/ Insurance, capitalism and morality

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Jon Stewart - on 16 Apr 2014

Today I picked up the renewal notice from my car insurer and thought, "there is no way I'm paying that" so I looked on a comparison site and of course there were much better deals around. I rang my insurer and said, "so then, this is the best offer I've got, what's yours, it's clearly not that nonsense you sent in the post?". They said, "no of course not, we were just taking the piss with that, seeing if you were either too busy or too lazy to give us a ring, we can offer pretty much the same as anyone else".

I shrugged it off, and thought "what a shit, crooked world we live in".

But it played on my mind. There is nothing surprising about this banal tale. But is it alright, morally, that my expectations of people should be so low? Although it requires something of a stretch of the imagination, insurance companies are actually collections of people - human beings. It wasn't magic, or an accident, or a mistake that they tried to rip me off, it was a decision. A pathetic, dishonest attempt to take a couple of hundred of quid out of my bank account and add it to their profits without providing anything in return.

Now this market is regulated, and I say that the regulation has failed, because whenever I have any dealings with the financial services and insurance sector, they lie to me and try to rip me off to the tune of hundreds or thousands of pounds. Well, yes, regulation fails.

But the moral question is this: have we failed? We don't refuse to deal with the people who behave like this, we don't refuse to work for them, we don't, through our elected representatives, ensure that the cheats are brought to justice. We just shrug it off, or join in.

After a bit I went up to Stanage and climbed many of my favourite routes in the beautiful cool spring air as the sun set. But some poor bastard just went home from work having spent the day trying to cheat and lie his way into a little bit more money.
Post edited at 21:54
In reply to Jon Stewart:

I agree. I struggle to know how they draw the line between banks charging you a fortune for going a quid overdrawn for a day (good) and payday loans (bad).
Rick Graham on 16 Apr 2014
In reply to Jon Stewart:

I agree.

The reason we put up with it is because on , say , car insurance we have no choice, its a legal requirement.

Industry speak.
"Low Risk Policy" A rip off , no chance of ever having a claim.

Loss Adjuster.
A person who's job it is to reduce claims, not a claims assessor.


Rick Graham on 16 Apr 2014
In reply to Jon Stewart:

and being of a certain age, how I laughed when the Annuity rip off got axed, how they bleated.
andy - on 16 Apr 2014
In reply to Jon Stewart:
I wonder what the "real" price would be though? The switchers' price is probably uneconomic, subsidised by the stickers' price - so the "real" price is somewhere in between. They tried that with mortgages (CAT standard that were designed by civil servants to offer "long term value") a few years ago - nobody bought them, because they were a lot more expensive than the new business deals.
Jon Stewart - on 16 Apr 2014
In reply to andy:

> I wonder what the "real" price would be though?

Good point. But when you start to examine it, you see that this market is a load of arse. There is no market without the deceit and obfuscation, all many of us need is our car insured as a legal requirement, so in a market that worked there would be a single price for 3rd party cover.

The "products" on sale are just bundles of lies and manipulation. The whole concept of a no claims bonus invalidates the product. Would I buy trousers which came with a "no wear" bonus off the next pair?

I'm starting to feel the death of my spirit just discussing this. To maintain my health I should ignore it, but then I become culpable - complicit inaction.

Skyfall - on 16 Apr 2014
In reply to Jon Stewart:
> After a bit I went up to Stanage and climbed many of my favourite routes in the beautiful cool spring air as the sun set. But some poor bastard just went home from work having spent the day trying to cheat and lie his way into a little bit more money.

How do you know the poor bastard wasn't merrily climbing alongside you having done his job?

I completely agree with the general sentiment however.

I managed to reduce my insurance by almost 50% on two occasions because of the same attitude (and I'm talking quite large sums in absolute terms as well).
Post edited at 22:22
Jon Stewart - on 16 Apr 2014
In reply to Skyfall:

> How do you know the poor bastard wasn't merrily climbing alongside you having done his job?

I noticed that everyone at the crag cast a shadow.
Rob Exile Ward on 16 Apr 2014
In reply to Jon Stewart:

Don't EVER get involved in property. The insurance schemes regarding covenants, deposits and the like are arcane beyond imagining. I think they are put together by pointy headed actuaries whose grasp of math(s)is only marginally below that of Stephen Hawking.

At another level - you're an optician, right? When you sell a product that may be available at a marginally lower price somewhere else, you don't go and top yourself, do you? These are complex equations involving service, aftercare, convenience - the market decides which permutations are acceptable.

Though I agree with your point - working out these permutations must be soul destroying, nothing like as satisfying as creating a product and working out a fair price that satisfies both parties.

Skyfall - on 16 Apr 2014
In reply to Rob Exile Ward:

Whilst I get market forces (I run my own business), I do think that the attitude of insurance companies (particularly car insurance) stinks and is close to immoral. We're not talking small differences here.
Timmd on 16 Apr 2014
In reply to Jon Stewart:

> I noticed that everyone at the crag cast a shadow.

Like.
In reply to Jon Stewart:

> I noticed that everyone at the crag cast a shadow.

Nice one!
Rob Exile Ward on 16 Apr 2014
In reply to Skyfall:

I'm conflicted too. At one level it's just a manifestation of market forces - at another it's...











satanic.
Blue Straggler - on 16 Apr 2014
In reply to Jon Stewart:

> Today I picked up the renewal notice from my car insurer and thought, "there is no way I'm paying that" so I looked on a comparison site and of course there were much better deals around. I rang my insurer and said, "so then, this is the best offer I've got, what's yours, it's clearly not that nonsense you sent in the post?". They said, "no of course not, we were just taking the piss with that, seeing if you were either too busy or too lazy to give us a ring, we can offer pretty much the same as anyone else".

Interestingly I went through this last year and found that the "better deals" were not really better.
This year my "stick with it" renewal actually looks acceptable. I ran everything through a comparison website and the only ones that came out cheaper were with non-established brands who have got a poor reputation based upon a quick browse at customer reviews - and they were only about 20% cheaper and that's the "lure you in price"; by the time I've submitted additional details they are bound to increase. So this time, it's not worth my bother. I will just stick with the current insurer and accept their renewal premium - essentially I have taken a decision to not spend several hours chasing up maybe at best a 30 saving.
Timmd on 16 Apr 2014
In reply to Jon Stewart:
> I'm starting to feel the death of my spirit just discussing this. To maintain my health I should ignore it, but then I become culpable - complicit inaction.

You can't change every ill in society, but perhaps you could contact 38 degrees or another online pressure group which specialises in causing a fuss?

It's the best I can think of at gone quarter to eleven anyway. Take comfort in not being immoral, in it's own small way I'm sure it contributes.
Post edited at 22:49
Stig - on 16 Apr 2014
In reply to Jon Stewart:

HI Jon,

Interesting, I have been mulling this over recently after we have switched our weekly shop due to financial pressures [two kids in nursery three days a week - separate issue] from Ocado to the newly opened local Lidl. Saving about 30 a week. What interested me is that my welfare / use value from the goods hasn't dropped in the slightest. In fact I would say that some of the groceries are of higher or equivalent standard to those from the big four. So the gap is pure surplus value going towards the supermarket in question.

Do I have a problem with this? not greatly. If the supermarkets can convince people to pay more through marketing/image/middle class touchy-feelgoodness then so be it. I guess what annoys me more is the blatant attempts to mislead/confuse. the supermarket equivalent here is those stupid deals that aren't deals which require standing staring at the packets of ham doing mental maths to work out that the one not in a deal is the best value. However, to answer your question my expectation is that this is all pretty much fair play in a market economy and on balance I like living/operating in a market economy. I just feel slightly overwhelmed with gratitude (and say so) when I get, say, a genuinely good meal cooked with care and skill for a fair price: i.e. when someone is doing something out of love rather than trying to turn a dollar.

As to insurance (or energy, or rail tickets), I guess I have different expectations. If companies know well that through inertia, ignorance or stupidity people won't exercise their consumer sovereignty then that's their look out. its been this way since the Thatcher revolution. Have we failed in some wider political sense? I don't really think so, I feel that collectively (if that means anything any more) we have gone along with that. There are still wider political feedback loops, look at the way Osborne is sensitive to cost of living issues, petrol prices, inflation etc.. You allude to regulation etc but I don't really think its about regulation. Some of these companies that as you say engage in this behaviour are already beginning to lose. The big supermarkets are screwed I think, for example.

My message (similar to yours): go climbing, ignore this shit and make your own way in life. Anyway, rambling answer (brain fried after two days climbing), good questions.
Jon Stewart - on 16 Apr 2014
In reply to Rob Exile Ward:
> Don't EVER get involved in property.

No danger of that. I've been through the painful process of buying a flat once (obviously it involved a lot of people ripping me off) and I never intend to buy or sell again (this is actually more likely than you might think).

> At another level - you're an optician, right?

Not quite yet, I start my pre-reg this summer. I will loathe being pressured into telling people that their prescription has changed, when the change is not actually a change, just the variability of measurement. That is dishonesty and it goes on all the time in the profession - because it operates within our crooked market system. Dealing with it is a challenge which awaits me.

> Though I agree with your point - working out these permutations must be soul destroying, nothing like as satisfying as creating a product and working out a fair price that satisfies both parties.

It seems to me you are blurring the lines between a market which considers more than just the product at face value, and the outright deceit and manipulation of the insurance (and property) business. If I was to sell a pair of specs at a higher price than a competitor then the customer would be able to think about whether or not to shop around. But if I was to have different prices for different customers for the same product, allowing customers to pay the higher price unless they asked for the lower one, then I would soon become known as dishonest. I would hopefully be taken to a civil court and I would hope that the business would go under.

I agree that there is a sliding scale (what about a contact lens reward scheme?) but saying "oh now you mention it, I was trying to rip you off by 200 and you caught me" is well, well off the end of that sliding scale.

