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Why don't we have national car insurance? Watch

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    It seems to me that drivers would be better off if they could obtain their insurance through central government instead of through private insurers.

    It doesn't seem fair, given that car insurance is a legal requirement if you wish to drive, that no alternative to paying vast sums of money to *******ly insurance companies exists.

    Instead, why not have a national system. You are responsible for a car crash, instead of going to your insurer you get a government loan to cover your expenses, which you have to pay back at an affordable rate (with some public profit).

    People who don't get into car crashes don't have to pay anything (yay!), and insurance companies, whilst not banned has such, are left to go do one (double yay!). People who don't drive still don't have to contribute.

    This driver's safety net would exist kind of like a national driver's association, that after initial effort would be able to sustain itself and contribute a little to the public pocket.

    I'll admit, I haven't thought this through a great deal, so I'm sure you can murder me with plenty of criticisms, but thoughts anyone?
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    Its the old problem of nationalised industry vs privatised industry. The argument will never be won.
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    National insurance in the loan form you described plus private insurance if you want it.
    I'd imagine with private insurance being optional rather than compulsory the premiums would come screaming down too.
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    (Original post by BeanofJelly)
    It seems to me that drivers would be better off if they could obtain their insurance through central government instead of through private insurers.

    It doesn't seem fair, given that car insurance is a legal requirement if you wish to drive, that no alternative to paying vast sums of money to *******ly insurance companies exists.

    Instead, why not have a national system. You are responsible for a car crash, instead of going to your insurer you get a government loan to cover your expenses, which you have to pay back at an affordable rate (with some public profit).

    People who don't get into car crashes don't have to pay anything (yay!), and insurance companies, whilst not banned has such, are left to go do one (double yay!). People who don't drive still don't have to contribute.

    This driver's safety net would exist kind of like a national driver's association, that after initial effort would be able to sustain itself and contribute a little to the public pocket.

    I'll admit, I haven't thought this through a great deal, so I'm sure you can murder me with plenty of criticisms, but thoughts anyone?
    What you have described is not insurance. People would be financially crippled by an accident, and payouts would take forever, potentially never being made.

    It would be far more expensive than the current system.
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    You put someone in a vegetative state, you're going to be paying for life.
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    (Original post by chestercityfan)
    National insurance in the loan form you described plus private insurance if you want it.
    I'd imagine with private insurance being optional rather than compulsory the premiums would come screaming down too.
    Yes quite

    (Original post by Kiirk)
    To allow competition, so that the government does not maintain a monopoly over car insurance.
    They wouldn't have a monopoly because private insurance companies would still exist. Rates would come down because there would be an alternative to "extortionate".
    Market forces working to the benefit of the customer is this ideal that a significant number of people think works all of the time - but to me insurance companies are the perfect example of how clearly markets can become stagnant and unfair. Insurance isn't like buying a product, it doesn't play by the same rules and you forget that in this instance the company has an inherent advantage - many people can't opt out. Where demand is so artificially elevated by legal and social necessity customers will get a bad deal.

    (Original post by Apagg)
    What you have described is not insurance. People would be financially crippled by an accident, and payouts would take forever, potentially never being made.

    It would be far more expensive than the current system.
    And people aren't currently financially crippled if they get into an accident? As it stands young people can't drive, whether they get into accidents or not without being financially crippled. Insurance companies literally milk their customers, I don't see how any system could be more expensive for the average driver.

    You have a point though, if someone were unfortunate enough to smash up a bentley rather than a nissan then they might be crippled with some massive drawn-out debt. But perhaps compensation could be put in place to help with that. A maximum financial penalty dependant on income perhaps? .. Maybe a little too socialist for some people's tastes Perhaps then just a maximum penalty - the difference being compensated by the minor profits generated from such an enterprise.

    (Original post by Lack of Creativity)
    You put someone in a vegetative state, you're going to be paying for life.
    Hmmmmm I'll try to think of something.


    EDIT: Even if there are problems with a repayable loan idea, that still doesn't exclude the idea of a regular insurance company that operates in the usual way ... just owned by the driving public (hence not overly concerned with raking in an enormous profit at the expense of it members). I still like the repayable loan idea
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    (Original post by BeanofJelly)
    And people aren't currently financially crippled if they get into an accident? As it stands young people can't drive, whether they get into accidents or not without being financially crippled. Insurance companies literally milk their customers, I don't see how any system could be more expensive for the average driver.

