Posts Tagged ‘Cheaper car insurance’

Petrol price increases to affect transportation costs and the way we drive!!

Written on April 28th, 2011 by jonckie@arrivealive.co.za
Categories: Car Insurance Advice, Pay As You Drive

pertol_increaseRoad users are having to pay more and more for their driving! The fuel price will increase by 29 cents a litre on Wednesday.

The diesel price is also going up by 16 cents a litre from next week.

The increases come as new figures show that Producer Price Inflation, the increase in prices at the factory gate, has risen.

New figures released on Thursday show that PPI was 7.3 percent year on year in March, up from 6.7 percent in February.

PPI measures the average changes in prices received by domestic producers.

Economist Chris Hart said this will lead to higher food prices.

“This number would be quite a bit higher if the rand had been weaker. The big saving grace for South African inflation so far has been the strength of the rand,” he said.

[Info from Eyewitness News]

It is expected that vehicle owners will have to consider closely how they drive, how far they drive and how they can reduce unnecessary travels.

We would like to urge vehicle owners to pay close attention to their car insurance in the same way that they do with their other vehicle costs. If you drive less – consider an insurance product that allows you to pay for how much you drive!

Also view: Pay As You Drive and Car Insurance

Vehicle and Insurance Telematics

What is Insurance Telematics and how will it impact on Car Insurance?

B23-Hollard_PAYD_578x908

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Posted in Car Insurance Advice, Pay As You Drive | No Comments »

Why do I pay more for car insurance in Johannesburg than elsewhere in South Africa?

Written on January 5th, 2011 by jonckie@arrivealive.co.za
Categories: Car Accidents, Car Insurance Advice, Car Insurance Claims, Car Insurance Humour, Car Repairs, Car Statistics, Cheaper car insurance, Road Safety, Safe Driving Tips

JHBWe have discussed on the Car Insurance Blog the factors contributing to the cost of car insurance premiums. These include driver characteristics, vehicle characteristics, purpose of use and usage, area where the vehicle is to be driven etc.

But why is the area important?

Car insurance premiums are paid to cover the risk of vehicle loss and damage – and claim statistics reveal to car insurance companies that there is a greater risk of claims in specific areas! These greater risks can be attributed to:

-          More vehicle accidents on the roads in a specific area

-          Increased criminal activity and incidents of hijacking, vehicle theft and smash-and-grabs

Why do we have more accidents in a specific area?

We would like to offer the following contributing factors:

-          Greater number of vehicles on the roads

-          More licensed and unlicensed drivers

-          Increased traffic congestion

-          Hectic lifestyles contributing to speeding, road rage and frustrated driving behaviour

-          Road conditions, road works and potholes in a specific area

-          Weather conditions and road hazards from rain, hail, mist, smoke etc

All of the above could result in more expensive car insurance premiums payable for driving in Johannesburg. Car Insurance companies have very detailed claims and crime statistics at their disposal to calculate the risks in a specific area – and car insurance in Johannesburg is definitely more expensive than the smaller cities and towns

There could however, on a lighter note, also be enough other reasons why drivers in Johannesburg should expect to pay more for insurance. A regular visitor to the Arrive Alive website shared the “Rules for driving in Johannesburg” – examples of unsafe behaviour on our roads!!

Rules for driving in Johannesburg

1. Never indicate – this will give away your next move. A real Johannesburg driver never uses them.

2. Under no circumstance should you leave a safe distance between you and the car in front of you, this space will be filled by at least 2 taxis and a BMW, putting you in an even more dangerous situation.

3. The faster you drive through a red light, the smaller the chance you have of getting hit.

4. Never, ever come to a complete stop at a stop sign. No one expects it and it will only result in you being rear-ended.

5. Braking is to be done as hard and late as possible to ensure that your ABS kicks in, giving you a nice, relaxing foot massage as the brake pedal pulsates. For those of you without ABS, it’s a chance to stretch your legs.

6. Never pass on the right when you can pass on the left. It’s a good way to check if the people entering the highway are awake.

7. Speed limits are arbitrary figures, given only as a guideline. They are especially not applicable in Johannesburg during rush hour. That’s why it’s called ‘rush hour….’

8. Just because you’re in the right lane and have no room to speed up or move over doesn’t mean that a Johannesburg driver flashing his high beams behind you doesn’t think he can go faster in your spot.