Do you think it's possible that you're trying to justify dishonesty by drawing parallels that don't hold?
Post edited at 23:00
Phill Mitch - on 16 Apr 2014
In reply to Jon Stewart:

We just got our quote from last years insurer, way over the odds. I felt the best way to deal with it was to just change insurer. Since then I have had 2 letters and a phone call to say if I find a cheaper quote let them know as they might be able to help!
No wonder people are making false claims with no conscience or moral dilemma.
Gordon Stainforth - on 16 Apr 2014
In reply to Stig:

> My message (similar to yours): go climbing, ignore this shit and make your own way in life. Anyway, rambling answer (brain fried after two days climbing), good questions.

You seem to have missed Jon's main point, which was 'some poor bastard just went home from work having spent the day trying to cheat and lie his way into a little bit more money.' This is a big problem with our modern world, since many professional standards more or less collapsed about three decades ago. There are some encouraging signs, in some areas of life (but still not politics, it seems) that some of those old standards are being clawed back, with great difficulty.

This is a problem to be solved, though. Not to be bickered about.


Jon Stewart - on 16 Apr 2014
In reply to Phill Mitch:

> No wonder people are making false claims with no conscience or moral dilemma.

Yep, that's the consequence, a vicious circle. Well it's not so vicious for the the insurers, they just make even more while a little bit flows out to the customer cheats.
ads.ukclimbing.com
Oujmik - on 16 Apr 2014
In reply to Jon Stewart:

You can argue that this is 'just the market at work' but the market is a human construct, not some godlike entity that must be revered. When the market doesn't serve humanity, something needs to change.

The insurance industry has been caught in a race to the bottom for some years, arguably helped on its way by comparison sites. They are in a position where price is almost the only differentiator and the prices offered to entice new customers are not profitable (or at least not to the extent demanded by shareholders) so the only way to win new business is to subsidise your new customer offers with increasing penalties for existing customers. It's a market in which customers are penalised for loyalty. In theory, this should be unsustainable as poor customer satisfaction ultimately leads customers to leave. The problem is that there is no alternative (other than leaving the market altogether) as the whole market has moved into this state. Until someone changes the game (either a radical new business model or a change to the rules) we're stuck with it.

Incidentally, this penalty for loyalty is a hallmark of the world's most disliked industries - insurance, banks, utilities, insurance.
Phill Mitch - on 16 Apr 2014
In reply to Oujmik:

> Incidentally, this penalty for loyalty is a hallmark of the world's most disliked industries - insurance, banks, utilities, insurance.

Capitalism at it's best!
One reason I love to go to wild places and climb, away from the s**t.
Jon Stewart - on 16 Apr 2014
In reply to Stig:

> HI Jon,

> If the supermarkets can convince people to pay more through marketing/image/middle class touchy-feelgoodness then so be it.

Agreed, that's part of the product, no outright deceit involved. The marketing debate is another interesting one...

> I guess what annoys me more is the blatant attempts to mislead/confuse.

Exactly. But the insurance example is worse than this, it's deceit. It's having 2 different prices for the same product depending on what you say. If anyone thinks that's acceptable, I would suggest that there's always a slim chance that they may end up spending eternity burning in hell.

> However, to answer your question my expectation is that this is all pretty much fair play in a market economy and on balance I like living/operating in a market economy.

This is a really interesting angle: could we still have the benefits of a market economy without having to experience the nausea and depression that come with the vulgar cheating and lying the market surrounds us with? I'd like to think that effective regulation would aim to achieve exactly that...but in a globalised world, effective regulation might come at the cost of the generation of wealth.

> As to insurance (or energy, or rail tickets), I guess I have different expectations. If companies know well that through inertia, ignorance or stupidity people won't exercise their consumer sovereignty then that's their look out...Have we failed in some wider political sense? I don't really think so, I feel that collectively (if that means anything any more) we have gone along with that.

I don't see it that way. I had all day to sort out some admin stuff, do a bit of work, and go climbing. Most people's lives aren't like this, they have jobs and families and better things to do with their time than fill out 4-page forms on the internet as a defense against some cheating, lying dick who manages an insurance firm. The market exploits people's circumstances, we only "go along with it" because we don't have time to oppose it. The market system we live under operates against the concept of a functioning market: information is suppressed so that prices can be distorted in favour of the vendor. It isn't the market that's the problem, it's the cheating and lying that a "free" market inevitably incubates.

> I don't really think its about regulation. Some of these companies that as you say engage in this behaviour are already beginning to lose. The big supermarkets are screwed I think, for example.

I think you're unjustifiably optimistic!
Jon Stewart - on 16 Apr 2014
In reply to Oujmik:
> You can argue that this is 'just the market at work' but the market is a human construct, not some godlike entity that must be revered. When the market doesn't serve humanity, something needs to change.

Strikes me that the system is such that the needs of humanity are unequally expressed:

- the voices of those that are served very well by the market and who can ignore its corruption and the misery it creates (like, I dunno, the soulless arseholes who run banks and insurance firms) are loud

- the voices of those who are served well by the market but can see the profound disadvantages of its corruption are silent, because to speak up harms their self-interest (like me)

- the voices of those who actually suffer because the market is crooked cannot be heard because they don't have access to the microphone (they can't afford to buy it)

A very effective deadlock on the system, if you're in the first group.

> The insurance industry has been caught in a race to the bottom for some years...It's a market in which customers are penalised for loyalty...Until someone changes the game (either a radical new business model or a change to the rules) we're stuck with it.

> Incidentally, this penalty for loyalty is a hallmark of the world's most disliked industries - insurance, banks, utilities, insurance.

Very true, I would describe it as evidence for failed regulation.
Post edited at 23:55
Alkis - on 17 Apr 2014
In reply to Jon Stewart:

For three years in a row my insurer offered me a much better deal when I called them. I didn't even need to cite any online quotes, I just called, told them that I got the letter and asked them if the price is right and to give me a quote. Every time, they would beat their own price by a couple hundred pounds and they didn't seem to be reacting to any external forces to do so, since I have never had to even mention other insurers' quotes.
Jon Stewart - on 17 Apr 2014
In reply to Alkis:

It's so brazen it's almost funny.

Imagine it in a shop, everything priced up with vastly inflated but just-plausible labels, the guy on the till keeping his gob shut until someone asks "are these carrots really a quid each?"
deepsoup - on 17 Apr 2014
In reply to Skyfall:

> Whilst I get market forces (I run my own business), I do think that the attitude of insurance companies (particularly car insurance) stinks and is close to immoral. We're not talking small differences here.

And that's even before you consider their complicity in the whole "claims farming" malarky, which is all *extremely* murky and has done a great deal to drive all our premiums upwards, ever upwards. (Whilst rewarding some fairly extreme scumbaggery on the part of various ambulance chasers and dodgy claimants.)
Jim C - on 17 Apr 2014
In reply to Rick Graham:

> and being of a certain age, how I laughed when the Annuity rip off got axed, how they bleated.

I'm going to help with the lambing this weekend at my sister's farm. There could be less bleating going on there than there is currently going on with these rip off merchants . I expect them to give people a better Annuity, deal, or people will just take their money from them.

I'm laughing along with you Rick.
Jim C - on 17 Apr 2014
In reply to Jon Stewart:

> It's so brazen it's almost funny.

> Imagine it in a shop, everything priced up with vastly inflated but just-plausible labels, the guy on the till keeping his gob shut until someone asks "are these carrots really a quid each?"

There is a programme on TV where people bring items to a dealer to get offers, the dealers start low,and work up to see if the punter is stupid enough to accept a low deal.

Some punters are stupid enough to take an offer, when the obvious thing to do is just say no until the dealer stops increasing the offer, at which point you either take the deal or go to auction .
They even have had to step in sometimes to stop punters being ripped off too much.

The best tactics are so obvious,but still people take an offer before the dealer says no more.

People really are that stupid, and they even go on TV to prove it !

Ferret on 17 Apr 2014
In reply to Jon Stewart:

While I agree its a pretty crooked market and it is not fair to offer unsustainably low rates to new customers to try to win business while over charging existing customers we all know it happens and we can all deal with it.

Walk away or negotiate. Its not that hard.

And to my mind, better to have the power in the hands of the consumer than have yet another (badly) regulated market. We do not need a regulator to sort out prices in a competitive market, that is up to us as consumers to make a choice of price/embugerment factor and quality of service. There are hundreds of insuers (or brands at least) so there is choice (unlike say, energy where the regulator gets involved as there is insufficient competition).

As someone else said, many of the cheap deals come from unknowns or companies with obviously poor service standards. While I'm not altogether convinced its that easy to figure out which companies are actually semi decent I do try and don't take the cheapest quote each year. A new entrant making a splash on customer service or added value has a reasonable chance of attracting customers, and getting good 'reviews' online and building up a sustainable business.

In fact, in last 2 years, my renewal (Privilege) has come through cheaper, with a loyalty bonus on it and on checking comparisons its not been worth moving (a few quid/very small %age saving) to go to an unknown with lots of internet stories about not paying out.

Last thing I want is a regulator getting involved - choice and power should lie with the buyer, and it does with a modicum of care and effort. If people can't be bothered to look after themsleves, in a market where they can I can't see any gain in paying a regulator to do it.
andy - on 17 Apr 2014
In reply to Jon Stewart: doesn't the same thing happen (in a small way) when individuals are selling cars/bikes/second hand gear in some way? I put a jacket on UKC at 100 knowing full well I'll take the first 85 I'm offered?

The thing I have a problem is is cross-subsidisation - a business model that relies on some people over-paying to mean some people get stuff cheap - like current accounts thst most of us get free when of course they're not free to operate.

Then there's airline tickets - I booked me and the kids' ski flights for next Feb half term -144 a head. Six hours later the price was 350. Would it be better if it was 200 all the time? It'd certainly be simpler, but then I wouldn't have as much fun checking prices every morning!

John_Hat - on 17 Apr 2014
In reply to Jon Stewart:

I'm not really sure whether you are being a bit naive here.

The insurance industry reacts to customers, and if customers didn't persist in valuing price (which is exactly what you are doing) over everything else then we wouldn't be in this situation.

Because the insurance industry knows that customers will buy the insurance at 299.99 over the one at 300 they do their best to get the price down as much as possible, including sacrificing any shred of customer service (because consumers really don't value it), and, because its easier to keep customers than win them (because of customer apathy), offering what amounts to a discounted rate in the first year to attract you in and shoving the price up after that.