    You have a point though, if someone were unfortunate enough to smash up a bentley rather than a nissan then they might be crippled with some massive drawn-out debt. But perhaps compensation could be put in place to help with that. A maximum financial penalty dependant on income perhaps? .. Maybe a little too socialist for some people's tastes Perhaps then just a maximum penalty - the difference being compensated by the minor profits generated from such an enterprise.
    No, because the insurer covers all costs, and the only cost to you is your premium for that year and a subsequent increase in the premium you are charged (depending on the nature of the accident).
    My brother was recently knocked off his motorbike. No injuries, bike was written off. Insurance paid him £8000 - no driver (of a normal car) has that kind of premium. Imagine how much you'd be paying if you disabled someone. Of course your system would be more expensive.

    The whole point of insurance is to transfer risk from the insured to the insurer. Your system leaves all risk on the "insured".
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    You are responsible for a car crash, instead of going to your insurer you get a government loan to cover your expenses, which you have to pay back at an affordable rate (with some public profit).
    This is fine if you're talking about "cheap" cars but most people would not be able to pay back the price of a Porshe or expensive car they crashed into in any reasonable timeframe!

    I'd much rather see a limit to the absurd prices that young drivers are charged or atleast allow a proper decrease of the premiums if you have a reasonable excess. When I last did an insurance comparison changing the excess to a high amount made almost zero difference.
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    (Original post by BeanofJelly)
    Yes quite



    Even if there are problems with a repayable loan idea, that still doesn't exclude the idea of a regular insurance company that operates in the usual way ... just owned by the driving public (hence not overly concerned with raking in an enormous profit at the expense of it members). I still like the repayable loan idea
    i like the sound of that one... i've thought about it for all of 20 seconds so i'm sure i'm being silly, but wouldn't the exact same system of insurance being in place but owned by those who pay in the first place work? because it could be run at a 'ticking over' rate, not 'make a huge profit out of people who have no other choice' rate?
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    (Original post by Apagg)
    No, because the insurer covers all costs, and the only cost to you is your premium for that year and a subsequent increase in the premium you are charged (depending on the nature of the accident).
    My brother was recently knocked off his motorbike. No injuries, bike was written off. Insurance paid him £8000 - no driver (of a normal car) has that kind of premium. Imagine how much you'd be paying if you disabled someone. Of course your system would be more expensive.

    The whole point of insurance is to transfer risk from the insured to the insurer. Your system leaves all risk on the "insured".
    Thankyou for your input I think you may be right. I asked for thoughts afterall

    But why not then have some kind of centralised insurance company (operating in the usual fashion) which would be considerably cheaper because it's profit agenda would be significantly reduced?
    Kind of like the insurance equivalent to how building societies used to be - owned by their members (in this case the driving public) with their interests at heart.

    It's only that my experience of insurance companies is they sting you for years, you have an accident, they pay for as little as possible and then sting you again at a higher rate.

    Most people spend more on their insurance than they get, and that is fair enough because they might have been the person who gets "saved" from the terrible financial burden of a really expensive accident (such as your brother).

    But my objection is that insurance companies gain a massive net profit, more than enough to cover their costs. If you had a member-owned company those costs could go back into the pockets of drivers, particularly responsible drivers.


    Based on some sensible thread feedback:

    How about a combo of:

    Repayable loan for "affordable accidents" and
    Steady premium payment to cover the risk of "disastrously expensive" accidents

    But without the millions going into the pockets of the middle man, because of what this person said:

    (Original post by conway!)
    because it could be run at a 'ticking over' rate, not 'make a huge profit out of people who have no other choice' rate?
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    (Original post by BeanofJelly)
    Thankyou for your input I think you may be right. I asked for thoughts afterall

    But why not then have some kind of centralised insurance company (operating in the usual fashion) which would be considerably cheaper because it's profit agenda would be significantly reduced?
    Kind of like the insurance equivalent to how building societies used to be - owned by their members (in this case the driving public) with their interests at heart.

    It's only that my experience of insurance companies is they sting you for years, you have an accident, they pay for as little as possible and then sting you again at a higher rate.

