Hello both,

Thanks for such detailed responses, it's been interesting and I think you've definitely made some good points.

I've asked Julie to have a read of your comments and come back to me. She hopes to do so this week but she has quite a few commitments, so please be patient. As soon as I hear from her, I'll post the response here.

Cheers,

Felicity

Felicity

I agree with Coyote. If you look at the areas which are prone to theft claims, you will find that there is a high level of drug use. The users have to steal to afford their habit.

I have dealt with many Home Insurance security issues, following theft claims. In one instance, a lady lived in a nice detached house, but unfortunately, a couple of miles down the road, there was an estate with a high level of crime. Over a period of a year or so, she was broken into 3 or 4 times. She found that what happened was that the thieves would break in again a few months after each claim, hoping that Insurers had replaced the items. Yes thieves do appear to keep a diary. They even appeared to have kept an eye on her movements as each time she was broken into it was during the day when she walked her dogs. After each theft the physical security was improved with better locks installed, but unfortunately, a determined thief will overcome most types of physical security. Anyway the lady was forced to install an expensive alarm system and had to put this on everytime she left the property. The property was never broken into again but the thieves moved onto other properties in the area that did not have alarms.

Insurance premiums are calculated on an individual basis taking into account all personal factors. But of course the area in which policyholders live is relevant. To be fair Insurers now use the full postdcode to assess the risk and can vary rates even down to which street you live in, compared to the next street with a slightly different postcode. The way Insurers now calculate the premium is the most complicated it has ever been. A huge range of rating factors are now compiled to calculate the net premiums that will be charged.

I agree with Coyote, that one of the major factors now driving an increase in premiums is fraud. If you did a poll, with a question. Do you consider it a criminal act to inflate a Home Insurance claim by claiming for items not subject to loss? How many people would be honest and admit that they have taken advantage of Insurance. Some people see Home Insurance as an investment product almost, that they can obtain money from by submitting dodgy claims. They think it is their right. I have dealt with a few claim events where fraud has been found and you would not believe the bare faced cheek of some people. One lady(?) with a drug habit( found out later by Police) tried to seduce a loss adjuster to support claiming £10k worth of items from a garden shed. Suffice to say the Police were involved and she ended up with no Insurance. An extreme example but Insurers do come across claims every day which they know could be fraudulent and they now apply various methods to try to prevent these.

If you live in a high risk area for theft there are steps that you can take. One of them is to involve the Police crime prevention team, which can assess a property, recommend steps to take, extra security, neighbourhood watch etc.I think in most areas of the country over the last 20-30 years we have seen some areas that have been transformed. In the past they were crime ridden slums, but now through public investment they have changed and have now become a more desirable place to live.

This is a complicated issue that needs to be looked at 'in the round'.

Huckster

Felicity King-Evans:

Why do I feel you are not going to agree with me? *grins*

I shall brace myself!

Look forward to hearing your thoughts,

Hi Felicity,

Thank you for your reply. Glad you've braced yourself for a grilling. You are correct in your presumption that I'm not going to agree. It would be rude not to disagree and, on this topic in particular, quite wrong. Here we go with the dissection...

I understand why it is important to see the public perception on the subject matter but it is a known fact that in certain parts of the country crime is worse than others. This can be due to overpopulation, poor housing and accommodation and the prejudice of those living in these parts becoming an ever growing reality. Not a lot of people realise the importance of this or take it into account. You wouldn't find many affluent, wealthy people living in an area where vehicles are burnt out on a bi-nightly basis (and I say bi-nightly as the criminals would expect the police to be on sentry duty in the area the night after). Nor would you expect them to live next to a public house, or close to a high rise housing estate.

Each person's attitude to risk is different. Therefore we all respond to risk in a different way. Some people are willing to carry certain risks themselves and are termed risk-seeking, while others act very cautiously and are terms risk averse feeling happier by minimising the risks to which they are exposed. Attitude to risk can be derived also by a Good Moral Hazard and Bad Moral Hazard. You will find more of each category in certain areas.

I have read your research with great interest and would like to discuss this. Julie Owens has stated:
The research highlights a broad mix of areas across the North and South of the UK so it is clear that no matter where you live, there is always a risk you could become a victim of theft or burglary, and this should not be taken with light consideration. Properties classified as being in a 'high-risk' area - whether that be for crime, or something like flooding or subsidence, could mean the price of your insurance premiums will be affected. Unfortunately there is no escaping this and to make matters more complicated, there are no hard and fast rules which apply. Most insurers have a blanket approach when it comes to assessing postcode districts for home insurance and this really needs to change.