What the hell do you expect them to do when you (and everyone else) prioritise price as the only element of a buying decision? Your second year premium is paying for someone else's discounted first year. And last year, someone else's second year was paying for *your* first year (when you were happy with the price).

I do honestly wonder about folk. The financial service sector is an industry, and out to make money. However some people appear to believe that it is actually a philanthropic charity designed to help the consumer and do the very best to - whilst competing with everyone else in the industry and offering the consumer the lowest price possible - make sure that they make as little money as possible in the process.

I wish consumers would either take the (minimal) time to learn about the way the world works or employ a financial advisor to educate them and/or make the decisions for them - but the consumer wouldn't pay for the financial advisor and refuses to do the minimal research, and then complain when the FS industry attempts to make money out of them - and says its all a con and how its all the fault of the financial sector...

...whilst then complaining about how they are not getting a good enough service, saying its all a con, and regulation has failed, and conveniently forgetting that service is paid out of the profits that are made elsewhere, which they don't think that the company has the right to make.

*sigh*

Chambers - on 17 Apr 2014
In reply to Jon Stewart:

> I'm starting to feel the death of my spirit just discussing this. To maintain my health I should ignore it, but then I become culpable - complicit inaction.

Not necessarily. Once you realise that capitalism is the most ethically bankrupt system of society ever devised and understand that it is concerned with profit and nothing else you will be able to float through the crap without ever feeling the slightest bit culpable.

TheDrunkenBakers - on 17 Apr 2014
In reply to Jon Stewart:
I completely agree with you and absolutely agree that one should exercise one's rights and scour the market for better deals. As another has said, I recently did this and found that for my wife's car, the stick-with-it deal was better than the rest and with a 'good' insurer, Aviva.

I say good insurer because I had a burglary a few years ago and made a claim of over 4 grand, which was complex an involved an expensive watch and items lost in the car which was stolen and burnt out. They were proficient, helpful and ultimately paid out on everything we claimed for, albeit they asked some pretty hard question during the process, which I accept if we are to stamp out fraud. This is where insurance works well - I paid in 400 for that year's premium and I was paid out well over 4k- good value for money I would say.

I come at this from a slightly different perspective and can see some of the mechanics in the industry. I am professionally trained in insurance and ACII qualified and worked in the industry some time ago. This doesn't stop me from being extremely frustrated too.

So, let's take this down to brass tacks and a few hundred years. Insurance as always been a gambling industry and believe it or not, once upon a time you could actually bet on the death of anyone's life, including the Kings, and get a payout if he/she died. Insurance in its modern form is a British invention and came about a little later from the coffee shops in London where merchants wanted to protect cargo and vessels against loss or damage at sea where these merchants and other people came together and pooled capital against losses in a form of mutual organisation; the notion of pooling the resources of many to protect the losses of few should be the central tenet of insurance. Ill come back to this later.

This money could then be invested and if losses didnt occur the returns would be paid out to the 'investors' or some would say, gamblers, in dividends or other some such. Lloyds of London was built on these groups of individuals, called names and grouped into syndicates which in principle still works in the same way but of course is much more sophisticated.

Todays insurance businesses have lost their way in my opinion and behave too much like businesses and less like mutuals, some of this has been consumer driven too. Those poor people whom were flooded this year; ask them how easy it will be to get flood insurance on their homes from now on and if they can get cover, how much will it cost? If the original principles applied then everyone's premiums would rise slightly to cover the loss of a few and these folks should be able to get cover at a reasonable cost. The fact is that the insurers don't want to cover a high risk so exclude it and if they do, apply a punitive excess or premium. This, I think, is completely wrong. Consumers complain if premiums go up too much without understanding the central principles of what insurance is for and these complaints manifest with the industry limiting their losses through unreasonable exclusions. (one could also argue that the insurers should take a greater role and try and influence town planning to limit the building on flood plains in the first place but that's for a different thread)

On a more personal note, I have a couple of shoulder injuries and have recently had to reapply for life and critical illness to cover my mortgage. Not only have I had a slight premium increase on the policy but the insurer has completely excluded claims relating to my shoulders, a potential reason to actually make a claim. So the insurance company fails to insure for anything known!

These businesses and syndicates cant sustain perpetual losses over time as the system wouldnt function but in not covering for flood or previously known risks, for the consumer, some would say that the system already is.
Post edited at 09:09
Coel Hellier - on 17 Apr 2014
In reply to Jon Stewart:

Everyone accepts that markets need regulation.

I think that a very good new law would be that for all financial transactions (credit, insurance deals, interest rates in savings accounts, etc) the provider must offer the same price to everyone, so if they offer a better deal to a new customer they must automatically reduce the amount they are charging existing customers.

Of course they'd be allowed to charge a different rate according to relevant factors such as credit rating, length of lock-in for savings rates, etc), but not offer new customers better deals than they'd offer an existing one.
RomTheBear - on 17 Apr 2014
In reply to Jon Stewart:

> After a bit I went up to Stanage and climbed many of my favourite routes in the beautiful cool spring air as the sun set. But some poor bastard just went home from work having spent the day trying to cheat and lie his way into a little bit more money.

Capitalism works very well if you are selfish, always on the look out for a better deal, and always suspicious of those you trade with. It's a system based on selfishness and paranoia.

Interestingly richer people on average score higher on psychopathic tests, most likely because they are able to take cold calculated decisions based solely on self interest.

The thing is most people are not greedy psychopath, so in this system the majority of us who tend to trust and give will always be f*cked in the arse from time to time, that's just the way it is.
Ferret on 17 Apr 2014
In reply to Coel Hellier:

I can see where you are coming from but where do you draw the line and why the bias against 'financial transactions'?

What about car showrooms, furniture shops, jewelers etc? Most establishments that sell something offer at a price and may negotiate further. Some people are better at negotiating than others. Do we need to 'regulate' to ensure that everybody pays sticker price on a car or everybody gets a mandated 10% discount or do we just accept that people are responsible for their own fate and should obtain the best deal they can themselves?

I'm not a great negotiator, so when I buy a car I generally do shed loads of research and buy the cheapest example I can find that matches my needs and will try to get a discount but will be aware that if the range of prices I'm seeing on the car I'm intersted in (same age, spec, mileage etc) is say 4k to 5k, if I go to the dealer selling one at 4k I will probably not get much if any discount. If I go to the guy selling at 5k I would hope to get it for 4k but I know I'm rubbish at negotiating so tend to expect not to, so I simply don't go there.

Do I need rules to 'protect' me from my inability to negotiate hard? No.
ow arm - on 17 Apr 2014
In reply to Jon Stewart:

we should be taught about this stuff in school, basics, to protect ourselves as far too many kids / adults are naive about this form of greed
Coel Hellier - on 17 Apr 2014
In reply to Ferret:

> where do you draw the line and why the bias against 'financial transactions'?

Things like offering credit, banking transactions, insurance transactions are already specifically regulated and licensed. Thus it would be easy enough to make rules specific to those. The aim is partly to stop being getting a worse deal, but also just to simplify life, and stop people having to put effort into shopping around.
Neil Williams - on 17 Apr 2014
In reply to Ferret:
I don't think I'd want to see it regulated, but I do think I'd vastly prefer it if you just paid list price for a car rather than the faux-negotiation to get a price the dealer expected in the first place. That said, Kia tried that on a commercial basis and found it lost them sales, as while the list prices were low people like "getting themselves a bargain".

That said, some regulation is good. I like the way mobile phone companies have now been forced (by the EU I think) to separate buying a phone on credit from the actual airtime contract. It makes things much clearer, and means you don't have to pay off an airtime contract to get a new phone if you break yours (or similar), you just have to pay the cost of the phone. Thus making insurance largely unnecessary.

As for car insurance, I'd like to see third-party liability insurance provided by the Government from a fuel levy as it is in some countries. The insurance companies could then compete on service rather than just price to see what cover people might want to add on top. Or you could just choose to buy a cheap car and have only the third party insurance provided by the Government. I don't think having compulsory insurance but making it provided by a free market to be particularly effective.

Neil
Post edited at 10:28
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Ferret on 17 Apr 2014
In reply to Coel Hellier:

But surely you still need to shop around as the nature of insurance itself is that there are differences of opinion on how to correctly price risk. So ignoring the issues of first year teaser rates vs humping people who remain year after year, even if you stay with a firm, if they were competitive when you were 25 (they think 25 year old boy racers are lower risk than another firm say), by the time you are 30 with a longer driving record, your existing firm may think you are higher risk than another firm who hated 25 year olds but are convinced that 30s are OK.

So you would still need to shop around. Unless we move to a universal insurance model where everybody pays the same. That is fair (by one measure), and insurance actually works best this way as those who need insured get it at an affordable rate and those that don't still pay (subsidising higher risks)..... However, that model breaks down as there is no incentive to 'being carefull', so if everybody pays the same theres no incentive to drive carefully and avoid claims (and hence avoid proving yourself to be a bad risk).

Why do we need to regulate/legislate to 'stop people having to put the effort into shopping around'? That sounds like the worst of the nanny state to me and might actually stifle the market further and prevent innovation of service, or gaining market share by providing better products/services than others.
Neil Williams - on 17 Apr 2014
In reply to Ferret:
"if everybody pays the same theres no incentive to drive carefully and avoid claims (and hence avoid proving yourself to be a bad risk)."

So you'd think, but it isn't so much my observation. I know some safe drivers, and I know some bad ones with high accident records. The fact that someone might lose their no-claims or get hit with a premium hike does not with anyone I know influence their style of driving. Personally (I'm on the careful side generally) I don't want to crash because (a) I don't want to get hurt, (b) I don't want to hurt anyone else and (c) I don't want the hassle. That if I did my insurance might go up a couple of hundred quid a year for a bit is neither here nor there.

I have spoken to people (who don't drive defensively) and pointed out that whoever's fault it is you don't want to crash so you might as well accommodate others' shitty driving, but for some reason surprising numbers of people don't get that...

