liam McPoyle
    Closed Accounts Posts: 14,846 ✭✭✭✭Liam McPoyle


    mirrorwall14 wrote: »
    What sort of cases get referred to the underwriter?

    Could be for any number of reasons.

    Age of driver.
    Car type/value/spec/imported/age.
    Claims experience.
    Occupation.
    Class of use (eg sales rep)
    mirrorwall14 wrote: »
    Is there any way to ensure that your claim is as straightforward as possible?

    Unfortunately not. For a single vehicle accident ie you crash your own car then in general they are open and shut cases.

    When liability is in dispute or there is a personal injury claim involved, thats when things can and do get messy and can drag on for years.


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    #18
    368100
    Closed Accounts Posts: 2,067 ✭✭✭368100


    Business Cat wrote: »
    Mileage may make a difference in premium calculation if its very high eg in excess of 40,000 KM per year however for the average driver it does'nt.

    Likewise with asking where the car is kept at night.

    The main reason for requesting mileage, where the car is kept and other non rating questions are for use in the event of a claim.

    Eg, someone gives their mileage as circa 10k per annum but they clock up 30k. They are involved in an accident. The question must be asked where did the extra mileage come from.

    Does their occupation correlate with the miles clocked up?. Ive seen cases where someone would have occupation as student but on the side they were delivering take aways. Delivery drivers are outside of acceptance criteria for most insurers and the way it is, alot of people know that so they take a chance and dont declare it when buying a policy.

    The mileage question can help give the insurer a better level of understanding and protection in the event of an accident where there may be a question over liability or when trying to decline a claim that they know happened on a fraudulently obtained policy.

    Cheers!


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    #19
    Liam McPoyle
    Closed Accounts Posts: 14,846 ✭✭✭✭Liam McPoyle


    aphex™ wrote: »
    Why do we need actuaries? Why not use flat price car insurance like they do in other countries (usa, poland) where most people pay the same price for insurance? Most insurance companies seem to settle disputes between each other from what I can see anyway.


    Thanks!

    Risk rating tbh.

    If you wanted to have everyone paying the same premium from a 17 year old lad on a provisional licence to a 55 year old housewife, what premium do you put on it? €700, €800, €1000?

    Invariably most people will end up spending more in the long run if everyone paid the same rather than people paying premiums based on their experience and driving history.

    In terms of insurers settling the disputes between themselves, thats all well and good for a 50/50 claim where there is no clear fault but what about the driver that mills someone out of it after having a couple of shandies?

    Its the personal injury or fatality incidents that are the cause of most high claims and in general its going to be one company that foots the bill for each one.


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    #20
    mirrorwall14
    Closed Accounts Posts: 6,751 ✭✭✭mirrorwall14


    Are you specifically in motor insurance? I worked in a call centre for a life insurer in my early 20s and some of the claims refusals and wait times were horrendous. Is that still the case today?


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    #21
    Liam McPoyle
    Closed Accounts Posts: 14,846 ✭✭✭✭Liam McPoyle


    Dozen Wicked Words wrote: »
    Is crash for cash a problem in Ireland?

    Not just crash for cash but the compensation culture in this country is massive.

    Below are a couple of examples of real claims that Ive seen over the last 5 and a half years.


    Family staying in a Hotel, some random guy manages to get into the room in the early hours of the morning after having too much to drink. He does'nt do anything other than apologise and get totally embarrassed when the kids start screaming and he leaves the room. Claim for "emotional trauma and distress" against the Hotel, €25,000 paid.

    Couple staying in a Hotel, find a used condom in the locker beside one of the beds. €15,000 paid for shock/disgust.

    Guy at a wedding, totally hammered, runs out of the Hotel and vaults over a wall and lands on a rock, breaking his femur. Tries and fails to sue the Hotel, ends up suing the farmer whose field he landed in, €48,000 paid.

    Guy in a pub, hammered, falls off his stool and ends up fracturing his skull, €400,000 paid out.

    Individual that had been caught shop lifting in a supermarket on a number of occasions previously gets approached by the security guard who knows them and their form. Turns out said individual didn't try and steal anything on this occasion but he did manage to get himself €15,000 for the embarrassment of wrongful arrest.

    Its all too common that people see insurance fraud (by fraud I mean false and/or exaggerated claims) as a victimless crime but its not as it just ends up costing the average, honest punter extra money. I would have no problem in shopping someone in that I suspected or knew had a dodgy claim.


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    #22
    Liam McPoyle
    Closed Accounts Posts: 14,846 ✭✭✭✭Liam McPoyle


    Omackeral wrote: »
    Does this ad make you want to gouge your own eyes out with a dessert spoon?


    https://www.youtube.com/watch?v=_1jltMLa-KA

    Its awful as well as been incredibly sexist. Its also a bit misleading as its implying that because its a female only policy it will be cheaper than other companies but the risk equalisation that came in at the back end of 2012 took care of that.


    For those that dont know, the risk equalisation was an EU ruling that stated gender could no longer be used as a factor when determining insurance premiums.


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    #23
    mackes
    Registered Users Posts: 75 ✭✭mackes


    Why is car insurance dearer in limerick City than anywhere else? When I go to renew every year for the past couple of years I've entered the exact same details for other cities and limerick is always dearer.


