Insurance payment method: a means of risk assessment.

Toyotafanboi

Not sure what i'm getting at with this thread, i was just a bit shocked, never seen this done (or at least done openly) before, is this normal? next they will be assessing you by what brand of laptop you applied for the quote on.

i also don't understand how they can advertise the part pay for €857 when you can only purchase it for €917.

Cleveland Hot Pocket

Quite logical to be fair, they are extending credit so mitigating the risk that you take out the policy then cancel the DD (still having the disk in the window)

Guy:Incognito

They are loaning you the premium amount to pay for it and charging interest on that loan.

Toyotafanboi

Cleveland Hot Pocket wrote: »

Quite logical to be fair, they are extending credit so mitigating the risk that you take out the policy then cancel the DD (still having the disk in the window)

i do see your/ their point to a degree, but does it justify a premium increase to the tune of roughly 25% of the overall cost of the policy? i mean if i cancel the direct debit and keep the disc in the window what does that matter to the insurer, they wont cover me and that'l be the end of it, they'd hardly incur any additional costs.

every year i do mine on the drip with whoever and i've not seen anything like this. generally it's very marginally more and never blatantly stated.

readytosnap

was checking for the missus the other day, her renewal ( Liberty ) came in at €368. via mail.
I went through the regulars and got a fully comp ( Aviva ) for €280, TPF&T with the same company was €280 as well?? The pay monthly including costs worked out at a few pennies short of €300, 1@56 & 9@27.07 (so roughly 10% extra for the pay monthly option, not excessive imo)

for fully comp, ncb protection, Full Irish, 6yr ncb, 2012 VW UP! 1.0 quoted:
123 - 312
AA - couldn't get a quote something wrong with site tried several times during the day.
AIG - 367
Liberty - 478 ( this was the quote when I filled in all the details as a new customer)
Aviva - 280
Chill - Sorry we cannot provide you with a quote based on the details submitted ??
1 Direct - 280

NewApproach

I suppose it could be justified in a way.

People having to pay by instalments, more likely to be financially stretched, therefore more likely to make spurious claims?

readytosnap

NewApproach wrote: »

I suppose it could be justified in a way.

People having to pay by instalments, more likely to be financially stretched, therefore more likely to make spurious claims?

Bit of a broad statement there, the missus always has paid by instalments and she has never made a claim, I always pay up front and I have never made a claim either, so have to disagree with you on that one.

The only spurious claim is the one you made with that statement!

Aint Eazy Being Cheezy

Motor tax is no different, you get a discount for paying 12 months in one go, as opposed to 4x3 months or 2 x 6 months. Ditto my gym membership. All businesses prefer cash up front.

Nermal

NewApproach wrote: »

People having to pay by instalments, more likely to be financially stretched, therefore more likely to make spurious claims?

Bingo. Data supports it.

Toyotafanboi

NewApproach wrote: »

I suppose it could be justified in a way.

People having to pay by instalments, more likely to be financially stretched, therefore more likely to make spurious claims?

i suppose that's a mindset. i wouldn't see myself as financially stretched for my circumstance by any means.

i just like the extra financial security that the direct debit offers. (allowing me to have more of my money in my account at any given time for unforeseen stuff). i know we aren't talking huge figures but i'm much happier to pay a 300 deposit and 60 a month for 9 months than pay out 750 up front for example.

i dont mind taking the little extra hit for the perceived security but a 25% increase to pay by d.d. imo is horrific. i know i'm under no obligation to buy with them and this is all my own personal preference etc etc and i can continue to shop around but still.

this is the straw that broke my back in insurance shopping.

Guy:Incognito

What insurance company is that btw? I've never seen it cost anything near that to pay by DD. It's usually around 10% or less.

Toyotafanboi

Guy:Incognito wrote: »

What insurance company is that btw? I've never seen it cost anything near that to pay by DD. It's usually around 10% or less.

ironically:

quadrifoglio verde

Interest of 22.5%....Id be going to the credit union and getting a loan:eek:

CiniO

readytosnap wrote: »

Bit of a broad statement there, the missus always has paid by instalments and she has never made a claim, I always pay up front and I have never made a claim either, so have to disagree with you on that one.

The only spurious claim is the one you made with that statement!

See that might be that simple as statistics.

F.e. they checked their last 5 years history, and from their customers who paid premium in one go upfront, 10% claimed, while from people who paid in monthly instalments, 20% claimed.
So here is the reason, no matter if you, or me, or even them don't understand why is it like that.

oldyouth

Do you not see the link between this stance being taken by insurers and the countless threads on Boards where 'clever' people suggest you get around a difficulty by cancelling a DD once you have used the facility to your advantage?