Neil
Post edited at 10:31
Neil Williams - on 17 Apr 2014
In reply to Jon Stewart:

Notably, I've taken Direct Line's renewal premium for my car insurance every year for about the past 5 years, as I've never actually beaten it by any significant margin using any of the price comparison sites, and in any case I trust them, whereas I don't *want* to cut to the bone as I know that in the event of a claim I'll have trouble. I have claimed off Direct Line (home insurance) and found them very helpful.

I suspect I must be lucky to fall into the bracket of very low risk on their underwriting criteria, though.

Neil
Jon Stewart - on 17 Apr 2014
In reply to John_Hat:

> The insurance industry reacts to customers, and if customers didn't persist in valuing price (which is exactly what you are doing) over everything else then we wouldn't be in this situation.

Wow, that's a bizarre interpretation. Let me run the situation past you again:

Insurer: The price of this product is 500
Me: Are you sure?
Insurer: No, I was lying. It's 300.

Can you see what I'm objecting to yet? The clue is in a single word above, can you spot it?

> Because the insurance industry knows that customers will buy the insurance at 299.99 over the one at 300...

You're not addressing the point. My insurer then offered me the same product at a different price.

> What the hell do you expect them to do when you

Not lie about the price. What the business does is attempt to prevent consumers making rational choices by obfuscating the price of the product.

> I do honestly wonder about folk. The financial service sector is an industry, and out to make money. However some people appear to believe that it is actually a philanthropic charity designed to help the consumer and do the very best to - whilst competing with everyone else in the industry and offering the consumer the lowest price possible - make sure that they make as little money as possible in the process.

Claptrap. I do not object to a competitive market, I object to dishonesty. The fact that you equate an objection to dishonesty with a belief that an industry should run philanthropically suggests that you have a poor understanding of what honesty actually entails.

> I wish consumers would either take the (minimal) time to learn about the way the world works...they don't think that the company has the right to make.

> *sigh*

Sigh indeed. We're back where we started at low expectations. I'll reiterate the simple point made at the outset: I do not object to the market, I object to crooked markets in which information is obfuscated to rip the consumer off.

An interesting point was made about the businesses that are loathed - energy, banks, insurance - and which penalise loyalty. What these business have in common is that there isn't sufficient product differentiation to operate a market without the practice of obfuscation of prices; and the product is something that we have to have. They are what I describe as "bullshit traders". This is why they are loathed, your thesis that it's because consumers think the world should be made of fluffy bunnies, is I'm afraid, a load of crap.
Jon Stewart - on 17 Apr 2014
In reply to Ferret:

> If people can't be bothered to look after themsleves, in a market where they can I can't see any gain in paying a regulator to do it.

Sounds good, but I remain unconvinced that consumers are given sufficient information to look after themselves. If I go for a cheap switch deal, how do I know the disadvantages? Given that the price of the product changed with a few words over the phone, how do I know it couldn't change again if I wrote a letter?

Markets work when there is free information. It is in vendors' collective interests to choke off the flow of information - that is where the regulator would help, not by price control.
RCC - on 17 Apr 2014
In reply to Jon Stewart:
> Wow, that's a bizarre interpretation. Let me run the situation past you again:

> Insurer: The price of this product is 500
> Me: Are you sure?
> Insurer: No, I was lying. It's 300.


That is one interpretation, but it is a bit dishonest. Products have no objective value. The price can be as high as the buyer is willing to pay, or as low as the seller is prepared to charge.

It is exactly the same conversation that happens every day on the for sale forum.
Seller: Want to buy this product for 500?
You: It clearly isn't worth that; try again.
Seller: Would you pay 300?
You: Ok then.

You can't really claim that they lied to you.
Post edited at 11:52
ByEek - on 17 Apr 2014
In reply to RCC:

Seconded. In the ideal world, every product would have a different price for every person based on whatever they felt was good value. In the software world I inhabit, price is a very fickle thing. A few years ago, we segmented our offering and quadrupled the price of the top-tier product. The majority of our customers didn't bat an eye lid.
pebbles - on 17 Apr 2014
In reply to Oujmik:

"You can argue that this is 'just the market at work' but the market is a human construct, not some godlike entity that must be revered. When the market doesn't serve humanity, something needs to change."

Like. can i vote for you?
Jon Stewart - on 17 Apr 2014
In reply to RCC:

> That is one interpretation, but it is a bit dishonest. Products have no objective value. The price can be as high as the buyer is willing to pay, or as low as the seller is prepared to charge.

> It is exactly the same conversation that happens every day on the for sale forum...

> You can't really claim that they lied to you.

That sounds convincing until you consider the context. When we buy second hand goods from an individual, we're engaging in barter and the rules are understood by both parties. There is no dishonesty involved. The vendor says "would anybody like to buy this for 500" and reacts to bids.

With car insurance, I receive a letter which says: "On the 23rd of April, I'm going to take 500 out of your account for this product, because that is its price. The end." It's not really a situation of open barter is it? Bear in mind also that I have to have the product, if not from them, so the tone of the letter stating the price as if it's immutable, and my knowledge that not having the product is a criminal offence, all contribute to a deceit.

The point stands that a market is bullshit if it descends into a game of cat and mouse trying to uncover the information.
MG - on 17 Apr 2014
In reply to Jon Stewart:

Can't you just stuff your details into price comparison site like everyone else? I'd say insurance is pretty easy to get a good deal with. Energy is much harder as you never really know how much you are going to use or how prices will chance, and therefore which tariff will work out best.
MG - on 17 Apr 2014
In reply to Jon Stewart:

> With car insurance, I receive a letter which says: "On the 23rd of April, I'm going to take 500 out of your account for this product, because that is its price. The end." It's not really a situation of open barter is it?

Well it is, isn't it. As you said, you just ring them, or go elsewhere.
Jon Stewart - on 17 Apr 2014
In reply to ByEek:

> Seconded. In the ideal world, every product would have a different price for every person based on whatever they felt was good value.

In an ideal world, each buyer would know what the last buyer paid and that would influence the price that was settled on. Very basic stuff.
RCC - on 17 Apr 2014
In reply to Jon Stewart:

> With car insurance, I receive a letter which says: "On the 23rd of April, I'm going to take 500 out of your account for this product, because that is its price. The end." It's not really a situation of open barter is it?


Completely open. You will suffer no penalties if you choose not to renew with them, and you choose to pay by direct debit.

The requirement for insurance (if you drive a car) is irrelevant. Food is even less optional, but that doesn't make food shopping unfair to the consumer.
Jon Stewart - on 17 Apr 2014
In reply to MG:

> Can't you just stuff your details into price comparison site like everyone else? I'd say insurance is pretty easy to get a good deal with.

Not read much of the OP, have you?

> Well it is, isn't it.

Err, no. A situation in which not engaging means you're charged hundreds of pounds over the odds for a product you must legally have is not "open", no.
MG - on 17 Apr 2014
In reply to Jon Stewart:

> Err, no. A situation in which not engaging means you're charged hundreds of pounds over the odds for a product you must legally have is not "open", no.

Well if you find that too much effort I am very happy for you to keep subsidising my insurance. Thanks. It's just like any other bartering - if you don't ask, you don't get.

Seriously, of all the things to get worked up about, this is pretty trivial. Everyone knows the game and it's simple to play.
MG - on 17 Apr 2014
In reply to Jon Stewart:

Have you ever tried buying an airline ticket. You won't believe it but the prices change depending on when you ask! Unbelievable isn't it!
Jon Stewart - on 17 Apr 2014
In reply to RCC:

> Completely open. You will suffer no penalties if you choose not to renew with them, and you choose to pay by direct debit.

See post above. Your definition of open is weird. Plus I'm not sure I have the choice to pay DD, I pay annually to avoid being ripped off further and since they have my card details, I think they just take the money to avoid me being uninsured. I guess there is some smallprint somewhere that would allow me to opt out of that, but describing the situation as "open" is absurd.

> The requirement for insurance (if you drive a car) is irrelevant. Food is even less optional, but that doesn't make food shopping unfair to the consumer.

No, food is much more optional. You decide when you'll have it, what kind you'll have, and if you choose not to buy any you could conceivably get it from outside the market.
Jon Stewart - on 17 Apr 2014
In reply to MG:

> Well if you find that too much effort I am very happy for you to keep subsidising my insurance. Thanks. It's just like any other bartering - if you don't ask, you don't get.

Not read much of the OP, have you?

> Seriously, of all the things to get worked up about, this is pretty trivial. Everyone knows the game and it's simple to play.

The point is that a market is bullshit when it descends into a game of cat and mouse trying to get your hands on the information. We put up with it in insurance, imagine if when you went to the shop, there were no prices, you weren't allowed to overhear other transactions, and you were ushered straight to the till with a trolly full of stuff at exorbitant prices as soon as you went in. It would be bullshit, would it not? Why is it OK for the pricks in one business to do it, but not in another?
hamsforlegs - on 17 Apr 2014
In reply to Jon Stewart:
I'm not sure I agree with this last post.

[Edit - took too long to post - this was referring to your post about 'lying']

There is no 'lying' about the price. The price is just the amount you end up paying for it - it's not fixed by some exogenous process and then simply administered. Commerce itself decides the price.

I think there is dishonesty in insurance companies' approach of offering cover crafted in such a way that it will almost never pay out. TheDrunkenBears has described how explicit this is across large parts of the industry. This is really a collective action problem, since most people will tend to rail against paying a little more to indemnify someone else, even though we will be the 'someone else' at some point in the future. I tend to think that insurers get away with this due to a general collapse in public understanding of collective systems and their value.

Your more general point is a good one though.

I do think we are too slow to hold organisations accountable as collections of people making decisions about their actions. You see this in the tax debate: 'You can't make a moral argument - they are companies minimising costs within the law, so change the law'.

Well.... 'changing the law' has proved inadequate due to the short termism of senior executives and the investors around them. They prefer the comfort of professional tax planning to the complexity of making long term investments in the society around them. It's much, much easier to do, involves hiring lots of familiar buddies from other firms, and gives measurable short term outcomes and so higher bonuses.

