Big Brother

[johnatg]

Apologies that this has little or nothing to do with Lexus - but I came across the article linked below this week.

I received an alert on my credit report (CreditKarma) that a 'soft insurance search' had been carried out, so I went looking for more information.

See what I found - and be afraid - be very afraid!

New or Known Customers Confirmed - LexID® for Insurance Launches at Point of Quote for U.K. Insurers (lexisnexis.co.uk)

[Phil xxkr]

1 hour ago, johnatg said:

Apologies that this has little or nothing to do with Lexus - but I came across the article linked below this week.

I received an alert on my credit report (CreditKarma) that a 'soft insurance search' had been carried out, so I went looking for more information.

See what I found - and be afraid - be very afraid!

New or Known Customers Confirmed - LexID® for Insurance Launches at Point of Quote for U.K. Insurers (lexisnexis.co.uk)

John, sorry to say but look at Trust pilot for Credit Karma reviews 😕

[johnatg]

Nevertheless the search was made - I received insurance renewal documents a couple of days later!

It's LexisNexis I am flabbergasted by.

[Herbie]

2 hours ago, johnatg said:

Apologies that this has little or nothing to do with Lexus - but I came across the article linked below this week.

I received an alert on my credit report (CreditKarma) that a 'soft insurance search' had been carried out, so I went looking for more information.

See what I found - and be afraid - be very afraid!

New or Known Customers Confirmed - LexID® for Insurance Launches at Point of Quote for U.K. Insurers (lexisnexis.co.uk)

The stupid thing is, there's really no need for all this data mining and probing to give us "a smoother quote journey" at all.

Although we don't buy based on cost all the time, most of us, if offered a decent and reasonable quote, would stay loyal to x, y, or z company. It's when we feel we're being ripped off that we feel the need to go elsewhere and start another "quote journey" with some other company.

[Linas.P]

Ohhh don't even get me started... I think this is scandalous and many people are only finding that out now. They always check your credit score when you quote for insurance and yes - your insurance price depends on your credit score!

Once I had false report on my credit score and wouldn't have known about it if not for making random insurance quote, I was just browsing for the cars and checking how much it would be to insure and suddenly quote came back for triple the price I was expecting... don't remember exactly what prompted me to check my credit score, but like you I have noticed searches by insurance company and basically put 2 and 2 together. As soon as I reported the mistake on credit score and it was fixed insurance price went back to normal. And it wasn't like some sort of CCJ or something, I believe it was just a single late payment on the account which was actually closed. 

I mean I was always very upset about how insurance works in UK, all irrelevant questions which they ask in the quotes for no apparent or driving related reasons and how it is insurance that decides basically who can drive and what cars. So this really was just to top it all off... not only they ask if you married or have kids and where you work, but now apparently even if you struggle financially they will knock you further down without even asking. And by the way... I am assuming many people who never lived outside of UK thinks that this is how it is... but no... it isn't like that elsewhere. I had insurance in other countries and different countries have different requirements, but mostly they only ask about driving related stuff. Sure most of the time they do necessary data mining themselves, UK is just a little bit backwards where apparently they need to ask you how many years you have driving license, not really sure why can't they just check it themselves, but I have bought insurance if few other countries where the only two things you need for quote is A) the car registration and B) the driving license number.... well and we can say C) the payment details. That is all they need... they don't need to know where you work, or how many kids you have, or where you park your car. Sure enough - car registration tells them everything they need to know about your car, age, mileage, engine, previous damage, value etc. your driving license gives them everything they need to know about you - where you live, your age, how many years you have the license, in other countries there are no point system and finally payment details tells them that you are who you say you are. The UK quote with 4 pages and 100 questions is utterly ridiculous and now you have credit check on top of that... and by the way it is not a new thing... I don't know how long this was the case, but the even I described was like 10 years ago. Any by the way - not only there is no reason for this data mining, but I reckon it should be illegal to ask anything that isn't relevant.

As for credit score itself - I honestly terrified of it. We always think that China is backwards country with their "social credit", but the fact is our own countries could do exactly the same with credit score, they already have all the information there, sure they don't use it for the same purposes, but they could if they wanted. And by the way in US... it is actually quite similar to China already - landlords refuse rent of evict tenants if credit score drops, employers check it and refuse work, even their already expensive medical insurance can go-up if you credit score is low... Sure China goes step further - prevents people from travelling or working etc. but my point is - data is there already, it is just a matter of time when until it gets abused.