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    #24
    Liam McPoyle
    Closed Accounts Posts: 14,846 ✭✭✭✭Liam McPoyle


    mirrorwall14 wrote: »
    Are you specifically in motor insurance? I worked in a call centre for a life insurer in my early 20s and some of the claims refusals and wait times were horrendous. Is that still the case today?

    Im specifically in commercial lines at the moment with a small smattering of personal lines thrown in. I worked in personal lines for over 3 years as well.

    Life in quite different to non life. I dont have any experience in the life market but from what I do know of it, its incredibly cut throat, similar to health insurance in that the slightest mistake means hefty punishment.

    It is certainly a case of "buyer beware" when it comes to life or health insurance.


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    #25
    Liam McPoyle
    Closed Accounts Posts: 14,846 ✭✭✭✭Liam McPoyle


    mackes wrote: »
    Why is car insurance dearer in limerick City than anywhere else? When I go to renew every year for the past couple of years I've entered the exact same details for other cities and limerick is always dearer.

    My guess would be loss ratio / claims experience.

    Unfortunately, Limerick has a bad rep due to a small unsavory element and that results in everyone suffering.

    In my experience border counties - Donegal, Louth, Monaghan, Cavan, are rated higher in comparison to other parts of the country for the exact same kind of car. Again, it comes down to claims experience in those counties. Donegal in particular is an insurance black spot.


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    #26
    Kelly06
    Closed Accounts Posts: 509 ✭✭✭Kelly06


    On my last renewal my insurance went from 650 to over 1200 with no claims made on the policy and full no claims discount. Reason given by 123.ie was that insurance was going up for everyone. How can insurers justify this?


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    #27
    Little A
    Registered Users Posts: 321 ✭✭Little A


    This is something that I dont agree with I must admit, it doesn't mean that people have become bad drivers or anything.

    From a purely underwriting perspective, if someone said they had a bonus that expired 3 years ago Id ask a number of questions.

    Above was to do with NCB & losing it after a few years.

    I am currently on a fleet policy, will I lose my no claims after 2 years or will the fact I can prove I have been covered mean I can keep it if I change job?

    Also, what do you think about the 2 years for Novice drivers? Will the "N" timeslot affect insurance & (as a professional!) do you think it is a suitable timeframe?

    Cheers & very informative!!


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    #28
    FF7 7777
    Banned (with Prison Access) Posts: 27 ✭FF7 7777


    Business Cat wrote: »

    Zurich Insurance for example recently released that they had not made an operating profit in 7 years!

    The Brother just mentioned yesterday that when he was pricing around he was actually shocked to see them offer a good price for a change, they are usually hundreds dearer every year.

    That's the reason then.


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    #29
    kerry4sam
    Registered Users Posts: 15,127 ✭✭✭✭kerry4sam


    I was going to ask in Motors but sure here you go instead if you don't mind.

    Don't want to go into details, however I will say that they were at fault and admitted liability at the scene. I now know they have a young family & do drive for a company for a living and am just curious as to how a claim would impact on their policy? ... the effects of the incident are still on-going.

    Many Thanks,
    kerry4sam


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    #30
    Liam McPoyle
    Closed Accounts Posts: 14,846 ✭✭✭✭Liam McPoyle


    Kelly06 wrote: »
    On my last renewal my insurance went from 650 to over 1200 with no claims made on the policy and full no claims discount. Reason given by 123.ie was that insurance was going up for everyone. How can insurers justify this?

    As I mentioned above, 123.ie under reserved their claims fund and had to get €250 million of an injection from RSA.

    Have you noticed how little they are advertising nowadays?

    A couple of years ago you couldnt open a newspaper or pick up your post without a circular/flyer from them falling out. Likewise with their TV advertising, there seemed to be an ad for them during every single commercial break.

    So they are cutting costs and raising premiums for alot of people.

    The increase you were hit with though sounds as if they could be trying to get rid of you.

    Its common practice in the industry and is known as "rating to exit", essentially it means that a particular class of business - could be car type, area you live in, occupation etc - is no longer within their target market.

    As they are legally bound to offer you a quote they offer a premium much higher than what you paid last year on a take it or leave it basis. Obviously nobody will swallow that so you will try and likely succeed in getting a cheaper alternative elsewhere.

    As a guide, the average rate increase would be between 10 to 15% on last years premiums. Any more than that then Id be looking elsewhere.

    Another thing that people should be aware of. Some insurers have software in place that increases premiums higher depending on how long a person has been with them. The logic is that if a person is with the company for X years, they are less likely to leave so they will pay a higher premium without any qualms.


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    #31
    mikemac1
    Closed Accounts Posts: 12,395 ✭✭✭✭mikemac1


    The lads I know doing takeaway deliveries don't declare as insurance companies ask about this and it'll raise the premium.

    Do claims ever get denied over this for takeaway delivery drivers?

    If Mark crashes the car at 10pm in a lamppost with a few deliveries in the back seat how would an insurance company ever know what he was doing? If Mark crashes into another car and the gardai are called and take statements are the insurance company looking for evidence from a report that a driver was working?


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