It is a significant admin cost to process direct debits and handle subsequent defaults and cancellations.

goz83

readytosnap wrote: »

was checking for the missus the other day, her renewal ( Liberty ) came in at €368. via mail.
I went through the regulars and got a fully comp ( Aviva ) for €280, TPF&T with the same company was €280 as well?? The pay monthly including costs worked out at a few pennies short of €300, 1@56 & 9@27.07 (so roughly 10% extra for the pay monthly option, not excessive imo)

for fully comp, ncb protection, Full Irish, 6yr ncb, 2012 VW UP! 1.0 quoted:
123 - 312
AA - couldn't get a quote something wrong with site tried several times during the day.
AIG - 367
Liberty - 478 ( this was the quote when I filled in all the details as a new customer)
Aviva - 280
Chill - Sorry we cannot provide you with a quote based on the details submitted ??
1 Direct - 280

Chill never seem to quote online unless your credentials are perfect and you drive a boring auld yoke for driving miss daisy. But they always call you later that day

Cleveland Hot Pocket

oldyouth wrote: »

Do you not see the link between this stance being taken by insurers and the countless threads on Boards where 'clever' people suggest you get around a difficulty by cancelling a DD once you have used the facility to your advantage?

It is a significant admin cost to process direct debits and handle subsequent defaults and cancellations.

I don't think that is a fair comment, I've never seen it suggested as a potential action to be recommended.

I only suggested it here as a reason for the higher cost, not as a suggested plan of action.

jimgoose

CiniO wrote: »

See that might be that simple as statistics.

F.e. they checked their last 5 years history, and from their customers who paid premium in one go upfront, 10% claimed, while from people who paid in monthly instalments, 20% claimed.
So here is the reason, no matter if you, or me, or even them don't understand why is it like that.

Mmm. I wonder is this an example of the Five-Year-Old-With-A-Shotgun school of statistical analysis, though - i.e. is the claim data down to the method of premium payment, or is it a "useful" red herring camouflaging something else? The cost-of-credit thing I can understand of course, even if the APR is window-licking.

djimi

Surely at some point someone has to step in and start looking at what criteria insurers are using to assess risk and ask how is it relevant to the service that is being offered? Assessing risk based on payment method is no more relevant to motor insurance than assessing risk based on the day of the week that a claimant took out their policy.

djimi

oldyouth wrote: »

Do you not see the link between this stance being taken by insurers and the countless threads on Boards where 'clever' people suggest you get around a difficulty by cancelling a DD once you have used the facility to your advantage?

It is a significant admin cost to process direct debits and handle subsequent defaults and cancellations.

Then charge an admin fee to cancel a policy and DD early.

In fairness, this would not be an issue for insurers if they would get the finger out and sort a system of short term policies in this country. Its ridiculous that people have to work the system just to get around the 1 year minimum policies.

jimgoose

djimi wrote: »

Surely at some point someone has to step in and start looking at what criteria insurers are using to assess risk and ask how is it relevant to the service that is being offered? Assessing risk based on payment method is no more relevant to motor insurance than assessing risk based on the day of the week that a claimant took out their policy.

Well this is it, you see. The statistical data will show all kinds of trends and whimsies depending on how you choose to look at them. I'm of the opinion that insurance companies only drill-down so far and stop. I suggest that, while the facts are the facts, always and forever, there may be more facts behind the apparent facts that are rather more useful and informative in terms of what's really going on.

Supergurrier

Duracell Bunny wrote: »

Motor tax is no different, you get a discount for paying 12 months in one go, as opposed to 4x3 months or 2 x 6 months. Ditto my gym membership. All businesses prefer cash up front.

Its not a discount its a poor tax.

If it was a discount it would mean you get X% off the base figure.

But you don't you have to pay X% over the base figure. Therefore in anyone's logic it is a penalty/poor tax/because fuk you peasant tax etc.

Read a good article in a paper yesterday where a journo worked out on his car alonebhe was paying 14 taxes to go 2 miles to his local rural shop (let's remember we are a rural nation overall with almost no public transport)

Yet all taxes passive motor and other flat rate are equal across the board regardless or salary/social status and access to credit. So in order to get the tax breaks available from taxing up front/buying a new car on co2 system and onlyhaving to nct every two years you need to have aa lot of money hanging around.

Real buddy boy system if you ask me.