[johnatg]

Indeed

13 hours ago, Herbie said:

The stupid thing is, there's really no need for all this data mining and probing to give us "a smoother quote journey" at all.

 

Herbie - it's not for our benefit. LexisNexisID is a database and surveillance service for Insurance companies and we are the ones being surveilled.

Perhaps Linas' apoplexy is a bit OTT but he's quite right.

14 hours ago, Phil xxkr said:

John, sorry to say but look at Trust pilot for Credit Karma reviews 😕

Well I did, but I don't recognise any of the criticism posted there. (And 65% or the reports give it 5* - it's mostly dissatisfied people who leave TrustPilot reviews so take them with a pinch of salt)

Fact is, your credit score is kept by a number of companies and it's as well to check on it from time to time. I only use the free services and CreditKarma is generally more up to date than ClearScore and gives you more information than Experian. And BTW - ClearScore and Experian have not reported or recorded (AFAIK) the soft insurance search. But they all use different Credit databases.

LexisNexis is a whole new layer of data surveillance - gives the insurance companies much more information than just your credit score because it links a lot more data. The credit check could be done (and is) by the insurance companies but LexisNexis is a whole new ball game. And it's not just for car insurance - that's the tip of the iceberg - have a peruse of their site. It's not aimed at us - the public, or should I say, victims.

[Linas.P]

Well LexisNexis is just background checking company... I have done integration projects with their database, but in principle what they are for is checking if person is politically exposed, have adverse news about them, have criminal records etc. These checks makes sense for lending, mortgages opening investment accounts, but I just can see relevance to the insurance. 

As for the search appearing only one one of 3 databases, it is possible that they only checked the one and not the other two, this is part of their standard service level, checking more databases costs more. 

Now to if we want to give them benefit of the doubt, the integration could be simple check of address and LexisNexis then uses credit score database to confirm it. However, I highly doubt it. It would be equivalent of buying 300t press to drive a nail into plywood i.e. LexisNexis is extensive background checking company and paying them money just to confirm residential address would be waste of money and unnecessary complicated. So I have my bets on insurance companies just hoarding data under false pretence of preventing insurance fraud and then misusing it to raise insurance prices to anyone who they deem undesirable. 

But there are some good news on horizon - so called Consumer Duty legislation is coming later this year and insurance companies will have very hard time justifying what they are doing. I am certainly looking forward to challenge them on how exactly they comply with it. 

[Phil xxkr]

18 hours ago, Phil xxkr said:

John, sorry to say but look at Trust pilot for Credit Karma reviews 😕

Well this is interesting 🤔, TP has them at 2.5 stars yet claim 65% 5 star reviews. I admit that I only looked at the first few pages of the most recent reviews and they look pretty abysmal. But your note did encourage me to try Equifax. Fortunately I have no need for cards or loans but can see where it could be useful for some people. Thank you for that. 👍

[Phil xxkr]

1 hour ago, Linas.P said:

Well LexisNexis is just background checking company... I have done integration projects with their database, but in principle what they are for is checking if person is politically exposed, have adverse news about them, have criminal records etc. These checks makes sense for lending, mortgages opening investment accounts, but I just can see relevance to the insurance. 

As for the search appearing only one one of 3 databases, it is possible that they only checked the one and not the other two, this is part of their standard service level, checking more databases costs more. 

Now to if we want to give them benefit of the doubt, the integration could be simple check of address and LexisNexis then uses credit score database to confirm it. However, I highly doubt it. It would be equivalent of buying 300t press to drive a nail into plywood i.e. LexisNexis is extensive background checking company and paying them money just to confirm residential address would be waste of money and unnecessary complicated. So I have my bets on insurance companies just hoarding data under false pretence of preventing insurance fraud and then misusing it to raise insurance prices to anyone who they deem undesirable. 

But there are some good news on horizon - so called Consumer Duty legislation is coming later this year and insurance companies will have very hard time justifying what they are doing. I am certainly looking forward to challenge them on how exactly they comply with it. 