9. Always slow down and rubberneck when you see an accident or even someone changing a tyre. Never stop to help – you will be mugged.

10. Learn to swerve abruptly. Johannesburg is the home of the high-speed slalom driving thanks to the town council , which puts holes in key locations to test drivers’ reflexes and keeps them on their toes.

11. It is traditional in Johannesburg to honk your horn at cars that don’t move the instant the light turns green. This prevents storks from building nests on top of the traffic light and birds from making deposits on your car.

12. Remember that the goal of every Johannesburg driver is to get there first, by whatever means necessary.

13. On average, at least three cars can still go through an intersection after the light has turned red. It’s people not adhering to this basic principle that causes the big traffic jams during rush hour.

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Posted in Car Accidents, Car Insurance Advice, Car Insurance Claims, Car Insurance Humour, Car Repairs, Car Statistics, Cheaper car insurance, Road Safety, Safe Driving Tips | No Comments »

Car Insurance only covers the Market Value of your Car

Written on October 25th, 2010 by jonckie@arrivealive.co.za
Categories: Car Insurance Advice, Cheaper car insurance

MARKET VALUEToo view insured vehicle owners keep a close eye on their vehicle insurance. Every month the debit order amount reduces our bank balance – and we tend to see this car insurance premium as a “necessary evil”.

We often do not even open our correspondence from the car insurance company – and only comment with disgust when receiving an alert of escalating costs.

On the car insurance blog we have given advice on how to find cheaper and affordable car insurance – and recognize that there are indeed many ways to save on car insurance premiums at the time of purchasing car insurance.

Can we save on car insurance premiums once we are already insured?

A very important aspect to consider is the yearly depreciation of the insured vehicle. Your vehicle is insured at market value of the vehicle and this value depreciates or reduces as time goes by and the vehicle gains more and more mileage…

It is important to recognize that if your vehicle is damaged, stolen or written –off/ totalled, the car insurer will consider the market value of that vehicle at the time of such damage and loss – and not the value at the time when you first insured the vehicle.

What is the market value of your vehicle?

Market value is also often referred to as “fair” value. It can be described as the price an item can be sold or bought for between an agreeable (willing) and knowledgeable buyer and seller in an open market transaction. It is the current value of an item, if it were to be replaced by an identical item, being of similar age and wear and tear. This value is calculated at a specific time – the time the loss took place.

A better understanding is possible if we take a closer look at 3 different values:

* Retail Value: Refers to the price a car dealer might be able to sell the car for.
* Trade Value: Refers to the price a dealer might pay you should he buy the car from you.
* Market Value: Is halfway between the Retail and Trade Values.

Why is this market value and depreciation important for my car insurance premium?

Most insurers will only insure your vehicle at the current market value. You need to ask whether your car insurance premium keeps track of the depreciating market value. If you insured the vehicle at the time of purchase for the purchase price of R200,000 but now, 5 years and 150,000 km later the vehicle is only worth R80,000 – there is no sense in still paying the insurance premium that was required to cover an asset of R200,000. Your insurance premium should provide cover for an asset to the current market value of R80,000!!

Not all contributing factors to the car insurance premium depreciate!

Even though the depreciating market value should also reduce your car insurance premium – it is important to note that the reduction might not be as significant as you might expect. There are other factors that will, as time goes on also add upward pressure on the premium.

These include:

* Normal inflationary pressure can increase car insurance premiums by anything between 5% -15% yearly
* Increased perceived risks as a result of vehicle damage [accidents , potholes] or vehicle loss [accidents, crime]
* Even though your vehicle might reduce in market value – the costs of repairing such a vehicle after an accident might still increase.
* Vehicle parts needed for repairs might continue to become more expensive despite the market value of your car decreasing.

This is perhaps an explanation of why there is not an automatic reduction in the car insurance premium in line with the depreciation of your vehicle – and also why it might be a good idea to tie down the insurance premium for 2 or 3 years.

Advice to vehicle owners

Car Insurance should not be seen as a once-off but rather as something that requires more regular attention. We would like to advise that vehicle owners pay closer attention to the correspondence from their insurers or brokers.

Communicate more regularly with your insurer, and keep your ear to the ground for “newer generation products” etc. Do a yearly quote request and compare your existing insurance with products available that could provide the exact same cover at more favourable rates.

The car insurance industry is highly competitive – and this should benefit vehicle owners. Do not let laziness or apathy make you pay much more than you need to!!

