I help set rates for a Major Canadian Insurance Company! Some thoughts . . .

[VifferFun]

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ok, from what I understand it is more a case of the insurance company misrepresenting the policy and coverage.

The example that comes to mind is when an annual doctor's check up is considered a 'seeking medical attention for a prior existing medical condition' .

If it saves cost/make more then how long before the model is extended to other products? The company saves the cost of underwriting (which would make premiums on no claim accounts more profitable) and gives an opportunity to disallow claims, which would decrease their ratios.....statisticly speaking....of course.

This seems to be more of a potential issue with Life Insurance rather than Property and Casualty Insurance. Since I am a P&C guy, this is outside my realm of expertise. I can't see this being an issue with P&C because we are very careful about the risks we write. We won't deny a claim unless there is a VERY good reason to, and the courts would have to side with us.

 

[stevie t]

TWO BIKES AND ONE RIDER



You already explained the main reason yourself; it is quite likely that a person with two cars or two bikes would simply be trying to hide a second principle driver.


I doubt that an insurance company would allow this though, because it isn’t a common practice. In order to allow you such a hefty discount on the liability and accident benefits portions, the insurance company would have to conduct an Actuarial Analysis and also file the change in rating methodology with the Financial Services Commission of Ontario for approval. To be completely honest with you, it just isn’t worth the headache as far as the insurance company is concerned. I agree with you that it isn’t totally fair, but this is the status quo.

Sorry, did not read the entire post....

The first part of your answer assumes misrepresentation on the part of the customer.....I guess when your product is required by legislation you can get away with that kind of stuff.....but it is like saying all actuaries are pencil pushing nerds....but hey you ride a VFR...

The second part makes a little more sense....can't make enough money on it....so if I want to insure multiple bikes why wouldn't you run you analysis on the 'highest risk' bike and prorate the cost based on the number of bikes, or just charge the highest rate based on the most 'claimable(?)' bike?

 

[VifferFun]

Sorry, did not read the entire post....

The first part of your answer assumes misrepresentation on the part of the customer.....I guess when your product is required by legislation you can get away with that kind of stuff.....but it is like saying all actuaries are pencil pushing nerds....but hey you ride a VFR...

Actually, I used to have VFR, but now I ride a GSXR1000

If people can find a loophole, they will. It's inevitable. It's just too costly to make sure that people won't break the rules on this one, so the insurance industry does not offer that discount.

The second part makes a little more sense....can't make enough money on it....so if I want to insure multiple bikes why wouldn't you run you analysis on the 'highest risk' bike and prorate the cost based on the number of bikes, or just charge the highest rate based on the most 'claimable(?)' bike?

Because you would still end up having your son or friend regularly driving your second bike without disclosing it, and then pretending like it was "the only time they had ever been on the bike" when they get into an accident.

 

[stevie t]

Actually, I used to have VFR, but now I ride a GSXR1000




Because you would still end up having your son or friend regularly driving your second bike without disclosing it, and then pretending like it was "the only time they had ever been on the bike" when they get into an accident.

Sorry, vfr gsxr whatever...no disrespect intended.

Again, you assume misrepresentation by the customer....wouldn't this be simply avoided by making the policy exclusively for the principle rider?

 

[VifferFun]

Again, you assume misrepresentation by the customer....wouldn't this be simply avoided by making the policy exclusively for the principle rider?

We have to because 80% of such policies would be misrepresented.

I've thought about an "exclusive rider" as well. I think that there are legal implications that would not allow us to do so. It is one thing to actually sign an OPCF28a stating that you WILL NOT under ANY circumstance drive/ride a certain vehicle. This is quite clear, and the person being excluded is completely aware of the arrangement. However, if we took the "exclusive rider" approach, then the "hidden operator" could ride the bike anyways and claim ignorance in the event of a claim. The courts would probably rule in the favour of the hidden operator because they did not actually sign a document.

 

[stevie t]

We have to because 80% of such policies would be misrepresented.

I've thought about an "exclusive rider" as well. I think that there are legal implications that would not allow us to do so. It is one thing to actually sign an OPCF28a stating that you WILL NOT under ANY circumstance drive/ride a certain vehicle. This is quite clear, and the person being excluded is completely aware of the arrangement. However, if we took the "exclusive rider" approach, then the "hidden operator" could ride the bike anyways and claim ignorance in the event of a claim. The courts would probably rule in the favour of the hidden operator because they did not actually sign a document.

ok.....why can't the OPCF28a apply to multiple vehicles?

Where did you get the 80% figure you mention?

 

[VifferFun]

ok.....why can't the OPCF28a apply to multiple vehicles?

