Confused? Go Compare the Meerkat!

I’ve just had to renew my car insurance, and it was a rather pleasant experience. Well,  more so than it was buying it last year, anyway – because digging deep and forking out large quantities of cash for something that may or may not be worth it can never really be described as pleasant. Because car insurance here is expensive.

In South Africa, I was paying the equivalent of about £40 a month to insure two cars (one of them driven by a woman!). On arriving in the UK, I purchased one rather staid car, with a value of £7,500, and found myself having to haul out £1,080 to insure it for a year. Contributing to that was a lack of no claims discount – it turns out that this is non-transferable from outside the UK. But even so – that’s rather steep.

This year, my insurance company wrote me a letter to say that my premium for the year would be £1,425 – an increase of 32%! So naturally, I went shopping around. And the place to go shopping around is one of four price comparison websites, which advertise their services loud and clear on every TV channel (bar the BBC, which doesn’t have any adverts) every day and every night. I haven’t done any research on this (I know, my standards are slipping) but I swear that you can’t watch two hours of any non-BBC TV channel without seeing an advert for one of these four. Or for the other companies that don’t put themselves on price comparison websites, and take great pride in telling you so, repeatedly. Like Directline and Axa. And the adverts are, naturally, of such a phenomenally high quality that you’re glued to the screen with rapturous glee.

Or not. Here’s a sample:

Compare the Market – get a free Stuffed Meerkat – Young Man!
Go Compare! – The French
MoneySupermarket – Geoff is Epic (ok, ok, this one is actually rather good…)

Anyway, through, I managed to get a reasonable deal – identical terms, but for £504 for the year. Sweet. I saved 4 times as much as Geoff, but somehow, I didn’t feel quite so Epic. No inflatable alligators under my arm.

But I got to thinking – why is insurance so expensive? Well, one reason it’s not is because it’s compulsory. You’re forced to have insurance for your car, unless it’s never on the road (which also gets you out of paying car tax, which is another story). If you don’t, the DVLA people track you down by using the CCTV cameras which are on roads everywhere, and take your car away and crush it.  Well, they give you a warning first, but still – it’s not friendly. But obviously, the more people that have insurance, the cheaper it will be. Or you’d think so, anyway.

So getting to the point at last, the reason for the high premiums is a creeping trend towards a compensation culture. The sort of “You touch my car, I sue you” type attitude. This isn’t helped by a legal system which is moving towards no-win no-fee cases, and hefty referral fees. The result is that if you’re in an accident (no matter how minor), you can expect to get a call from a legal company offering to try and get a compensation claim. No risk to you – you only pay them a fee if they win the case. And since injuries like whiplash are impossible to disprove, and in an accident situation, there’s always *some* blame to go around, it’s easy money. Search for “Whiplash Claims” on to see what I mean. Now add in the tangle of lawyers involved creating a swathe of legal fees (even though they’re fixed, it’s at a rather high level) – the result being that claims are inflated, and so are the premiums.

But at last there’s a bit of a crackdown on this. The government has asked for a review of the industry, which came up with a number of suggested reforms. And at last they seem to be introducing some of those recommendations (although too slowly for some). Hopefully it will enable the litigious trend to be reversed before it gets anywhere close to what the US has.

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3 Responses to Confused? Go Compare the Meerkat!

  1. Brad Nixon says:

    Is there any irony in reading complaints from an actuary about insurance rates? Jusk asking.

    • Nick says:

      Ha! I’m a Life actuary, not in Casualty. It’s a lot simpler in our part of the universe. But although no irony was intended, I have to admit that the shoe is pretty close to fitting.

      As an aside, I came across this in Doctorow this morning: “I hung my head. I knew when I was licked. As soon as someone in authority starts talking about insurance coverage, you know that you’ve left behind reason and entered the realm of actuary.”

  2. Jimmy says:

    I really like what you are saying, and am glad I found your website. Please keep it up.

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