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Many vehicle owners lie to find cheaper car insurance

Written on October 5th, 2010 by jonckie@arrivealive.co.za
Categories: Car Insurance Advice, Car Insurance Crime, General Information, Insurance Fraud

Do-you-lie-to-find-cheaper-car-insuranceWould you lie to save on your monthly car insurance premium? We have written many blog posts on car insurance fraud and how this blue collar crime is increasing the car insurance premiums.

This most often focuses on fraudulent statements made at the time of making the car insurance claim.

These lies are usually related to disclosures of the following:

• Details of the driver at time of the accident
• Details of security features active during time of vehicle theft/ alarm systems etc
• Details of how the vehicle was lost or suffered damage
• Details of where the vehicle was parked, etc

These lies are most often motivated by fear that the accident claim could be rejected on account of the vehicle owner not complying with some of his obligations under the policy contract.

It is however also at the time of purchasing a car insurance policy that many vehicle owners resort to making untruthful statements/lies! It is important that we focus on the dangers of these fraudulent statements and warn consumers about the possible consequences.

Research in the UK on car insurance lies

Recent research in the UK has made available some shocking revelations:

• 38% of UK drivers have admitted lying to get a better premium.
• Men are more likely to be dishonest than the fairer sex, with nearly half admitting to fibbing to get cheaper cover.

What do they lie about?

• Drivers are most likely to lie about annual mileage (14%)
• Where they keep their car (8%)
• The value of the car (7%)
• Adding named drivers onto policies whom the owners suspect will never drive the car.

What motivates vehicle owners to lie when purchasing car insurance?

• 71% of those who lie on their car insurance (http://www.confused.com) applications say that they do it to save money
• 12% consider it worth the risk of having to pay out in the event of the accident to save on their premium.

Conclusion and advice

We would like to recognize and quote from Confused.com who made available these interesting research findings:

Will Thomas, head of motor at Confused.com, says: “When it comes to motor insurance, lying really doesn’t pay. By failing to tell the insurance provider your true circumstances you are risking invalidating your cover entirely, which ultimately means you are uninsured. Whilst it’s easy to think you will never be caught out, insurance companies are getting savvier, particularly in these hard financial times, and lying is a type of fraud. Having your cover invalidated not only has ramifications for you and the repair of your car, but also for any other driver involved in the incident – there is no limit to the costs that may be incurred in the event of an injury”

Perhaps keeping a clear conscience and acting with integrity in business dealings do count for more than a few rands in savings on your monthly car insurance premiums.

Do not tell the truth merely because you are afraid of your claim being rejected – tell the truth because it is the right and honourable thing to do!!

We would like to urge all vehicle owners to view the following:

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Lazy consumers will not save on car insurance!

Written on September 21st, 2010 by jonckie@arrivealive.co.za
Categories: Car Insurance Advice, Cheaper car insurance, Pay As You Drive

to_lazyLazy is perhaps too strong a word to describe some consumers – perhaps apathy would be a better description. Apathy can be described as a sense of indifference, a lack of interest displayed and often such a person might exhibit sluggishness. We would like to argue that many vehicle owners display apathy with regards to their car insurance cover.

Consumers are not afraid to complain about escalating costs and bad service. They are far less likely to share compliments and tell one another of their good experiences with service providers such as insurance companies, cellular phone providers and rental agencies.

We tend to console our friends who have experienced treatment that is not fair. We also share our advice and personal expertise in these matters. In many of these cases there is little that we can do i.e. when we are caught at the mercy of a specific body corporate or local municipality. There is however also opportunities where a bit of extra homework and effort could lead us to a better or more affordable provider of services to meet our needs.

Criticism of increased car insurance premiums

If you are one of those consumers/ vehicle owners who are criticising the car insurance companies for increases in your car insurance premiums – we would like to consider your scenario and reflect on possible solutions.

We could perhaps start by asking 3 simple questions:

• Do you know the exact amount of your car insurance premium?
• When last have you checked your short term insurance statement and the specific amount payable for your car insurance premium?
• What would you have paid for your car insurance premium with 2 other insurance companies?

Even though many consumers are complaining about expensive premiums – it appear that few are doing something about it! They simply continue with the status quo and seldom put in the effort to look for alternatives.

Research undertaken by price comparison site in the UK – oneysupermarket.com, discovered that a quarter of drivers didn’t bother seeking out cheaper car coverage, even though they could save more than £230 a year on average by doing so.

