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Insurance

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Ian Dunn
776020.  Sun Jan 16, 2011 5:35 am Reply with quote

I think I have a good question for Alan to ask Stephen: "What exactly is the advantage of Direct Line not being on any price comparison websites?"

 
Neotenic
776502.  Mon Jan 17, 2011 11:10 am Reply with quote

I would imagine that one potential advantage is not having to pay the price comparison websites for any business they put their way.

Whether or not this actually translates into lower premiums on like-for-like policies is a subject that is open for debate.

 
Tinker,Wales
789507.  Sat Feb 19, 2011 8:35 am Reply with quote

Ian Dunn wrote:
I think I have a good question for Alan to ask Stephen: "What exactly is the advantage of Direct Line not being on any price comparison websites?"

Depends on how you phrase the question. As phrased above the obvious answer is that the advantage is that the customer won't see any better quotes. (admittedly that is a benefit for Direct Line)

 
nicholasjwest
807456.  Tue Apr 19, 2011 6:32 pm Reply with quote

I have an interesting question, when did insurance come about and why? I recall something about a Parisian banker (Tonti), but that's about it.

 
nitwit02
807466.  Tue Apr 19, 2011 8:48 pm Reply with quote

I think it was a Scots clergyman - check out the TV series, "The Ascent of Money" for more details.

 
nicholasjwest
807477.  Tue Apr 19, 2011 9:38 pm Reply with quote

I watched that, thought I don't recall that bit. I'll have a look at it again.

 
Jenny
807584.  Wed Apr 20, 2011 9:22 am Reply with quote

Welcome to the forums, nicholasjwest :-)

 
Neotenic
807596.  Wed Apr 20, 2011 9:45 am Reply with quote

Policies of insurance that would be recognisable to us today probably started with forms of maritime insurance (fundamentally insurance against sinking and pirates) in Italy around the 14th century, and the practice gradually spread through Europe from there.

Domestic insurance was given a bit of a kick up the backside by the Great Fire of London, and fire insurance started to be sold soon afterwards - pioneered by, among others, Nicholas Barbon - who is probably better known around these parts for his rather unusual middle name.

Of course, the other big change the Great Fire brought about was the law banning the construction of wooden houses in London - so fire insurance arrived on the scene at almost the precise moment the risk of losing everything to the flames dropped dramatically.

 
nicholasjwest
807646.  Wed Apr 20, 2011 11:54 am Reply with quote

Thanks, Jenny.

I've always wondered whether, since you only get money in return from insurance companies, you made a net loss on insurance. And if you don't, then where is the loss?

 
suze
807658.  Wed Apr 20, 2011 12:20 pm Reply with quote

I'm not entirely sure that I know what question you're asking there, but I'll try and answer it all the same.

When you buy insurance, you're usually hoping that the bad thing won't happen and so you won't need to claim on the insurance - and if you indeed don't, then from that point of view you've made a loss. But the loss is considerably less than it would have been if you'd not bothered with the insurance, and then the bad thing had happened.

(If this last sentence is not true, then you perhaps shouldn't have taken the insurance. Except where the insurance is compulsory, as with cars.)


Insurance companies collect very detailed statistics. Basically, they determine how much they expect to have to pay out in claims, and use that information to calculate what the premium needs to be. If some catastrophic event means that there are many more claims than expected, then the insurance company does indeed make a loss. (It's actually more complicated than that, because insurance companies sell some of their business onwards to other insurance companies.)

And OK, so insurance companies are in it to make a profit - so if they've worked out that your insurance needs to cost 100 for them to break even, they'll actually charge you something like 120.

 
nicholasjwest
807664.  Wed Apr 20, 2011 12:34 pm Reply with quote

So in the end the person taking out the insurances makes a net loss? (ie. the money they get out in claims is less than the money they pay in in premiums)

 
suze
807740.  Wed Apr 20, 2011 4:44 pm Reply with quote

If that person does not make a claim, indeed so.

 
Spud McLaren
807752.  Wed Apr 20, 2011 5:06 pm Reply with quote

Neotenic wrote:
... so fire insurance arrived on the scene at almost the precise moment the risk of losing everything to the flames dropped dramatically.
A knack insurance companies have merely honed to perfection over the intervening years.

 
RLDavies
807774.  Wed Apr 20, 2011 6:11 pm Reply with quote

My father always hated the idea of insurance. The way he looked at it, you're betting on yourself to die, or have your house burnt down, or whatever. Which is kind of true, in a way.

 
Neotenic
807780.  Wed Apr 20, 2011 6:35 pm Reply with quote

In the same way that wearing a seatbelt is a tacit admission that you're going to crash, yes.

 

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