Would it be a good idea for insurers to give a % of income they give out in claims?

Question

We all look for the cheapest premium, but we have no idea how they would perform if you had to claim.

I heard somewhere that car insurers give out much more that household insurance (or vice versa) and can't understand why.

Answer 1

As previous answer has stated for UK companies this information is readily available, although to get an accurate picture you’d need more detail than is in the annual accounts, You’d need something like their annual return to the FSA which shows you the Loss Ratio (the number you are talking about) by class (property, motor etc) and year. This is what you really need to compare like with like, if you really want to wade through one, they are publicly available from the company concerned.

However it really isn’t a very meaningful guide in my view, insurance is by nature a volatile business and some classes are more volatile than others. Motor is a ‘fairly’ stable business; it isn’t massively affected by specific events, whereas property can be.

By this I mean that if there is a bad storm or hurricane, motor losses don’t increase in the way that property losses do. I’m not saying they don’t increase at all, but they don’t go ‘through the roof’ (bad pun intended).

So whilst motor may run at a loss ratio of say 85-90% each and every year, property may go 70%, 65%, but then shoot up to 150% if there is a hurricane or bad flooding.

As a result a property account has to make more profit in the good years to make up for losses in the bad, motor just trundles along making profits each year.

Anyway, just because a company has a lower loss ratio doesn’t mean it’s any tighter in claims payments than any other; there are just too many outside factors involved. ALL insurers will try to pay as little as they can.

I think you’re spot in when you say that more than price should be considered, but I don’t think the loss ratio is a good example.

Now if they published how many claims staff they had as a % of policies, which might be a guide to how quickly your claim would be looked at, we might be talking !!

Answer 2

I'm not sure if this is what you're asking, but some policies report expected claims.  I know for accidental death policies the companies might assume that they'll pay out 50% of the premiums they collect as claims whereas the rest goes to expenses, salaries, commissions, etc...

If this is what you're asking some policies in some states are required to give this information, but it's not prevalent.

Jeff

Answer 3

I don't look for the cheapest premium, I take other things into account.

Answer 4

Cars are more easily damaged than homes and car accidents result in seroius injury far more often than home accidents.  No, its not a good idea to give out the % then you'd just know who was getting hosed more.

Answer 5

You can always look at their accounts.  They are available online at Companies House.

Answer 6

No.