UK Research on comparison and automatic renewal of car insurance

• 10% of motorists said they simply couldn’t be bothered shopping around for a better price
• 15% were under the misguided impression that they wouldn’t be able to find a cheaper provider.
• Across the UK, 36 per cent of motorists were willing to hunt out a less expensive policy, with the savviest savers based in Yorkshire and the Humber (46 per cent), Wales (44 per cent) and the West Midlands (41 per cent).
• Younger motorists – aged 18-34 – were more willing to change car insurance providers, switching suppliers on average every 1.8 years.
• Drivers over 55 were more likely to stick with their current provider, staying loyal to them for an average of 3.5 years, although this loyalty doesn’t seem to translate to cheaper prices.

Steve Sweeney, head of car insurance at moneysupermarket.com, said:
“Our research shows people can save £233 on average a year by scouring the market – that’s nearly £100 more compared with last year. Providers count on apathy to reap the profits and do not reward loyalty with a cheaper premium. In this current climate, it is shocking to see the sheer scale of drivers who won’t spend a few minutes to see if they can save money when renewing their car insurance.”

Conclusion and advice

It is not only the consumers in the UK who fail to regularly monitor their car insurance premiums and compare their premiums with other policies on the market. South Africans also are often blindly loyal and oblivious to huge savings available.

On the Car Insurance Blog we advise vehicle owners on finding the correct car insurance. This is however not to mean that the insurance product that you have found 5 years ago- and which was perfect for your needs at the time – is still the correct and most affordable premium at this time!!

There are many reasons – including life changes – why it might be important for you to review your car insurance cover. We would like to advise that you either do comparisons yourself by going direct – or, if you still work through an insurance broker – that you ask him to provide you with at least 2 car insurance quotes from competitors in the market!!

Also view:

Pay As You Drive

Cheaper Car Insurance

Comparing Car Insurance

B25 Hollard_PAYD_705x90

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Effective history checks could provide cheaper car insurance premiums

Written on September 20th, 2010 by jonckie@arrivealive.co.za
Categories: Car Insurance Advice, Car Insurance Claims, Car Insurance Law, Cheaper car insurance

historyCar insurers are constantly reviewing strategies and investigating measures that could reduce the pricing pressures on car insurance premiums.

Inflationary pressures will not go away – and there will always be rising costs in employment, administrative costs, cost of repair, vehicle parts etc.

Not much can be done to reduce these escalating costs – but there might be other initiatives to reduce car insurance premiums!!

One of the most important measures is to ensure that the risks of accident claims are measured correctly. It is important that car insurance clients are correctly insured and that they pay the correct premium for the “claims risk” that they present!

If some vehicle owners pay too little and claim often – they will add to the pressure of expensive car insurance premiums for the whole client base.

Claims history and disclosures made by the client

Not only is car insurance fraud during the claims process hurting car insurers – but also the failure to make proper disclosures on signing the car insurance policy!
Too many clients – especially younger vehicle owners – try to gain cheaper car insurance premiums by not making a full disclosure of all the material facts. If this is discovered after a claim has been submitted, the claim could be rejected by the insurer as it amounts to breach of the policy agreement.

It is however also important for car insurers to pay closer attention to the disclosures made by the vehicle owner when his premium is calculated and before the policy document is signed! Applicants attempting to secure car insurance could be subject to additional background checks, which could keep premiums down in the future.

Insurance representatives are in agreement that greater attention be given to effective history checks of claims records and driving behaviour. One of these experts has noted that “It is not fair that safe, law-abiding drivers should pay higher premiums to subsidise people who lie about their previous claims to get cheaper insurance”.

Conclusion

Vehicle owners need to be active participants in this process – and blow the whistle on car insurance fraudsters. Cheaper car insurance requires that no client is able to take “short cuts” at the cost of other vehicle owners.

We would like to urge all vehicle owners to pay close attention to the terms and conditions of the car insurance policy and to make a full disclosure of all the material facts that have an effect on the car insurance premium. Be alert to others who pride themselves in saving money at the cost of honest policyholders – and alert the insurers to these consumers!!

Also view:

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Posted in Car Insurance Advice, Car Insurance Claims, Car Insurance Law, Cheaper car insurance | 1 Comment »

Searching for cheap car insurance gets fast…very fast!!

