Floods and Insurance?

[Tracker]

My heart goes out once again to those poor people who have lost so much - some that can and much that cannot be replaced as well as the trauma involved in such losses as the latest climate anomalies continue to hit this country.

 

Having been involved directly when I worked for the Pru and having seen the destruction to real homes and real people's lives and done my best to help the Pru pay for it all to be reinstated I wouldn't wish it on anyone least of all those who have done nothing wrong to get into this mess.

 

Leaving aside the reasons for climate anomalies and the rights and wrongs of government action or inaction on flood defences how do others feel about the alleged actions of insurers in taking a tough line - meaning sky high premiums and a huge excess - or even refusing cover to those who have been flooded?

 

I understand the principles of insurance and that you can't insure against something you know will happen one day - except death - but the other principle that we all pay in to protect the minority who need help still remains.

 

I don't see the insurers running to HMRC when they have a good year and offering to pay more 'windfall' tax so why now should the government respond to the insurers plea for more funds to help them maintain premium levels.

 

Personally I long ago made sure that my own home insurance sums insured are so high that I will never ever be under insured and surely the time is now right for every policy to carry sums insured of that nature to remove one of the nastier sides of insurance claim pitfalls?

 

If I have to pay more to protect others so be it because one day it might just be me who is in dire need of the support of my insurers?

 

How do the rest of you feel about this?

[nowtelse2do]

How many times has Tewksbury been flooded recently. Their houses must be virtually unsaleable :'( Terrible for them, such a nice place as well.

 

Dave

[Brian Kirby]

I think it is an "industry" that has lost its way. There are two sides to insurance. There is insurance against the chances of life, and there is insurance against things that one can influence or control. The former, generally, include things like property and health insurance while the latter include things like accidental damage or car insurance. Varying premiums as an incentive to folk to be cautious and careful is IMO fair in the latter cases, but generally iniquitous in the former.

 

It is unreasonable to raise premiums for a person whose house has been damaged by flood or storm, of for a person whose genes leave them susceptible to certain illnesses or conditions, because they can do so little to avert the risks. If a flood prone property is subsequently sold, then may be the time to change the premium, because the new tenant/owner then has choice over whether or not to buy, and so to accept the risk.

 

So, set flat premiums to cover the foreseeable global risks across the the cases where the insured has no control, and leave the variable, incentive based, premiums for those forms of insurance where the insured has choice over the risks they present.

[Paul-]

Particularly for houses on floodplains perhaps the risk should be stood by the ones who gave the planning permission.

People can only buy what they can afford and too often believe the sellers.

 

 

 

 

[Brian Kirby]

Be even better if it could be reclaimed from those who decided restrictions on house building on flood plains should be lifted, and those who lobbied for the lifting of those restrictions. I wonder who that was? :-D

[CliveH]

Bit of confusion between Assurance and Insurance

 

Assurance is to cover something that will happen - such as death. So here you take out Life Assurance for say a 40 year term and the premiums stay the same for each and every year regardless of your state of health declining over that period. As such Life Assurance Annuity contracts etc. are sometimes called Permanent policies in that only you can stop the policy. The Life Office has a contract with you for the full term - in this example 40 years. Even if the provider goes bust the FSCS ensures that the industry steps in such that another insurer buys the "book" and maintains cover for the individuals.

 

Example of this would be Prudential taking over the Investment Annuity book of Equitable life and Canada Life taking over the Gilt based annuity book.

 

Insurance is to cover something that may happen. Insurance policies are usually termed "general insurance" which defines them as being annually renewable. Which means that the insurance company only takes on liability for one year. You have to renew on each policy anniversary.

 

At each renewal point - your claims history and the claims history of that "risk" is assessed and the premium calculated.

 

We all know that dangerous drivers have more claims and so have higher premiums. Drunk drivers have to pay higher premiums when they get their licence back. Some Corporate policies state categorically that they will not insure an employee for company car use if they get done for drink driving. So their contract states that being convicted of drunk driving also gets you the sack.

 

I only mention this because Insurance is designed to apply a premium specific to your risk.

 

The idea of a global insurance scheme to protect those at higher risk will never take off because those who have low premiums due to driving safely, do not drink and drive, owning a house in a well sited area that does not flood should not be asked to sponsor those that do not.

 

How would we all feel if our house insurance premiums were increased so that those in Thatched Properties paid the same premium as us? Owners of Thatched Properties accept that the risks are higher and thereby accept higher premiums.

 

What should happen in my view is that where the flood risk is increased due to bad planning permission being granted such that flood plains are built on or drainage compromised by ill thought out projects then their should be responsibility levelled at those that sanctioned these projects.