It's not multiple vehicles that is the problem . . . it is multiple operators. Essentially, you would need to get everyone in the world (except yourself of course) to sign an OPCF28a. They need to sign the document so that we have proof, in court, that they acknowledged that they will not be covered for the vehicle should they choose to operate it. Read the wording of OPCF28a and it will make more sense to you:

http://www.fsco.gov.on.ca/English/PUBS/BULLETINS/AUTOBULLETINS/2005/a-03_05-1.pdf

Where did you get the 80% figure you mention?

I made up the figure to emphasize that a large portion of the people who will go for this discount wil do so to hide an operator, not because they are a bike enthusiast with a collection. If there is a loophole, people will jump through.

 

[stevie t]

It's not multiple vehicles that is the problem . . . it is multiple operators. Essentially, you would need to get everyone in the world (except yourself of course) to sign an OPCF28a. They need to sign the document so that we have proof, in court, that they acknowledged that they will not be covered for the vehicle should they choose to operate it. Read the wording of OPCF28a and it will make more sense to you:

ok.....so why doesn't everyone have to sign one now, by your logic, for every insured vehicle there are an infinite number of multiple operators? I read your form and it is pretty straightforward....I am not sure I follow your argument, but it does remind of joke ....

Two rednecks decided that they weren't going anywhere in life and thought they should go to college to get ahead. The first goes in to see the counselor, who tells him to take Math, History, and Logic.
"What's Logic?" the first redneck asks. The professor answers by saying, "Let me give you an example. Do you own a weed eater?" "I sure do."
"Then I can assume, using logic, that you have a yard," replied the professor.
"That's real good!" says the redneck. The professor continues, "Logic will also tell me that since you have a yard, you also own a house." Impressed, the redneck says, "Amazin!" "And since you own a house, logic dictates that you have a wife." "That's Betty Mae! This is incredible!" The redneck is obviously catching on. "Finally, since you have a wife, logically I can assume that you are heterosexual," said the professor. "You're absolutely right! Why that's the most fascinatin' thing I ever heard! I cain't wait to take that logic class!!"
The redneck, proud of the new world opening up to him, walks back into the hallway, where his friend is still waiting.
"So what classes are ya takin' ?" asks the friend. "Math, History, and Logic!" replies the first redneck. "What in tarnation is logic???" asked his friend. "Let me give you an example.
Do ya own a weed eater?" asked the first redneck.
"No," his friend replied.
"You're QUEER, ain't ya?"

but I digress.......again why can't I sign a form (say a WTF666) that states no one but myself can be covered on the following vehicles and then list those vehicles.

As far as misrepresenting the operators etc. I suggest that if anyone else would be riding/driving any vehicle that was listed on the form, the coverage would be void, or that individual would be charge with vehicle theft.

 

[VifferFun]

but I digress.......again why can't I sign a form (say a WTF666) that states no one but myself can be covered on the following vehicles and then list those vehicles.

As far as misrepresenting the operators etc. I suggest that if anyone else would be riding/driving any vehicle that was listed on the form, the coverage would be void, or that individual would be charge with vehicle theft.

Excluding ALL drivers in the world but yourself is a very different situation compared to excluding a specific operator that lives in the same household. It is easy to get one person to sign a form.

I know what you are trying to get at, but it wouldn't work. Suppose you own two bikes, and you insure "two for the price of one" and sign your ficticious "WTF666" form. Who is signing the form? YOU, not your nephew. So your nephew takes the bike out one day, with or without your permission, and hits a deer that ran onto the road. The bike goes down, and your nephew is on disability for the rest of his life. He claims that he didn't know that the bike had a "WTF666" exclusion on the policy, and you say that he borrowed the bike one day before you got home. Who's going to win the court case? As an insurer, I have no document with your nephew's signature stating that hee is aware that the motorcycle is not covered should he choose to ride it.

 

[stevie t]

Excluding ALL drivers in the world but yourself is a very different situation compared to excluding a specific operator that lives in the same household. It is easy to get one person to sign a form.

I know what you are trying to get at, but it wouldn't work. Suppose you own two bikes, and you insure "two for the price of one" and sign your ficticious "WTF666" form. Who is signing the form? YOU, not your nephew. So your nephew takes the bike out one day, with or without your permission, and hits a deer that ran onto the road. The bike goes down, and your nephew is on disability for the rest of his life. He claims that he didn't know that the bike had a "WTF666" exclusion on the policy, and you say that he borrowed the bike one day before you got home. Who's going to win the court case? As an insurer, I have no document with your nephew's signature stating that hee is aware that the motorcycle is not covered should he choose to ride it.

Ok, so if someone steals my bike and hits a dear, then your company is liable? Anyway, by your logic all I need to do is have all the licensed drivers in my family sign your form....so what is the problem?