Well I recall years and years ago Lexis coming about. It was to serve the legal community with easier access to Halsburys statutes of England and Butterworths precedents and other aspects of a comprehensive legal database in the nascent digital age. Perhaps with ChatGPT they are looking to widen their usefulness? 

[Linas.P]

6 minutes ago, Phil xxkr said:

Well I recall years and years ago Lexis coming about. It was to serve the legal community with easier access to Halsburys statutes of England and Butterworths precedents and other aspects of a comprehensive legal database in the nascent digital age. Perhaps with ChatGPT they are looking to widen their usefulness? 

Not sure about ChatGPT, but they were the go-to background checking agency for some time now. I personally have no issue with LexisNexis, I just don't understand why background checking would be necessary when insuring the car - or for that matter another 100 irrelevant questions we being asked. 

[Illogan]

19 hours ago, johnatg said:

Apologies that this has little or nothing to do with Lexus - but I came across the article linked below this week.

I received an alert on my credit report (CreditKarma) that a 'soft insurance search' had been carried out, so I went looking for more information.

See what I found - and be afraid - be very afraid!

New or Known Customers Confirmed - LexID® for Insurance Launches at Point of Quote for U.K. Insurers (lexisnexis.co.uk)

Yup, my father would be incensed, for his belief that 'personal privacy was paramount'.

However, the world has changed enormously since the creation of computers and the internet, just as your mobile 'phone provider can track your conversations and your location (and has that history on file too), credit card companies, your bank, PayPal (et Al), your local Council, DVLA, your GP, NHS, HMRC and the Police (for some!) all have instantly recoverable records of all of us.

IF data extraction results in fairer processes, decisions and quotes, and those customers whom, what shall I call it, "cheat the system", are rejected, caught out or disadvantaged. I'm all for that.

 

[Phil xxkr]

1 hour ago, Linas.P said:

Not sure about ChatGPT, but they were the go-to background checking agency for some time now. I personally have no issue with LexisNexis, I just don't understand why background checking would be necessary when insuring the car - or for that matter another 100 irrelevant questions we being asked. 

Because these firms are trading your touch points with others, remember John you are the commodity. And remember Cambridge Analytica who really understood this stuff 

[Linas.P]

1 hour ago, Illogan said:

IF data extraction results in fairer processes

Well - yes that exactly. However, we can quite clearly see it doesn't make for fairer process, because for it to be fairer process it must only contain data relevant for that process. I have argued this case before that data not related to driving, like profession, marital status etc. should not be allowed to be asked and this data should not be aggregated. Likewise I would argue that for normal car insurance extensive background check like the one LexisNexis does, or checking credit score should not be needed, nor allowed.

For example I don't believe that charging somebody with Fair credit score more than somebody with Good or Excellent makes it fairer. Or for that matter person with Bad credit score (for whatever reason) should be charged more - they are already struggling financially, so who is insurance companies to decide to punish them even more? Sure we can argue that person who is struggling financially may be less focused when driving or may not be able to spend as much on car maintenance... but why that is insurance company problem?! So this I think is exactly type of data bloat which is not necessary. It is not for insurance company to decide whenever car is road worthy, we have MOT for that and likewise it is massive stretch to assume that somebody who is poorer or has financial difficulties will be worse driver... it is guess at best.

And there it goes directly into this point:

7 minutes ago, Phil xxkr said:

Because these firms are trading your touch points with others, remember John you are the commodity. And remember Cambridge Analytica who really understood this stuff 

Agree... and that is not right, because insurance company job is only to provide insurance for your car. So they should collect information which is linked to your driving to estimate risk/liability and not a tiny bit more. It is not their job to have database about everyone and everything, then use it to explicitly target customers with different products or even use some of the meta data to raise the prices... perhaps they can use client occupation as reason to exploit them e.g. doctor who is likely to have high salary may not be financially savvy, so they can charge them more than say accountant... this sort of think should not be allowed and to be fair its already not allowed (it is part of Treating Customers Frailly regulation, which was kind of vague). 

That said this is exactly what they doing - they collect way too much data to justify exploitation and hiking prices for arbitrary reasons, and even worse they don't even disclose what makes your price go up or why. 