So why not be clearer - people leading organisations that engage in such pathetic and unethical behaviour are lazy, venal and unhelpful. They shouldn't be offered the best table in the restaurant, lordships, and a fawning tug of the hair. They should be treated with the disdain served up to other anti-social folk. They might be 'within the law', but we should all exercise our right to tell them to p**s off, both through our consumer decisions and, where possible, in more personal and direct ways.
Post edited at 12:25
RCC - on 17 Apr 2014
In reply to Jon Stewart:
> ...I'm not sure I have the choice to pay DD, I pay annually to avoid being ripped off further and since they have my card details, I think they just take the money to avoid me being uninsured. I guess there is some smallprint somewhere that would allow me to opt out of that, but describing the situation as "open" is absurd.

Again your choice if you sign up to an agreement you are not happy with. Every policy that I have taken out has had the option of out of non-automatic renewal.

> No, food is much more optional. You decide when you'll have it, what kind you'll have, and if you choose not to buy any you could conceivably get it from outside the market.

True, but in the real world almost everyone has to buy food. Similarly, if you really wanted to, you could avoid paying motor insurance buy not having a car, or making a deposit to the Accountant General of the Supreme Court. Your other points about consumer choice with food can equally well apply to motor insurance.
Post edited at 12:26
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Jon Stewart - on 17 Apr 2014
In reply to MG:

> Have you ever tried buying an airline ticket. You won't believe it but the prices change depending on when you ask! Unbelievable isn't it!

Not really. It would piss me off though if someone else asked at the same time and got a different price, because it would be dishonest.
Jon Stewart - on 17 Apr 2014
In reply to RCC:

So you can't see the difference between barter and churning through smallprint being necessary in order to maintain full control of a transaction?

Do you think that markets work better when information is open, or when it is obfuscated by the vendor?
Neil Williams - on 17 Apr 2014
In reply to Jon Stewart:
"Insurer: The price of this product is 500
Me: Are you sure?
Insurer: No, I was lying. It's 300."

Is that what it is, though? The price of an insurance policy is clearly negotiable, like the price of a car or house, but not like the price of a tin of beans in the supermarket. As I've posted I'm not a massive fan of this, but I don't think anyone is under the illusion of it not being the case.

So it's more like:-

Insurer: My initial offer is 500, will you accept it?
You: No.
Insurer: OK, how about 300?
You: Yes.

Or...

Insurer: My initial offer is 500, will you accept it?
You: Insurer Y is offering 300, I'll go with them unless you are cheaper?
Insurer: OK, how about 299?
You: Yes.

Neil
Post edited at 12:39
RCC - on 17 Apr 2014
In reply to Jon Stewart:

> So you can't see the difference between barter and churning through smallprint being necessary in order to maintain full control of a transaction?

Well, you can speak from your own experiences, but it has never been hidden from me, and when I've asked the insurance company to remove the auto-renewal, it has always been done. As to reading contracts that I am about to sign, yes I generally do. Strange habit I know...

Neil Williams - on 17 Apr 2014
In reply to RCC:
Given the pretty nasty consequences of ending up uninsured (not only illegal but also likely to cause you issues getting insurance in future if caught, not to mention expensive if you're cack-handed enough to crash into someone's Ferrari), auto-renewal is probably a good thing for the less organised among us, and not a bad thing per-se for the more organised as they will always get round to ringing up and cancelling.

I *know* it's intended to keep you on board through inertia, but it does have other benefits.

Neil
Post edited at 12:41
Neil Williams - on 17 Apr 2014
In reply to RCC:
Yes, I always read small-print. I would suggest others do as well, otherwise at some point they'll be caught out.

Example in my case: I do a lot of business travel. There are two common underwritings on home insurance - one of them denies you cover if you are away for 50 nights consecutively (this never happens), the other denies you cover if you are away for 50 nights in any one calendar year (this in some years does, or at least comes close). There might also be a third one that says any 365 day period, which isn't *quite* the same. So I have to read the T&C to ensure I choose the former, as the latter would be utterly useless.

There are surprisingly many such variations that will affect surprisingly many people.

Neil
Post edited at 12:44
Neil Williams - on 17 Apr 2014
In reply to RCC:
"That is one interpretation, but it is a bit dishonest. Products have no objective value. The price can be as high as the buyer is willing to pay, or as low as the seller is prepared to charge."

That is indeed a basic tenet of business. If there is to be a sale, there will be a point where the lowest the seller will charge and the highest the buyer will pay meet. That point is the point at which a sale occurs. If they don't meet, there is no sale. That point will vary by customers.

Supermarkets do it as well by having "value", normal and "finest" ranges. Often there's not so much difference between them.

Airlines and trains do it as well, though usually by product differentiation, e.g. based on the idea that you have time or money but not both, you can tend to save a lot of money on the same seat by booking early or travelling at an inconvenient time.

Neil
Post edited at 12:47
ByEek - on 17 Apr 2014
In reply to Jon Stewart:

> In an ideal world, each buyer would know what the last buyer paid and that would influence the price that was settled on. Very basic stuff.

Well not really. You are assuming that everyone is utterly concerned about always paying the absolute lowest price possible. Why do you think car options on new cars are so expensive? 1000 for a satnav? Because there are enough people out there who are willing to pay 1000 for a sat nav. Those who aren't will go down the road and buy one for 50 anyway. You also have to remember that the garage only needs one person to spend 1000 to make more money than the guy in the shop down the road who might sell x10 50 satnavs. By the end of the day, the person selling cheap sat navs has made less turnover, less profit and done 10 times as much work as the chap in garage who only sold one. What sort of a crazy business model is that?

And this is the rub. The assumption that all businesses want your business is completely wrong. In truth, businesses only really want the business of their target market who will pay full price without question and then not start making a fuss and requiring additional fuss. Such customers are star customers and make up about 20% of all customers within a market. The rest either cause a fuss or cost the business money in terms of agro or support.
Neil Williams - on 17 Apr 2014
In reply to MG:
In terms of advance time, yes. Technically they could increase them based on your previous travel profile, or based on how many people are searching at any given time, but I'm not aware of any airline (not even Ryanair) that actually does that.

I've heard it alleged that trains do, but knowing a reasonable amount about the NRS (the back-end system behind all of the websites and also ticket offices) it is not capable of doing that. The only differentiation it can do is based on ticket quotas and sales outlets (e.g. a TOC can hold back some cheap fares to sell from their website only, which is why it's best to book with the operator you're using and never to use the Trainline etc, not to mention the extra fees that site charges).

Neil
Post edited at 12:51
Jon Stewart - on 17 Apr 2014
In reply to hamsforlegs:
> There is no 'lying' about the price. The price is just the amount you end up paying for it - it's not fixed by some exogenous process and then simply administered. Commerce itself decides the price.

This is a really interesting point. The price theoretically as you say is not fixed but is the amount you end up paying. However, in our culture we make many implicit assumptions about price. We assume that we operate in an open market and that the price we see on a label has been arrived at through the process of commerce: we don't barter in shops. The rules about when we do and don't barter are subtle and unwritten. This gives leeway for obfuscation and manipulation.

I do take your point that "lying" is not strictly the correct term. "Taking the piss massively" would be fair, as would "attempting to deceive into paying an unreasonable cost". The deceit is the presentation that the price is fixed, and it being hundreds of pounds above what the insurer will settle on.

Well, we all know we can go on a price comparison site. Yes, we all know that the market involves a game of cat and mouse in which the vendor obfuscates the price.

> I think there is dishonesty in insurance companies' approach of offering cover crafted in such a way that it will almost never pay out. TheDrunkenBears has described how explicit this is across large parts of the industry. This is really a collective action problem, since most people will tend to rail against paying a little more to indemnify someone else, even though we will be the 'someone else' at some point in the future. I tend to think that insurers get away with this due to a general collapse in public understanding of collective systems and their value.

Absolutely agree.

> Your more general point is a good one though.

> I do think we are too slow to hold organisations accountable as collections of people making decisions about their actions. You see this in the tax debate: 'You can't make a moral argument - they are companies minimising costs within the law, so change the law'.

> Well.... 'changing the law' has proved inadequate due to the short termism of senior executives and the investors around them. They prefer the comfort of professional tax planning to the complexity of making long term investments in the society around them. It's much, much easier to do, involves hiring lots of familiar buddies from other firms, and gives measurable short term outcomes and so higher bonuses.

> So why not be clearer - people leading organisations that engage in such pathetic and unethical behaviour are lazy, venal and unhelpful. They shouldn't be offered the best table in the restaurant, lordships, and a fawning tug of the hair. They should be treated with the disdain served up to other anti-social folk. They might be 'within the law', but we should all exercise our right to tell them to p**s off, both through our consumer decisions and, where possible, in more personal and direct ways.

Hear hear!
Post edited at 12:51
MG - on 17 Apr 2014
In reply to Neil Williams:

Well I was being slightly provocative but I don't really see the fundamental difference - prices change.

Anyway, I have heard that the likes of Ryanair do change prices if you repeatedly look at the same route. By increasing the fare each time you look, you are more likely to buy as it makes you think there aren't many seats left. To get round this, delete cookies.
Stig - on 17 Apr 2014
In reply to Jon

> With car insurance, I receive a letter which says: "On the 23rd of April, I'm going to take 500 out of your account for this product, because that is its price. The end." It's not really a situation of open barter is it? Bear in mind also that I have to have the product, if not from them, so the tone of the letter stating the price as if it's immutable, and my knowledge that not having the product is a criminal offence, all contribute to a deceit.

> The point stands that a market is bullshit if it descends into a game of cat and mouse trying to uncover the information.

No, I don' think it's dishonesty. They are simply exploiting the information asymmetry and the behavioural insight that many customers feel inertia in switching or are simply ignorant. Happens in all markets to a greater or lesser extent depending on the nature of the product. It's just the same as someone coming to my house to give a quote: they'll play up the materials costs or whatever to try and get a better margin. It's up to me to put in some effort to understand the costs involved and get a few quotes and negotiate the price down. Even so I cant be bothered that much most of the time so I probably pay more than a more informed consumer.