 

[VifferFun]

Ok, so if someone steals my bike and hits a dear, then your company is liable? Anyway, by your logic all I need to do is have all the licensed drivers in my family sign your form....so what is the problem?

If a hidden operator uses your bike, they are not stealing it. Theft of your bike and misrepresentation are two independent topics. If you are knowingly misrepresenting, you will make up a story to cover the hidden operator if they got into an accident. You will say that your wife, who didn't know about the policy conditions, told him he could use the bike that day without you knowing it (or something similar). You wouldn't cover for someone if they stole your bike.

It's not just the licensed drivers in your family or household that is the problem. You and a buddy at work could insure both of your bikes in your name, split the cost of two-for-one insurance, and then each ride a bike.

 

[stevie t]

If a hidden operator uses your bike, they are not stealing it. Theft of your bike and misrepresentation are two independent topics.

If I have signed that no other driver/rider has my permission to operate my vehicles, then yes, they are stealing it and should be charged.

Unless, as you have so often pointed out, I am a criminal...and would/should be charged with insurance fraud.

 

[VifferFun]

If I have signed that no other driver/rider has my permission to operate my vehicles, then yes, they are stealing it and should be charged.

Unless, as you have so often pointed out, I am a criminal...and would/should be charged with insurance fraud.

Someone would not be viewed as stealing your car in the situation I described above, where a story is fabricated to protect the hidden operator. It's pretty easy to commit fraud without getting caught under such a system. And I'm not suggesting that you are trying to do this, but many people would.

Personally, I would absolutely love a two-for-one insurance policy as well, but it's just not feasible.

 

[stevie t]

Someone would not be viewed as stealing your car in the situation I described above, where a story is fabricated to protect the hidden operator. It's pretty easy to commit fraud without getting caught under such a system. And I'm not suggesting that you are trying to do this, but many people would.

Personally, I would absolutely love a two-for-one insurance policy as well, but it's just not feasible.

Dude, I signed your form stating that I had no hidden operator, so my choices would seem to be either taking the fraud charge or see my hidden operator charged with theft...that's it.

Anyway...it's not about 2 for one, each bike would have to have it's own collision/theft/comp etc. b/c each vehicle has a different value and theft probability and so on, my point is that I should not pay double or triple or whatever times the PLPD component as I am only riding one bike at a time.

 

[VifferFun]

Dude, I signed your form stating that I had no hidden operator, so my choices would seem to be either taking the fraud charge or see my hidden operator charged with theft...that's it.

Anyway...it's not about 2 for one, each bike would have to have it's own collision/theft/comp etc. b/c each vehicle has a different value and theft probability and so on, my point is that I should not pay double or triple or whatever times the PLPD component as I am only riding one bike at a time.

You are missing my point . . . *you* signed the form, not the friend down the street who unknowingly asked your wife if he could borrow your bike/car. You aren't committing fraud, and since the neighbour and your wife didn't know that you had an exclusion on the policy, the courts would rule in your favour. There doesn't even need to be fraud involved for the insurance company to be screwed.

Some companies will offer a discount if you have more than one vehicle type than operators for that vehicle type. I believe it is 10-15% with Co-operators.

 

[Avi Singh]

So you mean if I buy a second property, I'd have to pay gas, hydro and taxes on it in full? Even though I can only live in one house at the same time?

 

[VifferFun]

So you mean if I buy a second property, I'd have to pay gas, hydro and taxes on it in full? Even though I can only live in one house at the same time?

I'm not sure what you are trying to get at here . . .

 

[stevie t]

So you mean if I buy a second property, I'd have to pay gas, hydro and taxes on it in full? Even though I can only live in one house at the same time?

Well in your case your clients would pay for it...:laughing8:

But seriously, why can't the PLPD part be prorated over the number of bikes? Is not the PLPD only an issue when the vehicle is being operated an insured operator?

 

[Avi Singh]

Well in your case your clients would pay for it...:laughing8:

But seriously, why can't the PLPD part be prorated over the number of bikes? Is not the PLPD only an issue when the vehicle is being operated an insured operator?

No. If your bike is in a parking lot and falls over onto a car next to it, you're liable. Both parked vehicles, both unoperated.

Look at your billing, the Liability premiums are relatively low. It's the Accident Benefits section that usually drives the most premium.

 

[stevie t]

No. If your bike is in a parking lot and falls over onto a car next to it, you're liable. Both parked vehicles, both unoperated.

Look at your billing, the Liability premiums are relatively low. It's the Accident Benefits section that usually drives the most premium.

Ok......but to get to the parking lot I would have to ride it there....but let's move on to the accident benefits part....please explain to me why it cannot also be prorated?

Remember, these are not primary use vehicles, not for commuting or for work, simply for pleasure use.

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