At recent a CII/ABI hosted event at the Houses of Parliament, MPs, researchers and staff at Westminster got the chance to ask: “What’s going on with all this insurance business, then?”
Johnny Evans Chair of the All Party Parliamentary Group on Insurance and Financial Services led the questioning, which was mostly about flooding. Bankstone News lives on a nice little hill, so we won’t be writing about that.
But there was also some talk about motor insurance – and specifically (see last week’s issue) why car insurance is so effing expensive. Apparently MPs are getting a lot of post about this from their constituents, so they felt they really ought to ask.
Assembled industry experts were as one in concluding that insurers’ prices must reflect the risks and costs assumed. But Maggie Craig, who was playing the role of ABI director general, accepted that the insurance industry has not done a great job in explaining to its customers “where motor insurance premiums go and what the industry is covering.”
For every £400 premium paid, she said, £130 goes on Insurance Premium Tax, uninsured drivers, undetected fraud, and fat fees for personal injury lawyers, leaving just £270 with which to pay claims and try to earn an honest crust.
Young people are a problem she suggested: “Young men are sadly ten times more likely to kill or be injured in a crash. They are twice as likely to make a claim. Their claim tends to be three times more expensive, and, if it is a young man driving with three of his mates in the car, it triples the chance of the car crashing.”
Presumably if you continue adding further mates to the car, crashing becomes more and more likely, eventually becoming a statistical certainty (though, of course, some version of Zeno’s Paradox might apply.) It is perhaps for this reason that insurers and lawmakers are apt to set restrictions on maximum passenger numbers.
Craig went on to emphasise that insurance is important. The industry manages investments worth around £1.6 trillion, she bragged, “which is something like a quarter of the UK’s total net worth.”
Very true, chipped in CII supremo Sandy Scott: “Insurance is the DNA of our society today, because if you don’t have it, nothing works.”
Bankstone News is certainly hanging on to its DNA – and making sure it is properly rewarded. Can’t get a thing done without it.