It seems to me insurance is just a much more extreme example due to the nature of the product, ie:

1. there is a large information asymmetry because very few punters understand how insurance works (mathematically complex etc), and the pricing is opaque
2. Difficult to assess the product (you dont know how good it is until you need to claim) - ie quality uncertainty

There is a huge economics/legal literature on opportunism in contracts, exploitation of information assymmetry, basically just comes down to human nature and your view of it - see here for a start though: http://en.wikipedia.org/wiki/The_Market_for_Lemons

But as DrunkenBakers said above there is areally important point about the race to the bottom in insurance and consumerisation of that market. Similar sorts of things happened in banking with misselling etc. I just think there comes a point where that begins to backfire and consumers seek out a different sort of provider.
Jon Stewart - on 17 Apr 2014
In reply to ByEek:

> Well not really...

> And this is the rub. The assumption that all businesses want your business is completely wrong. In truth, businesses only really want the business of their target market who will pay full price without question and then not start making a fuss and requiring additional fuss. Such customers are star customers and make up about 20% of all customers within a market. The rest either cause a fuss or cost the business money in terms of agro or support.

That is sensible in specific industries which involve support, and fuss and so on (not all do by any means), but it does not address my point that in an ideal world, buyers know the prices of previous transactions and that is how the price is settled. There may be other factors involved in reaching a price (e.g. convenience, service/experience), but if the information about previous transactions is not there, then the price cannot be decided fairly.

What I find amusing about people who purport to believe in a "free market" is that when you get down to the nitty-gritty, they only like markets when they're crooked!

Bjartur i Sumarhus on 17 Apr 2014
In reply to Jon Stewart:
I have had a similar experience recently. One which has had me looking at myself and asking questions.

My wife was involved in a 3 car shunt (she was last to be hit and at the front) on the motorway, not her fault and she was not hurt at all. Car was repaired, courtesy car supplied, all good...insurance working as it should do.

Then the phone calls started. "did you hurt yourself?" "No pain at all in your neck?"...all answered as "no, i'm fine thank you, nothing to worry about"

Eventually those calls stopped. A couple of months pass

Then the latest ones (which are the most insidious IMO)

"Hello, I am calling from XYZ solicitors, the crash you were involved in, another party has claimed whiplash compensation and has been paid out 9000. If you are happy to fill out a form saying you have had neck pain, we are almost certain the at fault insurance company will pay you something in the region of 3000 to 4000 without any court proceedings. This is no win, no fee....etc."

4k for a little lie? Tempting? Anyway, told them we were not interested as there was no injury. We did discuss it over dinner but quickly realised we couldn't go ahead with basically defrauding the insurance firm....how many people do you think would turn that opportunity down though? And we wonder why our premiums are so high.
Post edited at 13:08
Neil Williams - on 17 Apr 2014
In reply to MG:
I've heard this alleged many times, but it's never actually happened when I've tried to cause it. Ryanair etc do vary prices based on demand, which is based on searches as well as purchases, but it's on more of a macro level. I would expect it to move that way in future, though.

On the basic level, airlines work with fare buckets - when one is sold, you move onto the next one. You can increase the number of seats in a given bucket or decrease it, and you can up and down the price of each bucket for each route (not even individual flights), but you can't do it per-user. Almost all airlines use this system, and the Skylights system used by many low-costs use it. This is what the "booking class" is when you get it on your boarding card with some airlines.

The railways categorically do not do it because the back-end NRS (National Reservations System) does not support it, so they can't. The railway uses a similar thing to airlines - you can see how it's set up on this example. They can vary quotas and limit quotas to sales channels, but you can't tweak individual fares for individuals. There are the walk-up fares which aren't quota controlled (Anytime and (Super) Off Peak, these can always be bought on the day without restriction), then there are a few oddities like the half-singles available only from VT's site but again not quota controlled, then there are a massive bunch of Advance quotas.

http://www.brfares.com/#!fares?orig=EUS&dest=MAN

What you're seeing with Ryanair is almost certainly that the seats *actually have* sold while you're looking, or the quota was reduced for everyone. Also watch that with some airlines, if you are buying for a group and the group can't come out of a lower-fare quota, the *whole group* will come out of the higher one.

Neil
Post edited at 13:09
Jon Stewart - on 17 Apr 2014
In reply to Neil Williams:

> Is that what it is, though? The price of an insurance policy is clearly negotiable, like the price of a car or house, but not like the price of a tin of beans in the supermarket. As I've posted I'm not a massive fan of this, but I don't think anyone is under the illusion of it not being the case.

I don't agree. I don't think there is a clear understanding, and I think that the insurers exploit that lack of clarity. A jacket on UKC is clearly negotiable, a tin of beans is not. An insurance renewal is presented as non-negotiable with an assumption that it may or may not be negotiable in some way. We certainly know that we can look elsewhere, but the transaction is not presented "our opening offer is 500". And if a sensible price is 300, then doesn't that opening offer smack somewhat of the vendor being a cock?

This is the moral dimension - there's nowt wrong with barter as you present it, but to pretend the price is not negotiable and then to inflate it by that degree may not actually be lying, but it is being a cock, pure and simple.

ByEek - on 17 Apr 2014
In reply to Jon Stewart:

> but if the information about previous transactions is not there, then the price cannot be decided fairly.

Well you have just raised the million dollar question - what is a fair price? You can buy a leather handbag with silver and gold bits on it for 30. You can pop next door to Selfridges and buy a leather handbag with silver and gold bits on it for 5000! Which price is fair? I would say both.

The point of a free market is that companies can charge what they like and customers are free to choose whether they spend their money. It is all very well you whittering on about this insurance company, but they don't give a sh1t about you or the fact that you may have "taken your business elsewhere." Why? Because there are lots of people out their more than happy to pay what they believe to be a fair price for insurance even if you don't believe it to be a fair price.

And if you are business who can charge double what other businesses are selling at for the same product and still maintain their reputation - why wouldn't you? Twice as month income for the same effort. It is a no brainier. That is why people working in Next are on minimum wages and the person working in the handbag shop selling 5000 handbags is driving a Ferrari.
Jon Stewart - on 17 Apr 2014
In reply to Stig:

> It seems to me insurance is just a much more extreme example due to the nature of the product, ie:

> 1. there is a large information asymmetry because very few punters understand how insurance works (mathematically complex etc), and the pricing is opaque

> 2. Difficult to assess the product (you dont know how good it is until you need to claim) - ie quality uncertainty

> There is a huge economics/legal literature on opportunism in contracts, exploitation of information assymmetry, basically just comes down to human nature and your view of it - see here for a start though: http://en.wikipedia.org/wiki/The_Market_for_Lemons

Precisely what I'm saying, but I feel that information asymmetry is something that can and should be addressed, while instead as consumers we just accept that it's a market for lemons...except that it's one we can't opt out of so instead we're guaranteed to get F'd up the A.

> But as DrunkenBakers said above there is areally important point about the race to the bottom in insurance and consumerisation of that market. Similar sorts of things happened in banking with misselling etc. I just think there comes a point where that begins to backfire and consumers seek out a different sort of provider.

Yes DB's post was very insightful - we shall have to wait and see whether the bullshiteers' chickens will indeed come home to roost.
Jon Stewart - on 17 Apr 2014
In reply to ByEek:

> The point of a free market is that companies can charge what they like and customers are free to choose whether they spend their money.

There is more to it than that, we're on about information asymmetry and how that distorts markets.

> It is all very well you whittering on about this insurance company, but they don't give a sh1t about you or the fact that you may have "taken your business elsewhere." Why? Because there are lots of people out their more than happy to pay what they believe to be a fair price for insurance even if you don't believe it to be a fair price.

I would hope that the thread title might give a clue that the discussion is intended to be broader than my feelings about a specific insurer.

> And if you are business who can charge double what other businesses are selling at for the same product and still maintain their reputation - why wouldn't you? Twice as month income for the same effort. It is a no brainier. That is why people working in Next are on minimum wages and the person working in the handbag shop selling 5000 handbags is driving a Ferrari.

Did I mention nausea and depression earlier?
RCC - on 17 Apr 2014
In reply to Jon Stewart:

> An insurance renewal is presented as non-negotiable with an assumption that it may or may not be negotiable in some way. We certainly know that we can look elsewhere, but the transaction is not presented "our opening offer is 500". And if a sensible price is 300, then doesn't that opening offer smack somewhat of the vendor being a cock?

Of course it isn't presented like that; what would be the point? You always start the price at a level that you would be very pleased with, and think that there is an outside chance of getting. As a buyer you do the same in reverse. It is called negotiation, and it is supposed to make it fair for both parties. If you accompany the initial offer with the caveat that you are definitely prepared to offer the other side a better deal, then you might as well not bother!
ads.ukclimbing.com
ByEek - on 17 Apr 2014
In reply to Jon Stewart:

> There is more to it than that, we're on about information asymmetry and how that distorts markets.

Well fair enough, but I don't see how knowing what the last person paid will help matters. Where as we as consumers can choose whether to pay, businesses can also choose whether to sell. So the price the last person paid, may be much higher than what you feel is fair. You still lose.

I am surprised this has come to the fore now. Throughout my entire adult life (since 2000) when I got my first car, I have had to re insure my car with a different provider. It is what you have to do. It is just the way it is and nothing will change.
Ferret on 17 Apr 2014
In reply to Jon Stewart:

Information asymmetry? You keep refering to it.

You don't need to know how they calculate the premium. All you need to do is look at the price and see if other companies are cheaper or more expensive. If there is no comparison mechanism, thats where assymetry becomes an issue. If there were only 2 insurers in the country, and both used the same black box of tricks to come up with a price to present to you and that price was similar that would smack of cartel and regulation may be required (or they may both be 'correct').

As there are lots of competitors and lots of comparisons available, they are not preying on information or lack of. They are playing an entirely legitimate game of using human nature and apathy to make a bit more money.
You can counter that as easily as they can do it so the game is pretty equall.

Presenting a price as a fait acompli and using recurring DD are both fair in their way, one is an opening gambit (and any person entering a negotiation is never going to say 'the price is X but hey thats only my first attempt so come on and nock me down') and the other is a combination of a technique and what many consider a service of making sure they do not accidentally end up uninsured. You can opt out proactively or wait for teh renewal notice, shop around and leg it. Or not.

You can exit the game at any time by removing your business. The fact that insuramce is compulosry on your car does not give them some advantage that other companies do not have (stepping out of the buying food market as you sugeest earlier? Nonesense).
RCC - on 17 Apr 2014
In reply to Jon Stewart:
> There is more to it than that, we're on about information asymmetry and how that distorts markets.