    Most people spend more on their insurance than they get, and that is fair enough because they might have been the person who gets "saved" from the terrible financial burden of a really expensive accident..

    But my objection is that insurance companies gain a massive net profit, more than enough to cover their costs. If you had a member-owned company those costs could go back into the pockets of drivers, particularly responsible drivers.


    Based on some sensible thread feedback:

    How about a combo of:
    Repayable loan for "affordable accidents" and
    Steady premium payment to cover the risk of "disastrously expensive" accidents combo would be best.

    But without the millions going into the pockets of the middle man, because of what this person said:
    Why do you think a nationalised insurer would be cheaper? If you wanted it to be profitable it would have to set premiums in the same way as current insurers do. They don't just charge whatever they feel like, they make actuarial calculations to find the expected loss on a policy and set the premium in an attempt to make sure they don't lose money.

    You say insurers are making a massive net profit. In fact, car insurers are currently losing money on the insurance part of their business (it has been loss making for years now) and are instead reliant on investment income. So if anything premiums are too low - the fact is that young drivers are simply very risky to insure. Blame the idiot boy racers, not the insurance companies.
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    (Original post by Apagg)
    Why do you think a nationalised insurer would be cheaper? If you wanted it to be profitable it would have to set premiums in the same way as current insurers do. They don't just charge whatever they feel like, they make actuarial calculations to find the expected loss on a policy and set the premium in an attempt to make sure they don't lose money.

    You say insurers are making a massive net profit. In fact, car insurers are currently losing money on the insurance part of their business (it has been loss making for years now) and are instead reliant on investment income. So if anything premiums are too low - the fact is that young drivers are simply very risky to insure. Blame the idiot boy racers, not the insurance companies.
    You may have a point again, I need some valiant defender to come in with some handy statistics right now huh Not gonna happen.

    Is investment income the money they make through interest from their saved up for a bad year money?

    They are businesses though. They don't operate to make no profit, their interest must be in profit and not in their customers. The reasons they are in loss seem to be out of their wormy little hands rather than from the goodness of their hearts. In the long run they have to be more expensive than a non-profit organisation, no?
    Aren't they whopping up the premiums this year?

    I think you are generally right though, competition is apparently high oh and my thread had so much potential :p:

    Well at least I got my question answered. You should check out my other thread it was much more sensible
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    (Original post by Apagg)
    The whole point of insurance is to transfer risk from the insured to the insurer. Your system leaves all risk on the "insured".
    This isn't a bad thing, it would certainly encourage safer, more careful driving. I have a friend who has crashed and claimed six times, I haven't crashed ever and have been driving longer than her and yet my permiums are still higher than hers - I'm paying for everyones' bad driving AND extra for 'boy racers'. Neither of my parents have had a crash that was their fault, my dad was hit while stationary but that's it. I'd support this system as there's simply no reason to crash if you drive sensibly and with awareness, therefore there is no reason why I, as a safe driver, should be paying for other people's recklessness and lack of road savvy. Imagine a system where if someone commits a crime everyone in the community has to go to prison for a while, that's effectively what we have now with car insurance.
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    (Original post by Einheri)
    This isn't a bad thing, it would certainly encourage safer, more careful driving. I have a friend who has crashed and claimed six times, I haven't crashed ever and have been driving longer than her and yet my permiums are still higher than hers - I'm paying for everyones' bad driving AND extra for 'boy racers'. Neither of my parents have had a crash that was their fault, my dad was hit while stationary but that's it. I'd support this system as there's simply no reason to crash if you drive sensibly and with awareness, therefore there is no reason why I, as a safe driver, should be paying for other people's recklessness and lack of road savvy. Imagine a system where if someone commits a crime everyone in the community has to go to prison for a while, that's effectively what we have now with car insurance.
    Yay some support, that was what I was thinking with the loan idea - that drivers pay for their own accidents.

    But the quoted person is correct in saying that people can have really expensive accidents, where no-one is particularly to blame, and then it's not a great insurance system for them to then be burdened with a giant debt.

    The reason we pay premiums when we haven't had any accidents is on the trade-off that it might never pay out, but then again we might have an accident we can't afford - so we're paying to avoid that risk.

