Adrian Flux renewal £373, Privelige £148...

What always amazes me is that people think insurance should be so cheap. What do you think the bill to the insurance company of the truck that hit the bridge on the M20 is going to be? I doubt the premium had anything to do with the drivers driving record or where they live. 

If there has been a measured increase in your demographic having claims, your insurance is going to go up regardless of your own driving history. If your post code is affected with thefts, crash for cash or other factors, your premium is going to rise. 

If you go on any driving forum you will see three trends in insurance threads. 

1/ The bastards are robbing me. Where is the cheapest place to get insurance. 

2/ I had an accident, the insurance company I am with is rubbish, there is no customer service. (No one ever seems to draw a conclusion between the two)

3/ People who are the injured party always want and expect maximum and more service and compensation. It does not take long to find comments that go “well it was done on the insurance so they also did some other stuff for me.” or “the lawyer got me £12,000 compensation because I had a week off work” 

If, for whatever reason, insurance companies give introductory discounts, just like Tesco’s selling beans cheaply, it does not mean that is the value of that product. 

Nick. I think you’re missing the point completely. No one thinks their insurance should be cheap. And when Tesco’s sell cheap beans, they sell them at a loss to entice you into the store. I don’t think any insurance broker has ever sold a policy at a loss. They may cut their fee to the bone to entice new customers in, but they never subsidise you to get your custom.

What most of us object to, is brokers hiking the prices once they have our business just because they can. At renewal you can often buy the same product from a different broker for far less. If the difference was less significant, we’d stay as customers because changing insurance is a pain in the backside. But when the price hikes are ridiculously large, you have no choice but to shop around. Insurance, like most financial services generates huge amounts of money in the city. 6 figure salaries are not uncommon, and we’re paying for it. So we have the right to gripe when we feel we’re being robbed.

Its also very interesting seeing what cash back you can get for insurers through Quidco and Topcashback.co.uk. The cashback you get is effectively the commission that the insurance companies give to websites that manage to convince their users to buy a policy. So lets say that for example you go to MX5OC.co.uk, see an advert on the website for Churchill, click on that link and buy a policy as a result of clicking through that link and Churchill will give the MX5OC website owners £50.

That alone strongly suggests that the true cost of insurance which underwriters are providing to brokers is considerably cheaper than what you pay. Even though Churchill pay £50 commission they’ll still be making money. I wouldn’t be surprised that the actual cost of my policy from the underwriters was sub £100. I’m happy with that, the insurance brokers aren’t in business to be a charity. However if Churchill are able to have an underwriter insure me for sub £100 you can bet your bottom dollar that Adrain Flux can as well and over 2/3 of that ridiculous quote was their profit. That is a hell of a lot of money for basically doing 30 seconds of automated administration. 

Anyway Nick if you think my insurance is too cheap then how much do you think it should be? I’m in my mid 40s. I drive 2000+ miles per week all over the UK. Tonight alone I’ll be driving another 442 miles, similar mileage to what I did last night and I expect that like the rest of this week nothing will happen the same as the last 20 years. I’ve driven well over 2 million miles accident free in the last 2 decades, 2-3 times more than most people will ever do in their entire lifetime, I’ve only ever had 3 points and I’ve not had an at fault accident since 1995. I live in a town which has the joint lowest crime in the UK.