One benefit of the market system is to eliminate the need for comparable levels of information. I literally have no idea how likely I am to crash my car, just as I have no idea what it costs to make a phone or how much work is involved in replacing my boiler.

As long as I have a range of providers (who are genuinely competing); each of whom know their own product, then I don't need to know the true cost. I can work out the value by direct negotiation or through indirect competion. All I need is an accurate (and legally binding) description of their product.
Post edited at 13:42
Jon Stewart - on 17 Apr 2014
In reply to RCC:

> Of course it isn't presented like that; what would be the point? You always start the price at a level that you would be very pleased with...As a buyer you do the same in reverse.

No, you don't always do that. You don't do it in (almost all) shops for a start, which make up a huge amount of the transactions we conduct.

As I've said, there is a lack of clarity which the vendor may try to exploit. Then there is information asymmetry (the lemons problem) that the vendor may also try to exploit. The consumer's only weapon is the price comparison site. My view is that with insurance, the principles of open barter (which does not suffer from information asymmetry) are completely perverted and instead we have tedious game of cat and mouse over the information.

Some people might think that's fun, "ooh, I got 30 off by using 5 comparison sites and lying a bit to my insurer, I reckon I've got one over on them this time". I think it's a banal waste of effort, but one which if you don't engage, you'll get shafted. The low-level dishonesty which we see as "natural" just saps our time and energy which we could otherwise spend doing something else more creative, like reading a book, going climbing, or shagging.
Jon Stewart - on 17 Apr 2014
In reply to Ferret:

> Information asymmetry? You keep refering to it.

> You don't need to know how they calculate the premium...If there is no comparison mechanism, thats where assymetry becomes an issue.

I haven't really explained what I meant by this. Not the calculation of the premium, but what kind of arseholes the cheap company are going to be should you have to claim, what their renewal price is, etc etc. You can't conceivably compare the different deals without a ludicrous amount of research and anyone who bothers to do that needs to be asking themselves some serious questions IMO.

> Presenting a price as a fait acompli and using recurring DD are both fair in their way, one is an opening gambit (and any person entering a negotiation is never going to say 'the price is X but hey thats only my first attempt so come on and nock me down')

Beside the point, but 100 ONO?

> (stepping out of the buying food market as you sugeest earlier? Nonesense).

Have you never seen The Good Life? ;)

RCC - on 17 Apr 2014
In reply to Jon Stewart:

> No, you don't always do that. You don't do it in (almost all) shops for a start, which make up a huge amount of the transactions we conduct.

OK, obviously I meant during price negotiations. Fixed price is one selling strategy that some people like for simplicity. Just because someone tells you it is a fixed price, doesn't mean that it is though. Lots of shops will negotiate if you make them an offer.

> ... low-level dishonesty which we see as "natural" just saps our time and energy which we could otherwise spend doing something else more creative, like reading a book, going climbing, or shagging.

Again, it is not dishonest; no product has an intrinsic value. What you are saying is that you resent having to invest the time. That's fair, lots of people think the same. Perhaps there is a market for a company that offers a fixed price, non-negotiable insurance premium with pre-defined and transparent pricing. Maybe they would do well, maybe they wouldn't, but don't pretend that they are doing anything qualitatively different to the others.
Jon Stewart - on 17 Apr 2014
In reply to RCC:

> One benefit of the market system is to eliminate the need for comparable levels of information.

As above, it's not about the consumer knowing the true cost of the product, it's about prices being obfuscated because of the customer cross-subsidisation, unknown level of service, etc. It's a market in bullshitting.
Ferret on 17 Apr 2014
>
> Have you never seen The Good Life? ;) LOL

I'm actually fairly sympathetic to your frustration but I just don't see regulation as the approach. You are also drifting into other territory... the most usefull thing would be high quality information around customer satisfaction but thats virtually impossible to come by in most areas of consmer interaction. I'd love to have a better idea if my 'guess' backed up by a bit of internet searching that 250 from 'shyster company X' is not worth the paper its written on (even if cheap), 275 from 'we we might wriggle a bit but you'll probably get your claim paid.com' is a reasonable balance of price/vs service and that 350 from 'we'll send your crashed car back gold plated.com' isn't worth the extra cost to me.

I'd still be shopping around each year though whether they present their best price first or not and whether I'm on recurring DD or not.

I hate calling the AA every year and telling them that 250 for 2 people covered in all cars at top level is daft and I'm walking to RAC if they don't give me the 150 first year rate. But I do it, it takes about 3 minutes and 'saves' 100 per year. If ever there was a cartel its that one by the way. AA, Greenflag and RAC price to within a pound or two of each others services, year in year out and all 3 play the low price first year, high price therafter game. But each will discount if you tell them you will walk. You could switch between AA and RAC yearly and never pay full whack. You could probably rotate between Mrs Ferret and Mr Ferret being the 'member' each year with the AA and get first year rate.

The only thing I don't do with insurers is 'tell us best price and we will match it'... I go to whoever gives best price/service... I see the 'we will match it' as the worst form of lazy dog in the mangerism going. If they can't pitch teh 'right' price I'm not going to tell them what somebody elses is and let them match it.

Jon Stewart - on 17 Apr 2014
In reply to RCC:

> Again, it is not dishonest; no product has an intrinsic value.

That's not what I mean by dishonesty. I conceded that "lying" is not the right term for presenting an unreasonable price as fait accompli, and penalising loyalty, and all the rest of it, but this game of exhausting the consumer into submission "look, just f^ck off, I can't stand thinking about f^cking car insurance for another f^cking minute, just take the f^cking money and f^ck off!" is in my view low-level dishonesty.

> What you are saying is that you resent having to invest the time.

Slightly more than that - I'm saying that I resent having to spend the time unproductively attempting to uncover information that is being deliberately hidden from me.

RCC - on 17 Apr 2014
In reply to Jon Stewart:

> As above, it's not about the consumer knowing the true cost of the product, it's about prices being obfuscated because of the customer cross-subsidisation, unknown level of service, etc. It's a market in bullshitting.

That still relies on the assumption that there is a 'true' value that can be obfuscated. We are now in the position of being able to access hundreds of customer opinions for the major insurance companies with an internet connection and less than 30 seconds of free time. Reputation is harder to hide than ever before; and if price is the sole criterion then that is because it is what we want.

You want a different pricing system, and if enough people want it too, then you will get it. You cannot pretend that we have less control over the system than the insurance companies.
Ferret on 17 Apr 2014
In reply to Jon Stewart:

I'm just wondering.. if you are selling a second hand car do you give the buyer an exhastive list of its faults or do you let them look it over and honestly answer any questions they have? If the former you are a better man than most...... if the latter, your approach is probably closer to what your insurer does by saying 300 please, listening to your response then reducing price. In all deals there is a requirement to 'uncover information' that may not be instantly forthcoming. 'Its had new brake pads' could equally be 'it needs new brake pads every 6 months as the calipers stick like beggary'.....
Neil Williams - on 17 Apr 2014
In reply to Jon Stewart:

To look at it differently again, offering an introductory discount, even a loss leader, is not an unusual sales tactic. Often you can't get that if you're an existing customer *at all*. You can with car insurance, you ring them up and get a quote as if you were a new customer, they don't care.

Neil
Jon Stewart - on 17 Apr 2014
In reply to RCC:

> That still relies on the assumption that there is a 'true' value that can be obfuscated.

Not exactly - it proposes that a market with stricter rules to protect the consumer would be a preferable situation. Perhaps it would mean fewer opportunities for people to make money from bad insurance deals. Boo hoo, I'm sure the economy will cope.

> You want a different pricing system, and if enough people want it too, then you will get it. You cannot pretend that we have less control over the system than the insurance companies.

Oh, the myth of the consumer-led market. What happens in reality is that people's priorities dictate that they will get what they're given. And what they're given will invariably be what is best for the giver.
RCC - on 17 Apr 2014
In reply to Jon Stewart:


> Oh, the myth of the consumer-led market. What happens in reality is that people's priorities dictate that they will get what they're given.

No, I deliberately didn't say consumer-led. If it were consumer-led, we would get our insurance for free. It is a system of mutual consent; there is no deal unless it is acceptable to both parties.
Jon Stewart - on 17 Apr 2014
In reply to Neil Williams:

> To look at it differently again, offering an introductory discount, even a loss leader, is not an unusual sales tactic. Often you can't get that if you're an existing customer *at all*. You can with car insurance, you ring them up and get a quote as if you were a new customer, they don't care.

As implied in the thread title, it's the moral dimension rather than the practical that I find interesting. When I start lying back to the insurers (as Bjartur i Sumarhus and others have raised) the vicious circle begins to turn...
Neil Williams - on 17 Apr 2014
In reply to Jon Stewart:

I don't know what the impact of that on insurance will be - probably higher premia for low-risk drivers.

In banking, this kind of drive towards regulation that has been going on over the last few years (e.g. in relation to overdraft charges) will IMO move towards a German-style model of monthly fees for current accounts. Just checking you prefer that model? In some ways I suppose it is fairer.

Neil
Rob Exile Ward on 17 Apr 2014
In reply to Jon Stewart:

Some things are hard because they're hard. Insurance is one of them.

Advising patients about glasses can be almost equally difficult, and you can tell that sometimes patients believe that it can't really be that complicated, can it? But it can be.
Jon Stewart - on 17 Apr 2014
In reply to Ferret:

> I'm just wondering.. if you are selling a second hand car do you give the buyer an exhastive list of its faults or do you let them look it over and honestly answer any questions they have?

Not sold one. Last one I bought the lad did tell me about the very minor faults (there were no major ones!). But I honestly would be open about faults - I would consider someone who said 'Its had new brake pads' meaning 'it needs new brake pads every 6 months as the calipers stick like beggary' to be a prick.

