Insurance products for UK residents

Car Insurance. Has the internet had it?

Yet another report on the rising cost of car insurance. However it is probable that the main reason for the increase is not legal costs but the means of buying car insurance. The internet! Or rather aggregator web sites.

Insurance companies have statistics showing that loss ratios can be 50% higher for policies bought through the internet than from customers who buy through a local insurance broker. There are several reasons.

  • People are more likely to lie to a computer than to a human being (especially face to face).

  • Repeatedly amending risk details to try and get a cheap car insurance quote is much harder to spot via a computer than via a human!

  • The only benefit the internet can offer is a cheaper price. Insurance providers cut cover and benefits (and pay out less on total loss claims!) so that they can quote a cheaper price. The best insurance policies and advice is provided by Brokers.

  • Insurers have been locked into contracts with wholesale brokers and been unable to amend terms to cater for the increase in claims. These deals are now ending.

  • Many car insurance suppliers on line build into their model 'referral fees' from solicitors for handling their customers claims for compensation. It is in their interest as a supplier to ensure that there are as many personal injury claims as possible.

  • There are other problems: lack of cover, lack of personal service that seem endemic with companies selling insurance online. Make sure you can speak to someone who is knowledgeable at the end of the phone.

  • If you want to know how bad your insurer is - have a look at an insurance review website - and be prepared to be shocked.

I would not be surprised if in 18 months the number of companies offering car insurance online has much reduced and that rates will be much higher than through the broker market.

Please feel to call us on 01388 607105 during office hours and we'll provide you with a friendly quote for car insurance, explain any queries you may have about your current policy, or our recommended one, and look after you should you need any help.

For more information contact JB Portwood

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