Written on September 17th, 2010 by jonckie@arrivealive.co.za
Categories: Car Insurance Advice, Cheaper car insurance, General Information

fastMore and more vehicle owners go to the internet in the search for affordable car insurance. Car Insurance companies have in recent times discovered that that they simply cannot do without an online strategy – and millions are now spent on websites, search engine optimization and content management.

Google and faster searches

Most of these searches are performed on the Google search engine – Google is the world’s No.1 search engine, but is facing increased competition from Microsoft Corp’s Bing search engine.

Google has recently revealed that searches are getting faster and faster. I have come across interesting insights shared via the website of FOXnews.com and a story titled “Web searches just got faster, Google claims”

I would like to share some insights from this story:

Google Searches and Predictive Text

How is web search speed measured?

Web search speed used to be gauged by how many mouse clicks they took. Google has not taken the click out of the equation. After several enhancements to its Internet search engine the new Google search engine will predict your query as you type and deliver results simultaneously — no more clicking for results.
Google claims its Google Instant technology will shave two to five seconds off every web search.

“Our key technical insight was that people type slowly, but read quickly, typically taking 300 milliseconds between keystrokes, but only 30 milliseconds (a tenth of the time!) to glance at another part of the page,” the company explained. By presenting results as you enter your search, “you can scan a results page while you type.”

Search Rankings and Search Results for the Keywords “Car Insurance”

What is the affect of these changes on Car Insurance Companies and their SEO strategy?

With so many car insurance providers and advertising strategies – it is of extreme importance for car insurance companies that their offerings can be found with ease and that they feature prominently in search results.

These changes and enhanced speed could have a significant impact on the bottom-line of some direct insurers. According to Adam Bunn, head of search at independent search and social marketing agency Greenlight, some websites may suffer a drop in traffic thanks to the changes.

Many sites buy advertising space based on long multi-word keywords, he explained, and as people see results that may be appropriate before they finish typing such keywords, those ad dollars may be wasted — and traffic may suffer.
Website optimization and the keywords “Cheap Car Insurance”

The experts believe that online marketers from car insurance companies will have to review the keywords used in their search engine optimization strategies.

“If a website has optimized for and holds good rankings for ‘cheap car insurance UK,’ that term may lose search traffic as UK users find that the shorter ‘cheap car insurance’ returns several relevant looking results, negating the need to finish their sentence,” Bunn said.

On the other hand, should less common topics should see even fewer page visits, the cost of buying ads that target those pages may drop, he pointed out.

Conclusion and advice

Google said the technology will also be available in many more countries in several weeks. This will be noted by local car insurance companies and we can conclude that South African car insurers will work closely with the experts in the online industry to ensure that their products can be found fast and with ease.

The car insurance industry can only benefit from faster search results. It is important that more vehicle owners on our roads are insured – and if they can use the internet to find the correct affordable car insurance -so much the better for road safety!!

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Finding car insurance – but only if you are willing to reveal secrets

Written on June 21st, 2010 by admin
Categories: Car Insurance Advice

Finding-car-insurance-but-only-if-you-are-willing-to-reveal-secretsIn this series on finding car insurance we would like to take the potential client through the process of acquiring a car insurance quote – from the very start to signing on the dotted line. We would like to do so in an insightful but easy to understand manner, not only to provide an easy solution – but also to shed some light on why we provide the advice we would like to offer.

Car Insurance and making disclosures

The vehicle owner will only be able to find car insurance if he discloses a few secrets about himself. A car insurance contract is an agreement between a vehicle owner and an insurance provider that the insurer will provide cover in return for a [monthly] premium from the vehicle owner. This premium is calculated and quoted by the insurer after taking into consideration all the risks of insurance claims.

Calculating the risk of an insurance claim

The car insurer will take into account all the material facts to calculate the premium payable. Most of these facts are only known by the vehicle owner – and it is required that they be disclosed by the vehicle owner.

We would distinguish between the information only known by the vehicle owner, and the facts known by the insurer.

