Is there such a thing as a poor rather than rich insurance company?
One of the reasons I ask, if I heard this correctly in the first place, is because I distinctly remember reading that insurers hadn’t made money from car premiums for a good few years; all to do with accident claims and associated legal expenses apparently.
But this clearly isn’t the whole story as in the case of Admiral who have just declared pre-tax profits from January to June 2011 of £160.6m, up by a dramatic 27% compared with the same period last year. And total sales for these six months rose by more than 50% to pass the £1 billion turnover mark representing 3.15 million customers, up from 2.37 million in 2010.
Nowadays Admiral is a global insurance business, but these are the brand names most of us will recognise in the UK…
Admiral Typically for those who pay higher than average premiums such as young drivers and those living in cities with higher risk ratings. Also offers multi vehicle policies.
Bell Mainly for drivers with a Zero no claims bonus.
Diamond As the song goes ‘Diamonds are a girl’s best friend’ and this Diamond sells insurance products to women.
NB: Whilst premiums are said to rise for females to meet EU equality demands from December 2012, will they need to when young men (the expensive risk) are unlikely to want to buy a product designed for females? So there is no reason to common-rate premiums surely…
elephant.co.uk A wholly online car insurance service with lower overheads and prices as a result.
Confused.com One of the best known UK insurance comparison websites including online quotes from all the major car insurance websites.
As impressive as all this profit is, we are told that Admiral’s loss ratio has increased significantly ie the amount paid out in claims divided by the amount collected in premiums to 77.5% in 2011 from 67.8% in the same six month period last year.
Could this be down to our bad weather last winter I wonder?
Needless to say I don’t know if this ratio is calculated before pre-tax profits are declared or after but I certainly wouldn’t describe Admiral as a ‘poor insurer’ which ever way the story gets told. But it’s likely that other insurers might be considerably less profitable because they aren’t as well run or as ambitious or they don’t have their own comparison website.
In which case I don’t think we motorists should be expected to shore up mediocre insurance providers with increased premiums. Let’s hope that the profitable businesses can afford to offer us more competitive premiums as a result; that’s what competition should be all about and if some can’t make the grade then it’s highly likely we won’t need them in future.
By all means explain the mechanics of all this to me if I have this wrong in my mind because the insurance industry is not as squeaky clean as it might be in my experience, especially when it comes to accident claims, high excesses and associated referral services.
Fortunately profitable insurance providers like Admiral can afford to lead the field through best practice and I hope they do just that. My particular interest is in seeing low motor insurance premiums for young female motorists in recognition of our (usually) safer driving record.
So I particularly object to the EU telling us what to do in our country as in ‘you must charge women and men the same insurance premiums’ masquerading as gender equality but which flies in the face of underwriting logic based on risk and experience.
Whatever makes the EU think they know what’s best for us; better than we know for ourselves?
FOXY