Also @ OP 60e difference on 917 is not even near 25%

There is the flip side however. My da pays his insurance upfront always. This year he lost 7 months insurance by being with setanta and having to get reinsured. If he was paying by dd he would have saved 200+e

djimi

Supergurrier wrote: »

Its not a discount its a poor tax.

If it was a discount it would mean you get X% off the base figure.

But you don't you have to pay X% over the base figure. Therefore in anyone's logic it is a penalty/poor tax/because fuk you peasant tax etc.

You can look at it either way. My tax is €636 to pay yearly, or €716 a year if paid quarterly. You could say that I get a 12% discount of the base rate of €716 if I pay in one lump sum, or you could say that I pay a 12% premium of the base rate of €636 for paying quarterly; it really depends on what angle you want to take with your argument!

Cleveland Hot Pocket

djimi wrote: »

You can look at it either way. My tax is €636 to pay yearly, or €716 a year if paid quarterly. You could say that I get a 12% discount of the base rate of €716 if I pay in one lump sum, or you could say that I pay a 12% premium of the base rate of €636 for paying quarterly; it really depends on what angle you want to take with your argument!

Yes logically you could (correctly) take that stance.
However the way it is presented/advertized to the populus is that the rate is (x) and the rate when paid in installments is (x+y), therefore you can see why it would be (also correctly) considered as a poor tax

Supergurrier

djimi wrote: »

You can look at it either way. My tax is €636 to pay yearly, or €716 a year if paid quarterly. You could say that I get a 12% discount of the base rate of €716 if I pay in one lump sum, or you could say that I pay a 12% premium of the base rate of €636 for paying quarterly; it really depends on what angle you want to take with your argument!

It all boils to one thing. The official price on the motortax website for a years tax.

Which makes it a penalty.

Its like walking into a supermarket to buy 4 eggs and seeing a price of 99c listed.

Then being told at the counter "oh you are only going to eat one today and the other three during the week ? That's 119c so thanks"

jimgoose

Cleveland Hot Pocket wrote: »

...you can see why it would be (also correctly) considered as a poor tax

Quite so. In fact, you could say that usury in all its forms is a Poor Tax!

Cleveland Hot Pocket

jimgoose wrote: »

Quite so. In fact, you could say that usury in all its forms is a Poor Tax!

In western/modern societies we do not have a problem with "usury"
Money is rightly treated for the commodity that it is.

jimgoose

Cleveland Hot Pocket wrote: »

In western/modern societies we do not have a problem with "usury"
Money is rightly treated for the commodity that it is.

I don't have a problem with it either - just sayin', like!

surpy

Toyotafanboi wrote: »

but does it justify a premium increase to the tune of roughly 25% of the overall cost of the policy?
.

they have the interest rate included in the screenshot (22.58%)

oldyouth

djimi wrote: »

In fairness, this would not be an issue for insurers if they would get the finger out and sort a system of short term policies in this country. Its ridiculous that people have to work the system just to get around the 1 year minimum policies.

I agree. However, the majority of insurers here also operate in jurisdictions where short term policies are readily available. If they felt they could make money with it in Ireland, they would be all over it like a rash. Obviously, they feel otherwise.

visual

oldyouth wrote: »

I agree. However, the majority of insurers here also operate in jurisdictions where short term policies are readily available. If they felt they could make money with it in Ireland, they would be all over it like a rash. Obviously, they feel otherwise.

They also work in countries where insurance costs are much lower and aren't all over that

vandriver

I have no problem with the 7% service charge(which equates to 22%apr) but a 33% increase in the premium for the privilege of paying the 22 % Apr is shocking!

visual

Very poor regulation and no consumer representation in insurance industry gives a free hand with the only check being competition and customers shopping around.

blackwhite

I wonder would it be anything to do with the new Direct Debit rules that came in last February?

Under the new rules, not only can you cancel you DD, but you can reclaim any DD's paid in the last 8 weeks and the bank cannot question it.

I'm guessing that the insurers are trying to cover for a situation where someone gets a payout on a claim, cancels the DD and then makes a repayment request from their bank.

djimi

blackwhite wrote: »

I wonder would it be anything to do with the new Direct Debit rules that came in last February?

Under the new rules, not only can you cancel you DD, but you can reclaim any DD's paid in the last 8 weeks and the bank cannot question it.

I'm guessing that the insurers are trying to cover for a situation where someone gets a payout on a claim, cancels the DD and then makes a repayment request from their bank.

I think a lot of policies now state that where payments are being made in installments, the remainder of the policy must be paid before a claim can be paid out. Im not 100% though.

blackwhite

djimi wrote: »

I think a lot of policies now state that where payments are being made in installments, the remainder of the policy must be paid before a claim can be paid out. Im not 100% though.