Well as I said this should end later this year, but it remains to be seen... I am already drafting my complaint! 😄  

[Phil xxkr]

16 hours ago, Linas.P said:

Well - yes that exactly. However, we can quite clearly see it doesn't make for fairer process, because for it to be fairer process it must only contain data relevant for that process. I have argued this case before that data not related to driving, like profession, marital status etc. should not be allowed to be asked and this data should not be aggregated. Likewise I would argue that for normal car insurance extensive background check like the one LexisNexis does, or checking credit score should not be needed, nor allowed.

For example I don't believe that charging somebody with Fair credit score more than somebody with Good or Excellent makes it fairer. Or for that matter person with Bad credit score (for whatever reason) should be charged more - they are already struggling financially, so who is insurance companies to decide to punish them even more? Sure we can argue that person who is struggling financially may be less focused when driving or may not be able to spend as much on car maintenance... but why that is insurance company problem?! So this I think is exactly type of data bloat which is not necessary. It is not for insurance company to decide whenever car is road worthy, we have MOT for that and likewise it is massive stretch to assume that somebody who is poorer or has financial difficulties will be worse driver... it is guess at best.

And there it goes directly into this point:

Agree... and that is not right, because insurance company job is only to provide insurance for your car. So they should collect information which is linked to your driving to estimate risk/liability and not a tiny bit more. It is not their job to have database about everyone and everything, then use it to explicitly target customers with different products or even use some of the meta data to raise the prices... perhaps they can use client occupation as reason to exploit them e.g. doctor who is likely to have high salary may not be financially savvy, so they can charge them more than say accountant... this sort of think should not be allowed and to be fair its already not allowed (it is part of Treating Customers Frailly regulation, which was kind of vague). 

That said this is exactly what they doing - they collect way too much data to justify exploitation and hiking prices for arbitrary reasons, and even worse they don't even disclose what makes your price go up or why. 

Well as I said this should end later this year, but it remains to be seen... I am already drafting my complaint! 😄  

You raise the incomprehensible (to me) idea of equality! If a man and a woman shall be treated equally irrespective of statistical risk then what relevance is say my occupation? In fact why bother with risk at all if we are all equal? 🤠

[Phil xxkr]

On 4/27/2023 at 6:31 PM, johnatg said:

Nevertheless the search was made - I received insurance renewal documents a couple of days later!

It's LexisNexis I am flabbergasted by.

It's everywhere John. I use Duck Duck Go as my search engine. They recently added a VPN like add-on which blocks tracking attempts from your apps! In the last 7days almost 21000 in my case 😱😱😱. Biggest culprits, Google, Weather app, Octopus Energy and incredibly over 17000 from Talk Radio 

[Bluemarlin]

23 hours ago, Linas.P said:

Sure we can argue that person who is struggling financially may be less focused when driving or may not be able to spend as much on car maintenance... but why that is insurance company problem?! So this I think is exactly type of data bloat which is not necessary. It is not for insurance company to decide whenever car is road worthy, we have MOT for that and likewise it is massive stretch to assume that somebody who is poorer or has financial difficulties will be worse driver... it is guess at best.

insurance company job is only to provide insurance for your car. So they should collect information which is linked to your driving to estimate risk/liability and not a tiny bit more.

Isn't that the point though. Insurance companies assess risk, and then price accordingly. That risk assesssment comes from actuarial data analysis and so, the more data you have, the more accurately you can assess risk. Historically it might have simply been age and car based, but then expands to postcodes, driving record, occupation, as they collect more data. It may transpire that poorer people have fewer accidents, or their claims are lower, and so they might be a lower risk. Insurance companies don't care what the detail is, just the risk profile. So, if it transpired that blue eyed people made more claims than green eyed people, they wouldn't care why, and only that they cost more to insure.

In short, insurance companies are esssentially trying to predict the future and then bet on the outcomes, and the collection of as much data as possible, assuming you have the ability to process it, is an aid to that. Of course some of that data might be irrelevant, but you don't know until you process it.

Either way, with the growth of AI,  and quantum computing, the ability to process massive amounts of data is only going to increase, and with it the demand for more and more data on people, from every area of commerce, medicine, government and law enforcement.

[Linas.P]

3 hours ago, Bluemarlin said:

Isn't that the point though. Insurance companies assess risk, and then price accordingly.