Material facts only known by the vehicle owner when applying for car insurance

These facts would include the following:

Personal details

  • Name and surname
  • Home address
  • Identity number
  • Years driving experience
  • Accident record and info on traffic violations
  • Driver impairments etc

Vehicle Details

  • Make and model of vehicle
  • Colour of the vehicle
  • Kilometres on the clock/odometer
  • Whether vehicle has been in an accident
  • Whether vehicle is to be insured at market value
  • Vehicle security features

Usage details

  • Whether vehicle is for personal or business usage
  • Who the regular drivers will be
  • Estimated distance to be travelled
  • Where vehicle is to be kept / garage etc

Material facts to be established by the car insurer

Not all the material facts are known only by the vehicle owner. The car insurer will have specific risk models to enable the insurer to calculate risks. The car insurer will have available information on the following:

  • Vehicle accident statistics
  • Vehicle crime statistics
  • Geographical information and statistics pertaining to this specific area
  • Vehicle market and replacement values
  • Cost of vehicle repairs
  • Cost of processing insurance claims
  • Details on effectiveness of vehicle security systems and tracking companies etc..

Full and Complete Disclosure as requirement for Car Insurer

If you would like to find car insurance – You will need to disclose all the material facts to the car insurance company. Failure to do so might not only lead to a finding of car insurance fraud, but will also result in your claim being dismissed and the contract declared null and void.

The car insurance contract is an agreement based on good faith – and requires obligations from both parties. There should be no secrets when it comes to the obligation of full disclosure. Once you are ready to disclose all that is required – we can continue with the next step towards finding car insurance!!

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Could Pay As You Drive car insurance save high risk drivers?

Written on May 28th, 2010 by admin
Categories: Car Insurance Advice, Cheaper car insurance

Could-Pay-As-You-Drive-car-insurance-save-high-risk-driversWe have referred on this Blog to the benefits of Pay As You Drive car insurance. To summarize briefly, this car insurance product is based on the principle “Drive a lot, pay more. Drive less and save!”

There are also environmental benefits as well as expectations that drivers will drive with more caution whilst aware that a Big Brother is monitoring their driving. In this Blog we would like to focus on a specific group that might benefit from a Pay As You Drive car insurance product – The High Risk Driver!

Who are the high risk drivers?

I would like to refer to the Blog post titled “Why do young and elderly drivers pay so much more for car insurance?”. In this Blog post we have identified the younger drivers [ 18-25 years] and the elderly drivers [65 years+] as the highest risk to car insurance. It is important to recognize that this is based on actual accident statistics.

If any driver in these age groups requests a car insurance quote, he/she will automatically fall into a higher pricing category before other variables such as the driving/ accident record, the area that they reside or the vehicle that they drive etc will be considered.

How can these young and elderly drivers reduce the risks of accidents?

We have offered some advice to these high risk drivers:

Advice to Younger drivers:

  • Shop around for your car insurance – make your increasing years of driving experience and age count as you get older
  • Try to maintain a safe, accident free driving record
  • Find an accredited advanced driving course recognized by your car insurance company
  • Be alert to the effect that the car you are driving might have on your premium
  • Pay close attention to vehicle security systems and safety features that could reduce your premium

Advice to older drivers

  • Try to maintain your safe, accident free record
  • Ensure that your lifestyle counts in your favour and you get recognized for the safe area you stay, your closed garage, vehicle security systems etc.
  • If you drive less – this should be recognized in your premium – enquire about Pay as You Drive Car Insurance

How can Pay As You Drive car insurance and data recorders help our High Risk Drivers?

Some of these high risk drivers might pose less of a risk when they drive much less than the average driver in this age group. Less exposure to other road users and roads risks should result in them paying reduced premiums for car insurance.

This reduced exposure to risk can be measured by odometer readings, or more advanced data recording devices. Some insurers now provide insurance products called “Pay As You Drive”, recognizing that reduced distance travelled should be rewarded with cheaper car insurance premiums.

We can illustrate how these higher risk drivers can be saved from financial hardship with a Pay As You Drive Car Insurance product:

Elderly Road Users:
Mr and Mrs Jones have retired at age 65. They have left the hectic city life and reside at their holiday home at the coast. They only travel short distances to the supermarket and only occasionally travel longer distances to visit their children. A Pay As You Drive car insurance product will recognize that they travel much less and provide cover for the reduced exposure to road risks!

Young Drivers
Not all young drivers are exposed to the same risks. Jane is a 23 year old student who travels to University about 500km’s away from her home in a rural area. Whilst attending to her studies she resides in a hostel on campus. She walks to classes and only travels long distances when returning home for the holidays. She travels short distances now and then when going shopping in the city. She is much less exposed to road risks than her friend who, at the same age is working as a sales rep for a pharmaceutical company. Her Pay As You Drive insurance product calculates her insurance premium on the distance driven each month.