 

This does work. When the insurance companies learnt that the local authorities in some areas had blocked up storm drains and their claims went through the roof - they sought legal advice on their ability to claim against those that sanctioned this. The legal bods cited the case where the Fire Brigade decided to let a factory burn to the ground rather than bother to put it out because the Fire Brigade reasoned at the time that as the building was "insured" the insurance company could pick up the tab.

 

The courts thought differently and the Fire Brigade was found guilty by dereliction of duty and had to pay money back to the insurance company because it was thought reasonable by the court that the Fire Brigade should have done its job.

 

As such it was reasoned that Local Authorities that blocked or did not maintain storm drains or sanctioned poor planning would be liable for claims against them by insurance companies who could reasonably expect proper due diligence to be carried out in this area.

 

So - if you live in a high risk area your best recourse is to research what the local authority has done to protect you or to make matters worse.

 

Best thing to do is to make sure you do not put yourself in that situation in the first place - tho I quite accept that is not always possible or practical.

 

 

[Tracker]

Thanks Clive - and there was me thinking that temporary life insurance was just that - insurance against something that might not happen within the term of the policy - such as mortgage protection at a basic level!!

 

The risk of dying within the term has to be evaluated on an individual basis according to perceived risk with the riskier (aka unhealthier or older or dangerous occupation) lives paying, fairly in my view, a higher premium for their cover.

 

I don't believe in flat rate home insurance either unless the home owner has lived in a perceived flood (or theft) risk area for many years without claiming and could have had no way of knowing prior to purchase of the property back then. That said, common sense dictates that if you live on a river bank sooner or later it will flood!

 

Those that have knowingly bought a home in a known flood risk area deserve little sympathy for higher premiums as it has been for several years easy enough to check on the EA website but nevertheless I do believe they should still be offered cover albeit at greater cost and excess if nothing for else than to encourage them to take reasonable preventative measures of their own - and to be fair to the rest of us who will still partly subsidise them.

 

Similarly with car insurance this EU cobblers that women drivers should pay the same as men when women clearly make fewer and generally lower value claims - partly because they in general drive slower than men so they don't hit things as hard and partly because they in general drive fewer miles each year - is crazy and surely goes against all the principles of insurance risk assessment just to be politically correct.

 

 

[CliveH]

Yes - the EU ruling that annuities should be unisex as well is simply going to make Male annuity rates lower.

 

The numpties come up with these politically correct spherical objects of ideas and convince themselves that they are correct and that they are going to make things better.

 

Invariably they do not.

 

One point re Live Assurance - for a 40 year term or a 10 year term - the risk is for the individual to die within that period. Death is a certainty - the odds of dying within a specific time period is one of the factors that determine the premium. The other is your state of health.

 

Smoke 40 a day and your premium will be higher.

 

Or at least it will be until some PC numpty states that such a distinction is not allowed and we non-smokers have to pay more so that smokers can pay the same as us.

 

(And I hope I am joking 8-) (lol) (lol) (lol) )

 

 

[Tracker]

CliveH - 2012-11-27 8:03 PM

 

(And I hope I am joking 8-) (lol) (lol) (lol) )

 

 

But I fear you may not be!!

 

SHHHHHHHHH don't for heavens sake give the numpties any more great ideas!!

[Brian Kirby]

CliveH - 2012-11-27 8:03 PM...............One point re Live Assurance - for a 40 year term or a 10 year term - the risk is for the individual to die within that period. Death is a certainty - the odds of dying within a specific time period is one of the factors that determine the premium. The other is your state of health.

 

Smoke 40 a day and your premium will be higher.

 

Or at least it will be until some PC numpty states that such a distinction is not allowed and we non-smokers have to pay more so that smokers can pay the same as us.

 

(And I hope I am joking 8-) (lol) (lol) (lol) )

 

Hmmm! Well most of us can't do anything about our gender, or about the different life expectancies it imposes on us, but we can choose whether or not to smoke. So I'll kind of go along with even annuity rates, but I'd object strongly to having to underwrite persistent smokers on health insurance premiums.

[Tracker]

Brian Kirby - 2012-11-27 8:49 PM

Hmmm! Well most of us can't do anything about our gender, or about the different life expectancies it imposes on us, but we can choose whether or not to smoke. So I'll kind of go along with even annuity rates, but I'd object strongly to having to underwrite persistent smokers on health insurance premiums.

 

As far as annuity rates (and life insurance/assurance)are concerned, women outlive men by around 6 years on average, which is the basis that an actuary uses calculates the returns to the annuitant - he's the guy paying them to rip him off courtesy of the EU!