So, if it transpired that blue eyed people made more claims than green eyed people, they wouldn't care why, and only that they cost more to insure.

In short, insurance companies are esssentially trying to predict the future and then bet on the outcomes, and the collection of as much data as possible, assuming you have the ability to process it, is an aid to that. Of course some of that data might be irrelevant, but you don't know until you process it.

Either way, with the growth of AI,  and quantum computing, the ability to process massive amounts of data is only going to increase, and with it the demand for more and more data on people, from every area of commerce, medicine, government and law enforcement.

Well I see your point (or for that matter point of insurance companies), but that is where I disagree - the more RELEVANT data they have, the more accurate is their assessment. The more IRRELEVANT data they have, the more worse is their assessment. Basically "shait in = shait out" and shait is shait - there is no way of telling individual driver risk from their eye colour. But here is the other thing - if that would be true, then insurance in UK should cost on average the same as elsewhere, just the gap between cheapest and most expensive would be higher. However, that is not the case - UK car insurance is much more expensive, especially for certain undesirable groups - like young people, or city delvers (my conspirator mind would say that is no coincide, but there is no proof), yet it is still slightly more expensive for everyone else. So unless the data they are gathering means that UK overall is much more dangerous place to drive (which I don't believe is true, as UK has one of the safest records in the world), then something is wrong with their data. And just one note here - my data on insurance cost is anecdotal, based on how much family members and friends are paying in other countries. One thing which is very obvious is that young people are paying ridiculous amounts for insurance in UK, I think Ireland is similar, but in rest of Europe prices are fairly reasonable. And by reasonable I mean young person the day after they get their license pays say 4 times the price than their parents with 20 years experience, if they get little shaitbox, then they may pay only double - in UK they pay 10 or 20 times as much regardless. 

Regarding second statement, perhaps they are trying to tell the future, but that is exactly what they have no right of doing it and should be prevented from. They are no future tellers, they insures - so they should stop guessing. Most importantly it is impossible to tell the future and using past data is worst thing for that - so again insurance companies should not be allowed to do it. Some general trends may be true - like more expensive car is more expensive to fix, less experienced driver (regardless of age, because remember age discrimination is illegal) is more likely to crash and powerful cars and young inexperienced drivers don't mix together. But by the time they start asking how many kids you have is way past it. I think I would compare it with legal concept of "innocent until proven guilty", I think insurance companies should be forced to respect the same. What they doing instead is charging people up-front for accident which may have

And you example about eye colours is very similar to something I have said myself in the past about hair colour - this is not reliable way of assessing risk, hence shouldn't be used... no different to occupation or family status. Now we partially got rid of some of this non-sense with discrimination act, but I think it needs to be expanded... to be fair GDPR already technically covers it (data minimisation concept and disclosing the data purpose), sadly it is not enforced.

Now why I hate insurance companies so much? I don't - I just consider they should be closely monitored, because insurance is mandatory. If it would be optional then who cares, if you want you can insure if you don't want don't insure, if they tell you ridiculous prices they can go to hell. Now everyone are legally compelled to insure, so there must be a process to make sure insurance is FAIR... and it isn't. I would even require them to have price caps (like facilities companies) or better profit caps (which is much better than price cap).

[Linas.P]

11 hours ago, Phil xxkr said:

You raise the incomprehensible (to me) idea of equality! If a man and a woman shall be treated equally irrespective of statistical risk then what relevance is say my occupation? In fact why bother with risk at all if we are all equal? 🤠

Well sorry mate - that is law, they have to be. So don't shoot the messenger. Do I think insurance companies still discriminates against gender - yes they do and they need to be slapped dead for it... but won't happen.

As I said above - if insurance would be optional, then I honestly would not care how they came-up with their prices. But it isn't so I do. 

[GMB]

No, you are overthinking it. Frank Zappa got it right when he stated that they just want to rob and cheat you. End of!

[Bluemarlin]

I agree with you Linas, that it's relevant data that matters. The trouble is one doesn't know what data is relevant until after you've processed it, as human beings are terrible at assessing risk. For example, immediately after 9/11 Americans stopped flying and drove instead, which was not only statistically less safe, but resulted in a higher number of traffic accidents. Armed with sufficient data, insurance companies could have predicted that.