It is also possible that when the young driver is not the owner of the vehicle, but described as the regular driver in the insurance policy, that driver would be more cautious knowing that the vehicle owner/ parent has access to a report on her driving as provided by the data recorded in the vehicle.

These data recorders or black boxes measure how fast the car is going and how long it is being driven for. It sends this information back to the insurer, which will use it to work out people’s premiums. New technology can even assess people’s driving styles by recording how fast they take corners and how aggressively they accelerate, meaning insurers can take this into account when working out the amount people should pay.

We would like to urge all “High Risk” drivers to shop around for their car insurance and consider the benefits of Pay As You Drive Car Insurance.

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Why use a comparison site if I can find car insurance direct?

Written on April 19th, 2010 by admin
Categories: Car Insurance Advice, Cheaper car insurance

Why-use-a-comparison-site-if-I-can-find-car-insurance-directWe have written quite a bit on the car insurance blog on comparison websites or car insurance aggregators. There has been in recent years a sharp rise in car insurance aggregators and comparison websites. The owners of these websites have found a niche gap in the market – and are using this to attract customers and earn commissions from the sale of cheaper car insurance policies!

What is this niche and why are they successful?

I believe there are a few factors to consider in the analysis of the success of aggregators / comparison websites:

  • A multitude of car insurers and car insurance products
  • Growing competition in the financial services industry
  • The fear of “missing out” on potential business leads
  • The growth and acceptance of financial transactions performed online
  • The need of the consumer for speed and the ease of use of these systems

The comparison websites / aggregators have thrived as more car insurers experienced a fear of “missing out” and joined the pool of car insurers to be compared.

Direct insurers are fighting back

It now appears that they are fighting back and trying to convince more clients rather to go to them directly. This is done mainly by offering reduced premiums to those clients who are contacting them directly instead of going the route of the aggregator.

It is expected that the AA’s British Insurance Premium index will show a sharp rise in the average quoted premiums for policies via comparison sites in the first three months of this year. The index, published this week, will show an overall fall in the price of car insurance of 3.2% for comprehensive policies. However, the average price for deals on comparison sites rose by 4.6%.

The average for third party, fire and theft deals, often taken out by younger people, fell by 4.5% for direct deals but rose 9.2% on comparison sites.

Ali Hussain provided some interesting findings in a story on Times Online titled “Comparison Sites could cost more”. This is an analysis of the trend amongst car insurers to invite more customers to approach the directly:

  • Axa, which launched its direct motor policies in February, offers a £30 discount if you apply direct rather than through a comparison site. It said: “We have to pay comparison sites commission, and this is to cover that cost. We want to encourage customers to come to us direct.”
  • Swinton and Kwik-Fit also offer cheaper deals in some cases if you go direct rather than via a comparison site.
  • The AA said it offered some deals cheaper to direct customers, while HSBC offers different prices depending on how a customer applies.

It is believed that customers who come via comparison sites are less likely to be loyal so there is little incentive to offer reduced rates. Comparison site deals may include less cover than policies obtained direct from insurers, resulting in the difference in averages. In some cases, comparison site deals will have higher excesses.

Much will however depend on the contractual agreement between the aggregator and the car insurers that takes part in the comparison system. Some insurers such as Zurich say that they are obliged to offer the same rates direct and through comparison sites because of contractual agreements with the sites.

Several car insurers in the UK had to review their participation in the comparison/ aggregator business model, and a few have since withdrawn.

  • Aviva, which has about 15% of market share, has only sold policies direct since September 2008.
  • Direct Line, part of the Royal Bank of Scotland group, also does not offer deals through comparison sites.

The major aggregators do however not believe that it is less expensive to go direct. Steve Sweeney at moneysupermarket.com, the comparison site, denied that providers offered better deals direct. “Our analysis shows we are saving customers more and that there is no difference between prices on comparison sites and insurers,” Sweeney said.

It is fascinating to view these trends in the UK and to reflect on what is to be expected in South Africa. South Africa has far fewer vehicles – but a massive market of uninsured vehicles – with only about 30% of the 9.6million vehicles on our roads insured!

There is much competition in the car insurance industry and the last 2 years have seen the rise in market share of a several aggregators. We can expect direct insurers and aggregators/ comparison sites to be innovative and to continue challenging the pricing of the various insurance offerings provided.

This is good news for the diligent consumer, who – with a bit of effort – should be able to find a competitively priced offering to match his specific needs!!

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