That makes sense.

Although I'd hope they have the sense to make sure the payment is by some means other than by DD, otherwise the risk of a repayment demand being made by the customer still exists for 8 weeks.

Pov06

djimi wrote: »

I think a lot of policies now state that where payments are being made in installments, the remainder of the policy must be paid before a claim can be paid out. Im not 100% though.

That's a bit silly considering you would also have to include excess.

If your excess is 300 euro and you still owe 300 in DD, then you need to cough up 600 for something simple like a scratch

Toyotafanboi

Pov06 wrote: »

That's a bit silly considering you would also have to include excess.

If your excess is 300 euro and you still owe 300 in DD, then you need to cough up 600 for something simple like a scratch

well that's something you need to consider before you submit a claim. whether it's financially sensible to claim or not.

goz83

Supergurrier wrote: »

It all boils to one thing. The official price on the motortax website for a years tax.

Which makes it a penalty.

Its like walking into a supermarket to buy 4 eggs and seeing a price of 99c listed.

Then being told at the counter "oh you are only going to eat one today and the other three during the week ? That's 119c so thanks"

:pac:

Its a bit more like seeing a pack 4 eggs for 99c and choosing to only buy one egg, costing you 30c. Those receipts and till time cost money :P

djimi

Pov06 wrote: »

That's a bit silly considering you would also have to include excess.

If your excess is 300 euro and you still owe 300 in DD, then you need to cough up 600 for something simple like a scratch

The excess is there precisely to stop people making silly claims for low cost damage.

It makes perfect sense really; otherwise there is nothing to stop you claiming and then cancelling the policy/DD after the claim has been paid out. Obviously how much it affects you is down to how long into the policy you claim.

No Pants

I would consider paying by Direct Debit to be prudent considering the mess that was/is Setanta.

TOMP

djimi wrote: »

Surely at some point someone has to step in and start looking at what criteria insurers are using to assess risk and ask how is it relevant to the service that is being offered? Assessing risk based on payment method is no more relevant to motor insurance than assessing risk based on the day of the week that a claimant took out their policy.

It's not just car insurance, there is nobody looking out for the consumer across Irish society. They will protect a frog in a midlands bog, but nobody is looking out for odinary people, eg pyrite eg dozens of price increases over the years, and reduced service provided

oldyouth

Direct Debit, in the consumer world, is not a God given right. If a private business wants to price itself out of the market for people who want the facility then that is their business. What they are really saying is that they want to pass the risk of default and admin over to the client's credit union, bank or finance company.

Going Forward

Just got a renewal letter from Aviva and see that:

"payment method (one annual payment, or monthly DDs) is considered to be a rating factor similar to engine size, area, driving experience and will impact the amount you pay."

Not sure how driving experience can be likened or linked to payment methods?

Gazzmonkey

Yeah I got €60 off by paying the full amount up front.

I seen it as an incentive to pony up all the dosh in one lump sum.

Toyotafanboi

i started the very same thread a few months back , worth a look.
http://www.boards.ie/vbulletin/showthread.php?p=90445988

Going Forward

Toyotafanboi wrote: »

i started the very same thread a few months back , worth a look.
http://www.boards.ie/vbulletin/showthread.php?p=90445988

And there I was thinking I was unique☺..!

biko

I'm merging the two threads so we get the whole picture.

I understand that the company want all the dosh in one go, and that this will decrease the prize a bit. Bizniz stuff really.

Going Forward

biko wrote: »

I'm merging the two threads so we get the whole picture.

I understand that the company want all the dosh in one go, and that this will decrease the prize a bit. Bizniz stuff really.

I accept the business "incentive" explanation, but not the equating it so blatantly to driving risk etc.

Surely a one payment incentive idea should be a completely separate financial affair?

But them, seemingly, is the rules.....

slimjimmc

I suppose there is a risk that you miss a payment and have a collision before the insurer gets to formally terminate the policy and the insurer has to pay out a 3rd party claim which may not be recoverable from you.

Padraig Mor

Going Forward wrote: »

I accept the business "incentive" explanation, but not the equating it so blatantly to driving risk etc.

Surely a one payment incentive idea should be a completely separate financial affair?

But them, seemingly, is the rules.....

Because there's scummers out there who take out an instalment policy but cancel after the first payment but keep displaying the disc which makes it look like they're insured to the casual eye. As they're scummers, they're more likely to drive like a dick and crash. Hence, instalment payers have a higher insurance risk. That would be my take on it anyway.