The eye colour example is a good one too. Imagine if blue eyed people did crash more. That may just be a weird coincidence, however it might be discovered in the future that there's some genetic anomaly that makes blue eyed people more prone to taking risks. Either way, the reason doesn't matter, as it's only the outcome that matters to an insurance company.

I know you think past data is no good for predicting future events, but did you know that bookmaker odds on horses, which are largely based on past data, are scarily accurate? For example, over the long term, even money bets win half the time, and 2-1 bets win one in three. This is true right up the range until you get to the outsiders, so past data is a powerful component of future prediction.

So yes, their job is to predict the future, that's what they've always done, and have done so by assessing risk based on historical outcomes. It's no different to what lenders do with credit assessment, investors do, and bookmakers with sports events. They all take past data, mix it with current and future variables, and come up with a statistical likelihood for a given outcome. Besides, you even do it yourself. If you're looking for an insurance company, and one has a history of poor reviews, then you'll judge them on historical data, and either avoid them, or take the risk if the price is low enough. It's the same calculation and decision making process in reverse.

I do agree with you though that some no doubt abuse this, and take advantage of certain markets or demographics, but that has always happened, in many industries, regardless of data collection. So yes, whilst it's possible for some to abuse data, it doesn't change the fact that the more data you have, the more accurately you can predict future events. This is why data is now considered to be the world's most valuable asset, even more so than oil.

Yes, it will be exploited, but it works both ways as, whilst some may exploit it to use against us, it's the also the same collection and analysis of data that has given us comparison websites, so that we can best choose who it is that's exploiting us 🙂

[Linas.P]

The first part is purely philosophical discussion (and indeed it is me who started it). As I have already said - if insurance would be optional, then I really do not care how they come-up with the price. We can calculate risk as well and we may come to the conclusion that paying £8000 for insurance is not worth it. Government took away our right to make this choice and I would think it would be just right to take away insurance companies ability to abuse us by trying to incorrectly predict the future. So in short I just consider that current arrangement is not fair... and sure some can make a point that many things in life are not fair and insurance is only once of them. Idealist in me would answer that this should not stop us trying to improve things, otherwise we would still have slavery and kings... ooops on that last one!

That said to more practical question - I don't understand why insurance companies in other countries are happy to take just registration and license number, but in UK they somehow need to know everything short of eye colour and hair colour? I really don't know the answer to this, but if I would just speculate, then they do this because they can! So again I would just argued they should not be allowed. 

I have no problem with objective risk assessment, by which I mean factors that increase the risk could be - more expensive car, less experienced driver (not age, but only experience), more risky area, more risky car model, past accident history and that is about it. All these things can be figured out by license and registration, but most importantly the calculation has to be 100% transparent e.g. if they say - "you have Lexus RX, which on our database is frequently stolen model and for this reason your insurance price will be 25% higher, unless you fit the tracking device", "you are young driver considering power/value of your car, your insurance will be 37% more expensive, unless you going to take PassPlus and drive with BlackBox for 3 months". Currently one person pays £5000, another £500 and nobody know why... the way risk and price is calculated is completely opaque. I am not saying price of insurance should be simply cheaper - I am just saying that there must be "base price" for the insurance and then each factor which increases the risk should be listed, should have specific amount associated with it and where possible mitigation. But as I said - this should come to the end this year as new legislation going to force insurers to justify everything, but I suspect they going to try as hard as they can to play the system. 

If anyone still reads and wonder how is this related to the topic, then simply ask yourself - "how many people know that credit score is part of your insurance cost? and that people with lower score pays more for insurance". In short - whole reason for this thread exists the is lack of transparency in insurance products. I doubt John would have made this topic if at the time of insuring one would get a pop-up saying "now we will run a soft credit check on your credit file to determine your credit score as it may impact your insurance, we are offering 20% discount for clients with Excellent credit score. Do you agree that we check you score?"... and at this point you may be "yeah mine is excellent, why not", or "no thanks I know mine is fair so I don't need to give any extra info for discount I won't get".

[LenT]

On 4/30/2023 at 5:57 PM, Linas.P said:

If anyone still reads and wonder how is this related to the topic, then simply ask yourself - "how many people know that credit score is part of your insurance cost?