I tend to avoid situations where there's pressure to be dishonest. I will I expect encounter some difficulty professionally when my employer wants me to sell products that people simply do not need. Fine if they want it, but I'm not going to suggest that something is going to be useful when it's unnecessary.
RCC - on 17 Apr 2014
In reply to Jon Stewart:

> I tend to avoid situations where there's pressure to be dishonest. I will I expect encounter some difficulty professionally when my employer wants me to sell products that people simply do not need. Fine if they want it, but I'm not going to suggest that something is going to be useful when it's unnecessary.

There are rules about selling unnecessary products in the financial sector; that isn't really what we are talking about. We are talking about pricing.

How will you decide whether your employer is charging a fair price for the products you sell; what will be an acceptable profit margin? If your employer introduces a limited 2 for one deal, will you consider that dishonest because it is being subsidised by customers paying full price?
Jon Stewart - on 17 Apr 2014
In reply to Neil Williams:

> Just checking you prefer that model? In some ways I suppose it is fairer.

Probably. While I might save money on not paying a higher premium or monthly charge for my account, I then get shafted when I drop my guard. HSBC bummed me for a couple of thousand over life insurance, Direct Line have done the same on the car when I haven't shopped around. I think that those who take an active interest in this banal area of administration will lose out, but those who can't be arsed being dragged down into the mire and consequently get shafted would probably be better off.

ads.ukclimbing.com
Jon Stewart - on 17 Apr 2014
In reply to RCC:

> How will you decide whether your employer is charging a fair price for the products you sell; what will be an acceptable profit margin? If your employer introduces a limited 2 for one deal, will you consider that dishonest because it is being subsidised by customers paying full price?

I'll say "the pricing is nothing to do with me, my role is clinical". As it happens, I would rather the whole system worked differently, it's wrong that the cost of an eye test is paid for by the sale of specs, it drives down clinical quality and drives up the dishonest sale of products people don't need.

The way the market for eye tests works is that market forces push down the quality all the way to its legal limit - and of course the employers want us to push as hard as we can at that boundary!
RCC - on 17 Apr 2014
In reply to Jon Stewart:
> The way the market for eye tests works is that market forces push down the quality all the way to its legal limit - and of course the employers want us to push as hard as we can at that boundary!


Again, that is something different; you are talking about the product. As far as I can tell, nobody has suggested that legislation should not be in place to set minimum standards for products or services. I think that that is fair given how few people are in a position to judge the standards they need for technical or complex goods or services.

You are saying that pricing should also be regulated in order that consumers don't have to value the product or service for themselves. I don't think that you have offered a convincing justification for this yet.
Post edited at 14:50
Jon Stewart - on 17 Apr 2014
In reply to RCC:

> You are saying that pricing should also be regulated in order that consumers don't have to value the product or service for themselves. I don't think that you have offered a convincing justification for this yet.

No, I think I said somewhere above that I don't agree with a regulator coming in to fix prices, but I do think the rules should be stricter so that information flow is much better. I object to the market in bullshit, and that bullshit could be reduced in volume and intensity without price fixing. I can't give you a list of proposals, but the principle would be transparent pricing: minimal cover would have to end up at a single price and when you decided to pay more it would be gain something extra. A system would also need to effectively balance the incentives for customers to make false claims and for insurers to discourage genuine claims, among many other considerations.
Neil Williams - on 17 Apr 2014
In reply to Jon Stewart:

"it's wrong that the cost of an eye test is paid for by the sale of specs, it drives down clinical quality and drives up the dishonest sale of products people don't need"

I'm with you on that one. It also leads to the situation whereby opticians won't give out your pupillary distance measurement "because it's a dispensing thing". Er, well, technically yes, but they could if they simply charged a fair fee taking into account time, materials etc for the test, then sold spectacles as a separate thing.

They're also on a losing battle with it, as I got mine by looking over their shoulder as they wrote it. Though I prefer to buy glasses in the shop anyway as I like to try a number of pairs on and have them adjusted for me.

Neil
Neil Williams - on 17 Apr 2014
In reply to Jon Stewart:

"minimal cover would have to end up at a single price"

Unless done as a nationalised thing via fuel (which does scale it up a bit based on miles driven, which is one measure of risk), I don't see why it should be. Why should I pay the same as someone who's had 10 accidents in the last 5 years and is likely to have 10 more in the next?

Neil
RCC - on 17 Apr 2014
In reply to Jon Stewart:

> No, I think I said somewhere above that I don't agree with a regulator coming in to fix prices,

Yes, sorry, I meant 'regulation' in a somewhat broader sense.

> ... minimal cover would have to end up at a single price and when you decided to pay more it would be gain something extra.

To me, that sounds a lot like regulation!

Jon Stewart - on 17 Apr 2014
In reply to Neil Williams:

> I'm with you on that one. It also leads to the situation whereby opticians won't give out your pupillary distance measurement

> They're also on a losing battle with it, as I got mine by looking over their shoulder as they wrote it.

Haha. Yes, it's personal data anyway so I guess you can have it for 10 subject access request?! And measuring it involves, you know, a ruler.
Jon Stewart - on 17 Apr 2014
In reply to Neil Williams:

> "minimal cover would have to end up at a single price"

> Unless done as a nationalised thing via fuel (which does scale it up a bit based on miles driven, which is one measure of risk), I don't see why it should be. Why should I pay the same as someone who's had 10 accidents in the last 5 years and is likely to have 10 more in the next?

Sorry, I overlooked that - I meant that if I enter my details, all the prices for minimal cover would inevitably look the same.

Rob Exile Ward on 17 Apr 2014
In reply to Jon Stewart:

That's not always the case you know. I know many practices where sight tests are 30, 40, 50+ - and they're doing OK. BBR in Hereford is one that springs to mind, but there are plenty others, even ours to a lesser extent - we charge 50 for a sight test including OCT. We may not see the numbers that Specsavers do, but we do OK. And there ARE plenty of patients who appreciate quality, and there is a reality there, it's not just bullsh*t - an expensive frame will last longer than a cheap one, expensive varifocals give better vision than cheap ones.

Specsavers have got one business model, but others are available. As is the case in the insurance market.
Neil Williams - on 17 Apr 2014
In reply to Rob Exile Ward:

"an expensive frame will last longer than a cheap one"

True. But as with mobile phones, I like (for fashion reasons) to change my glasses every few years. So that model works for me. FWIW, I have been known to get my eyes tested at independent opticians then buy glasses from Specsavers. So splitting the two completely in terms of business model would be fair to me.

Neil
Rob Exile Ward on 17 Apr 2014
In reply to Neil Williams:

' So splitting the two completely in terms of business model would be fair to me.' Depends how much you are prepared to pay for a sight test, doesn't it, because a decent optician cannot make a living at 20 - 30 for a half hour test - if you're not prepared to pay more, then there won't be any independents left. (Though I think the worst of the carnage has already happened.)

As for the frame: wait till you become a presbyope, we'll be 'aving you! Seriously, once you get to your 40s the chances are you will benefit from more expensive lenses, and there's no point in putting them in a cheap frame which won't last as long as the lenses. But it's all about informed choice.
Conor1 - on 17 Apr 2014
In reply to Jon Stewart:

I haven't read the rest of the replies here, but you may be interested in David Marquand, who talks quite eloquently and insightfully about how the individualist social model has destroyed our social values. See his book, Mammon's Kingdom: An Essay on Britain, Now http://bookshop.blackwell.co.uk/jsp/welcome.jsp?alumni=A1027&isbn=9781846146725

Or if you're around London, come see him talk for free at the RSA in a few weeks http://www.thersa.org/events/our-events/britains-moral-crisis,-and-how-we-can-fix-it
Jon Stewart - on 17 Apr 2014
In reply to Rob Exile Ward:

> That's not always the case you know...we charge 50 for a sight test including OCT. We may not see the numbers that Specsavers do, but we do OK.

Good to know!
Jon Stewart - on 17 Apr 2014
In reply to Conor1:

Cheers I'll come back to that, off on a trip now.
Jon Stewart - on 17 Apr 2014
In reply to John_Hat:

Apologies for my rather mischievous response earlier. While I don't agree at all with your post, I know that you're more of a pleasant, polite type who doesn't respond to being wound up!
1poundSOCKS - on 17 Apr 2014
In reply to Jon Stewart:

When I got my camper van stolen, I think I can only describe the offer my insurers made as fraudulent. If the same happened again, I'd make a formal complaint to the regulators, and let my insurers know about it.

orejas - on 17 Apr 2014
In reply to Jon Stewart:

Jon, do you have an Iphone or Mac? What do you think is the profit marging on it? Let me tell you it is higher than insurers make. It is the price people pay that matters not the price things cost, just because Apple is not prepared to negotiate it does not make insurers thiefs.

By the way, motor insurers in the UK lose money on the premium they collect against their expenses and the losses they pay (5m-8m for a person that gets left tetraplegic - that is a lot of 500 premiums)and make their money on investing the premium today and not paying until some time in the future.
Disclosure: yes, I work in the insurance business

Alkis - on 17 Apr 2014
In reply to Neil Williams:

In my case, in three years it went like this:

Insurer's letter: My initial offer is 950, do you accept this?
Me on phone: I got this renewal notice, it says my price is 950, doesn't sound right.
Insurer on phone: Oh, indeed, that should be 750.

Insurer's letter: My initial offer is 750, do you accept this?
Me on phone: Eh, your website says it's 500.
Insurer: That is indeed right, that should be 500.

Insurer's letter: My initial offer is 500, do you accept this?
Me on phone: I'm due for renewal, what's my price? (Specifically not mentioning their website, the letter, any other insurers or anything).
Insurer: Your renewal price is 300.

That is not bartering, it's asking for a quote over the phone with the same details as the renewal letter and getting a vastly different figure.
John_Hat - on 17 Apr 2014
In reply to Jon Stewart:

No need to apologise, It's been an interesting debate!:-) Unfortunately it's also been a busy day at work and hence I've not had as much time to contribute as I would have liked.

Work getting in the way of life *sigh*.
John_Hat - on 17 Apr 2014
In reply to orejas:

Yes, I was going to mention this earlier too. All General Insurers (as opposed to life, where I just don't know the figures) make an underwriting loss on every sector. Housing, motor, everything.

i.e. Total payments out > total premiums in.

They survive by investing the money they collect and hoping that it makes enough money in terms of interest, etc, before it has to be paid out.

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