    I guess though with some form of public loans system you could choose to not have that kind of insurance, without impeding the law (the right of other driver's to get money up front if you damage their property). But be absolutely screwed if you produce a costly accident.

    Perhaps if you had a combined loan for affordable accidents and insurance for unaffordable accidents a greater proportion of the cost (through a debt system for those smaller more affordable accidents) would be attributed to those who are having the accidents.

    But then again, don't insurance companies already get you back (disproportionately to other drivers) when you have an accident anyway?
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    (Original post by BeanofJelly)
    It seems to me that drivers would be better off if they could obtain their insurance through central government instead of through private insurers.


    Instead, why not have a national system. You are responsible for a car crash, instead of going to your insurer you get a government loan to cover your expenses, which you have to pay back at an affordable rate (with some public profit).

    People who don't get into car crashes don't have to pay anything (yay!), and insurance companies, whilst not banned has such, are left to go do one (double yay!). People who don't drive still don't have to contribute.

    ?
    People demand insurance in order to avoid hefty out-of-pocket payments should they have an accident - you're bascially calling for abolishing car insurance. So many car drivers are prepared to pay a premium in exchange for passing on the risk to insurance companies, who then pool the risk together. The reason car insurance is mandatory is because under a voluntary system, those most likely to avoid accidents would opt-out, thus leading to a pool of customers most at risk, leading to market failure.
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    Eugh, oh yes, lets rely on the government when we need money. blah blah blah.

    Private insurance is a good thing. it's there. it's yours. You are pretty much 100 per cent protected. I doubt it would be as 'idiotproof' if it was directly from the Government.

    Plus, wouldn't it first have to be born out of taxes? A system like the NHS is different because it's universal, everyone needs it, whereas not everyone has, wants or needs a car.
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    (Original post by BeanofJelly)
    You may have a point again, I need some valiant defender to come in with some handy statistics right now huh Not gonna happen.

    Is investment income the money they make through interest from their saved up for a bad year money?

    They are businesses though. They don't operate to make no profit, their interest must be in profit and not in their customers. The reasons they are in loss seem to be out of their wormy little hands rather than from the goodness of their hearts. In the long run they have to be more expensive than a non-profit organisation, no?
    Aren't they whopping up the premiums this year?

    I think you are generally right though, competition is apparently high oh and my thread had so much potential :p:

    Well at least I got my question answered. You should check out my other thread it was much more sensible
    Kind of... insurers take the premium you pay them and invest it, mainly in government bonds though also, to a small extent, in the stock market. They hold mainly bonds because these can be liquidated (turned back into cash) easily in the event they suddenly have to pay out a large number of claims.

    Obviously they'd like to make a profit from both underwriting and investing. But at the moment they are making a loss, implying premiums are too low. An insurer required to break even on underwriting (or turn a profit) would be charging much higher premiums.
    They always try and increase premiums but from my understanding the car insurance market is "soft" at the moment and won't accept higher premiums - they're having a hard time of it.
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    (Original post by Einheri)
    This isn't a bad thing, it would certainly encourage safer, more careful driving. I have a friend who has crashed and claimed six times, I haven't crashed ever and have been driving longer than her and yet my permiums are still higher than hers - I'm paying for everyones' bad driving AND extra for 'boy racers'. Neither of my parents have had a crash that was their fault, my dad was hit while stationary but that's it. I'd support this system as there's simply no reason to crash if you drive sensibly and with awareness, therefore there is no reason why I, as a safe driver, should be paying for other people's recklessness and lack of road savvy. Imagine a system where if someone commits a crime everyone in the community has to go to prison for a while, that's effectively what we have now with car insurance.
    Hmm, perhaps. I'm just as inclined to think that if people aren't encouraged to drive safely by the risk of personal injury or even death in the event of an accident, money won't make much difference either. I'd also say that without insurance, the kind of people who drive recklessly are also the sort who will try and duck out of paying damages (the same people don't bother buying insurance at the moment). At least with insurance the third party is covered and doesn't have to worry about the other driver paying up.
    It's actually more that if someone in the community commits a crime, everyone pays more in taxes to cover the cost of increased policing and repairing the damage done. Which is pretty much how things work


    Interestingly, I have heard that women have more crashes per miles driven but fewer claims overall because they drive less. Men are in fact safer drivers but not in a way that helps reduce premiums!
 
 
 
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