Well I didn't for one. Linus.  Not having any need for credit, I always regarded my credit score as irrelevant to me.

But now that the subject has been raised, I can see why it would be useful data for all Insurers - including Motor Insurers.  In fact, they might even be remiss if they ignored it.

For most people it will give some indication as to their financial stability and reliability - in much the same way as, for example, residing at the same address for many years.

Looking at the LexisNexis site, I see that they have a range of potentially interesting White Papers.  (But you have to register to access them and I hesitate to do that in case it affects my score.)

However, in 2013 they commissioned an Independent survey into 'UK Consumer Attitudes on Motor Insurance.'   The headline results showed that:

1. 40% think Premiums are too high - well, who would've thought!

2. 29% admitted naming someone else as main driver to reduce the Premium.

3.  15% think it's acceptable to misrepresent their NCD to get a better Premium.

4.  13% would lie about their address to get a better deal.

5.  49% think claims should be paid even if inaccurate information is given.

6.  67% think Motor Insurers are parasites that exploit the motorists' legal obligation to have insurance, take every dubiously moral opportunity to avoid paying legitimate claims and thus deserve to be treated with contempt.

(To be fair, I may have made this last figure up.)

But from the Insurers' POV, the survey highlights the risk factors they face and helps to justify the acquisition of personal data that gives further insights into their customers.

That a significant percentage of those customers are prepared to deceive them is surely a factor that they have to consider.  And if your surmise that 'poor people' are less likely to maintain their vehicles, replace worn tyres and so on, is correct then they are an enhanced risk.

The drivers who really don't care tend not to bother with Insurance at all!  And they increase your Premiums when they hit a driver who has to make a claim!

Let's not overlook the fact that Motor Insurance is primarily to compensate other people for your mistakes.

However, the main problem with this credit-influenced approach is that the rating can be wrong if it is based on incorrect information.  It is in my case!  

My feeling now is that Insurers may well have a responsibility to conduct any legal check that will help them refine the risk a driver presents.  Equally, they should make it very clear that these checks are being made.

That in itself should deter the devious applicant and thus help to keep Premiums down. 

[Bluemarlin]

I'm not sure that insurance can ever be "fair", in a true sense, in that it's aggregated such that some pay for a service they might never use, whilst others are paid out more than they pay in. That's the nature of it though, as insurers can't pay out claims unless they're making money from those who don't claim.

The only alternative would be some kind of flat rate insurance for everyone, but that woudn't be fair either, as those with lower risks will be even more heavily subsidising those of greater risk. Any middle ground, such as doing it simply by car, or age range, is just a means of profiling and, if you're going to do that, you may as well do it with as much data as possible.

Possibly one way to minimise people being ripped off is to ensure insurers don't wriggle out of claims, maybe by having an independent body that assesses claims and decides if and how much should be paid out. That said, on the couple of times I've had to claim on insurance (car and house) they've paid out quickly and fairly.

Maybe the bigger problem is the cost of cars, and the increasingly high cost to repair them, along with the ridiculous cost of loan cars. My previous car was hit by a lorry and had a few scratches and a broken windscreen. I insisted on a repair instead of the computer response of writing the car off, and the repairs came to £3k, whilst the loan car was billed to the third party insurer at around £8k for the 10 days I had it. I'd happily see loan cars being restricted to a maximum charge of say £50-100 a day if it meant lower premiums.

I don''t know what the answer is, but don't think that greater use of data is the biggest problem. In fact, if used properly, it should  provide a more accurate risk profile, and so premiums that more truly represent individual risk.

[Linas.P]

On 5/2/2023 at 11:04 AM, LenT said:

6.  67% think Motor Insurers are parasites that exploit the motorists' legal obligation to have insurance, take every dubiously moral opportunity to avoid paying legitimate claims and thus deserve to be treated with contempt.

I think it is pretty much covered here... even if you made it up 😄 

The whole issue is that insurance is mandatory, hence the level of "fairness" expected is much higher than for anything else. Likewise insurance is highly discriminative pretty much inherently - imagine if the amount of tax you pay would depend not only on how much you earn, but as well 100 other things that are not in your control... and in principle if you 17 years old male you would pay 100% tax rate and would work basically for free. Well that is literally the insurance in UK and it is not OK. The reason I am comparing insurance with tax is that - it is basically a tax and I am sure everyone would agree taxing people pretty much at random to the point where the taxes would be 100% or even over 100% would not be fair and would not work... but we doing exactly that with insurance... not even theoretically or whatever... but literally, because car insurance for young drivers can easily exceed their annual income. I honestly don't know another country which is as bad as UK in this regard (potentially Ireland?!).