I completely agree that no matter where you live there is always a risk you could become a victim of theft of burglary. This is common sense. There is a risk of tripping over your shoe laces but, to prevent this, we tie them up to avoid the trip. Those that have longer laces or whom chose not to tie up/can't be bothered are at a higher risk of tripping over. The first is fortuitous and the latter isn't as it is almost inevitable that you will trip over the shoe lace. (a bit like leaving the car keys in the ignition whilst you pop in the shop!)
Considering a situation where a home owner is burgled and several thousand pounds worth of home contents are stolen. Whilst the thieves' intent is obvious, provided there is no complicity on the part of the insured homeowner, the theft is fortuitous and covered by the insurance. Precisely why we have this element of risk transfer from Insured to Insurer.

I have to completely disagree with Julie's comments regarding blanket approaches to postcode districts and it needing to change. Your examples only include the initial stem of the postcode and does not reflect the true assessment of that area. For example, some insurers will not quote favourably (if at all) on NG5 5 but may quote on NG5 1.

The rates are based on statistics which are extremely accurate to the point that an insurer can accurately advise when and where an accident will occur or theft is likely to take place. This information is relayed to the police whom then come up with measures of control and crime detection. These statistics are formed by an actuary. Actuarial procedure is a bona-fide science and a discipline which has been around since late 17th/early 18th Century. One has to be extremely thorough and intelligent and most study or have studied 'Actuarial Science' over many years. Condemning them or what they stand for is unbecoming and quite disrespectful.

Julie's comment RE "If houses are evaluated on a case by case basis it would mean homeowners received quotes at the best possible prices for their individual circumstances." is slightly confusing. They are evaluated on a case by case basis currently! You have a base premium and surrounding factors will determine the end premium. Such as previous claims by that individual, value of the possessions, alarm, safe, occupancy type, occupation of the insured etc. So they do get the best possible prices for their individual circumstances leaving this comment to be somewhat ludicrous. What Julie is actually saying is that the insurers should throw out the statistics for theft in all areas and preclude this from applying a loading and discount dependent on area. If we took another ratable factor such as 'flooding risk' and precluded this in the same manner it's like saying 'Well this sea-side town has suffered flood three times in five years and we've paid out £100 Million in damages... but never mind we'll rate it the same as Birmingham'. Utter drivel. I am absolutely astonished that MoneySupermarket has actually entertained this idea by including an article on a site from a 'professional'. Surely anyone in their right mind can see the implications. Although judging by the fiasco of the 'award-winning' Swiftcover which were defended by MoneySupermarket/Leadbetter I shouldn't really be surprised, should I?

Julie goes on to say "recent ABI statistics reporting that in the first quarter of 2009, the cost of burglary insurance claims topped £100 million". This is correct. But judging by the first part of the outlandish article you might be better off concentrating on something helpful such as writing an article on Insurance Fraud which is estimated at costing £5.2 million a DAY/£1.9 billion a year which is up 24% from £1.6 billion from 2007. According to ABI £730 million was detected and prevented before a claim payout which is an increase of 30% since 2007 also.

I'd usually say stop meddling with insurance to the people that know no better. I never thought I'd be putting it on a forum about an article written by the head of home insurance !! Whilst I have given praise to MoneySupermarket where praise due, I will equally not sit around watching an influencial site rubbish the industry and cast doubt over it for the masses out there who like to form yet another fallacious opinion on a topic they know little or nothing about.

To reiterate and conclude: Most insurers have a blanket approach when it comes to assessing postcode districts for home insurance and this really needs to change. No. It will cost everyone dearly. It doesn't need to change; and it mustn't.

Hi Coyote,

Why do I feel you are not going to agree with me? *grins*

I shall brace myself!

Look forward to hearing your thoughts,

Felicity

Hi Felicity,

Thank you for your reply.

I am thoroughly looking forward to replying to it in due course over the course of the next 24 hours when I have a few moments. It won't be short (lol).

Hi Coyote,

Thanks for your comments, I hope you voted.

I think it is always interesting to see what the public perception and opinion is, whatever you consider to be the rights and wrongs. I am really interested in seeing the outcome of this poll by the end of the week.

While premiums are set based on a wide variety of elements, theft risk does play a role and that is what we were specifically addressing, following some research we'd undertaken and an article we'd put out.

I do see your point, though, perhaps we should have made it more clear that it was not the one lone factor affecting premiums. We will certainly bear that in mind for future polls so thanks for the feedback. I'll share it with the team.

Cheers,

Felicity

How utterly ridiculous that some have answered 'No' to this question. It's almost as ridiculous as the question being asked in the first place. In actual fact, I'm struggling to see which one is more severe.

Additionally it's not the theft risk of the postcode either; it's based on a number of things theft being a small factor. Think of subsidence, malicious damage, accidental damage, areas of deprivation, areas where fraud is more common, crime rate .. etc. So many !

Clearly those setting and answering the questions know very little about the economy.