I am amazed I have lasted this long without committing this particular rant to print. However, the arrival of a renewal insurance premium with a 35% increase has opened that particular old wound again (and no, it was not a health insurance policy).
Over the years, I have battled with insurers of property, teeth, and travelling. In each and every instance, they won financially, though I did gain some ground morally on occasion.
Apparently, the UK insurance industry is the largest in the whole of Europe and manages to reach fourth position across the globe, behind the US (no surprises there), Japan, and China. However, per capita, we are spending around 21% more on insurance premiums than even the US! (1)
I appreciate that some categories are incredibly wise to insure (e.g. house burning down) or legally required (e.g. car etc) but why are we so obsessed with protecting against other things that may never happen and which, let’s face it, rarely do to the tune of what you have paid in premiums over the years?
In my latest contretemps, I have realised that by putting the premium into the bank instead of the insurer’s coffers, I will be better off financially and have sufficient to meet everything but the most catastrophic event. The insurance companies won’t notice my paltry premium disappear out of their estimated £208 billion value - yes, billion. How did insurance become such a golden goose, and why do we keep blindly feeding it? Partly because of the complexity of policy documents and fine print, I imagine.
I have known several actuaries over the years; I consider some of them friends. But let’s face it, they are an unusual bunch: super-intelligent yet often not really of this planet. They live and breathe actuarial tables, and suggesting using a practical, real-life approach tends to send them skittish.
A previous example for you: a water main sprang a slow leak under my floor – slow enough to not be noticed, determined enough to rot through the joist and floorboards (all neatly concealed by a very large sofa). As part of the mayhem that followed, I had a full, new water pipe installed through my house. The insurance company was appalling and unhelpful, and so I was still in dispute with them come renewal. “Let’s double her premium and exclude any water-related claims going forward”, they said. Logic dictates that the odds of me having a new water leak had been minimised if not eradicated, yet the Table said “no”.
I appreciate there will be big claims elsewhere for insurers to meet, and I am sure people whose lives have been devastated by flood, fire, etc, are eternally grateful that they have cover. However, insurance companies have become akin to casinos, playing the odds yet always, always coming out on top.
Apparently, the government receives about £12+ billion (very old statistic) via the IPT (Insurance Premium Tax), but then the government also provides a form of reinsurance to protect the insurers from crippling claims, such as during Covid or our ever-frequent flooding. There is probably a very good reason why this money is available to the insurance companies and not as a publicly accessible option, but I fear it may be purely an administrative decision.
In these straitened economic times, could one small area of the government perhaps think about how individuals could be better protected without others profiting quite so much.
Footnote (1)
2024 figures