So... NO... I don't think they have a right to check their clientele, beyond things directly related to driving.

On 5/2/2023 at 12:03 PM, Bluemarlin said:

I'm not sure that insurance can ever be "fair"

I would argue... it could be. 

If we take aggregate of all damage, claims, injuries etc. over the period of 1 year and then divide it by the number of keepers (except SORN) and ask them to pay it on top of their road tax, then it would be inherently 100% fair. Everyone would pay same price, it would work more or less like general taxation, like we pay for NHS, which is basically a health insurance. I have even done calculation in the past, which was very very inaccurate because the data is not there (we simply don't know total number of damage caused), so I had to extrapolate I believe Admiral claims data... but the amount worked out at something ridiculously low... like £86 per person per year. Now obviously, this would require nationalising the provision of it, taking out profits, taking out private capital, taking out inefficiencies and tax avoidance, losing industry which employs 100k+ people and which still pays some taxes. But even if we double the total amount it would still work out cheaper than the cheapest insurance at the moment. Coincidentally my father pays something like 172 Euros for insurance and his "mandatory" insurance, something along the lines of "third party only" in UK is ~90Euro and then he gets what is equivalent to "Comprehensive" for extra ~82Euro. It would cost very similar amount for me to insure, maybe like 20 Euro more... and when I was 18 it still was very similar price, except my "mandatory" insurance was ~110Euro maybe, but the "comprehensive" would have been ~800Euro, what is important that you only need the mandatory third party insurance to drive and it was very affordable. Same in UK, you only need "third party" to drive, problem is that even today "third party only" would cost me like £4000, whereas "comprehensive" costs me £520. So this price of ~£200 is realistic and in most countries that is approximately how much it costs on average... it is only UK that has ridiculous £1000, £2000, £4000+ insurance.

[Bluemarlin]

Of course insurance is discriminative, that's the point. The higher your risk profile, the higher your premium. It works exactly like tax, as the more you earn, the more you pay. It's both unfair and inaccurate to compare the two by imagining tax as an age based charge though, as tax is income based, whilst insurance is risk based so, whilst both have incremental charging, the basis for it is different.

Aggregating it wouldn't be fair either, as the 50 year old driver, who's had no accidents or convictions, and drives a Focus one day a week, would be charged the same as a 17 year old, with speeding convictions, drink driving bans, and multiple crashes, driving a souped up hot hatch. Risk based insurance encourages and rewards good behaviour, whereas a flat rate rewards recklessness. How is that either fair, or sensible?

Besides, insurance is to some extent aggregated anyway, as you don't pay what you cost. Some pay more than they claim, and others pay less. It's just fine tuned by profiling risk, to put more of the burden on those more likely to present more of a risk. As such your calculation loses any value by not looking at the total amount claimed, and seeing what proportion of that is due to the higher risk drivers, who pay the highest premiums. If the numbers are weighted in that direction, then it would show the risk calculations to be accurate, and thus a more fair distribution of the cost.

A comparison to health insurance is unreasonable too, as public health is pretty much a basic human right in any civilised country, and driving a car, where you can reduce your risk profile by how and what you drive, is a choice. Where would you draw the line? Gas and electricity are expensive, and they're even more necessary than a car, so should we all just pay a flat rate for that? What about petrol, that's effectively compulsory too?

I do however agree that insurance in the UK is too high. Whether that's a reflection of costs, or blatant profiteering, I don't know, but agree that prices should be better investigated and regulated, especially given that it's compulsory. I also agree that there should be a greater differential between third party and fully comprehensive insurance.

Ultimately though, insurance is a gamble, with insurance companies betting that you won't crash, and you betting that you will. As  such, the odds, and therefore the price, are risk based. So, whilst I agree that there should be changes, I feel that preventing better data collection, and more accurate assessment of individual risk, would make things less, rather than more fair.

I have no idea who's right though Linas, we just have different opinions.