 

So if women live longer for the same annuity cost they will benefit more than the average man, which means that far from being fair this is penalising men - just as the 'equality' of car insurance is penalising women!

 

Oh well I suppose the EU would call that balanced from the perspective of their unbalanced mythical gravy train as it heads home to their ivory tower - also paid for by us!!

[CliveH]

Brian Kirby - 2012-11-27 8:49 PM

 

CliveH - 2012-11-27 8:03 PM...............One point re Live Assurance - for a 40 year term or a 10 year term - the risk is for the individual to die within that period. Death is a certainty - the odds of dying within a specific time period is one of the factors that determine the premium. The other is your state of health.

 

Smoke 40 a day and your premium will be higher.

 

Or at least it will be until some PC numpty states that such a distinction is not allowed and we non-smokers have to pay more so that smokers can pay the same as us.

 

(And I hope I am joking 8-) (lol) (lol) (lol) )

 

Hmmm! Well most of us can't do anything about our gender, or about the different life expectancies it imposes on us, but we can choose whether or not to smoke. So I'll kind of go along with even annuity rates, but I'd object strongly to having to underwrite persistent smokers on health insurance premiums.

 

But the fact is Brian that smokers tend to live longer than non-smokers and annuity providers and Term assurance providers and this is reflected in the Annuity and Life Cover rates.

 

So why when Women live longer than men should they be forced to pay more for life cover due to some EU numpty deciding that reality does not exist?

 

By exactly the same token why should males have their annuity rates lowered to unisex rates?

 

http://www.investmentsense.co.uk/retirement-why-21st-december-2012-is-a-key-date-for-male-retirees/

 

The reality is that women live longer than men. If you smoke you compromise your health.

 

The former from January next year will no longer be able to be taken into account.

 

Whereas the latter will still apply.

 

[Guest peter]

CliveH - 2012-11-27 9:04 PM

 

Brian Kirby - 2012-11-27 8:49 PM

 

CliveH - 2012-11-27 8:03 PM...............One point re Live Assurance - for a 40 year term or a 10 year term - the risk is for the individual to die within that period. Death is a certainty - the odds of dying within a specific time period is one of the factors that determine the premium. The other is your state of health.

 

Smoke 40 a day and your premium will be higher.

 

Or at least it will be until some PC numpty states that such a distinction is not allowed and we non-smokers have to pay more so that smokers can pay the same as us.

 

(And I hope I am joking 8-) (lol) (lol) (lol) )

 

Hmmm! Well most of us can't do anything about our gender, or about the different life expectancies it imposes on us, but we can choose whether or not to smoke. So I'll kind of go along with even annuity rates, but I'd object strongly to having to underwrite persistent smokers on health insurance premiums.

 

But the fact is Brian that smokers tend to live longer than non-smokers and annuity providers and Term assurance providers and this is reflected in the Annuity and Life Cover rates.

 

Boy am I glad to hear that Clive. :D :D

[CliveH]

peter - 2012-11-27 10:24 PM

 

CliveH - 2012-11-27 9:04 PM

 

Brian Kirby - 2012-11-27 8:49 PM

 

CliveH - 2012-11-27 8:03 PM...............One point re Live Assurance - for a 40 year term or a 10 year term - the risk is for the individual to die within that period. Death is a certainty - the odds of dying within a specific time period is one of the factors that determine the premium. The other is your state of health.

 

Smoke 40 a day and your premium will be higher.

 

Or at least it will be until some PC numpty states that such a distinction is not allowed and we non-smokers have to pay more so that smokers can pay the same as us.

 

(And I hope I am joking 8-) (lol) (lol) (lol) )

 

Hmmm! Well most of us can't do anything about our gender, or about the different life expectancies it imposes on us, but we can choose whether or not to smoke. So I'll kind of go along with even annuity rates, but I'd object strongly to having to underwrite persistent smokers on health insurance premiums.

 

But the fact is Brian that smokers tend to live longer than non-smokers and annuity providers and Term assurance providers and this is reflected in the Annuity and Life Cover rates.

 

Boy am I glad to hear that Clive. :D :D

 

Oh OUCH!!!

 

Thanks for the heads up Peter

 

The last para should read that "smokers tend to live shorter lives than non-smokers ....."

 

Apologies 8-)

[Tracker]

CliveH - 2012-11-28 8:45 AM

 

The last para should read that "smokers tend to live shorter lives than non-smokers ....."

 

Apologies 8-)

 

Thank heavens for that!!

 

And the fact that they pay so much to kill themselves does have to be the ultimate irony!!