Insurers are just gamblers, so play them at their game
I know absolutely nothing about horse-racing, greyhounds, roulette or blackjack.
I take the occasional Lotto punt but when it comes to the big stuff, I know the odds are stacked against me and in favour of the bookie.
Insurance companies are like sophisticated bookmakers. They calculate risks, judge the odds and price accordingly. When you buy an insurance policy for your car or your house for instance, the cost has been based on the spread of policies across the entire customer base.
While you will of course be charged more if you're deemed to be an excessive risk, due to penalty points or the fact that your house is beside an often-flooded river, generally speaking the price is far less to do with the individual and more with the market in which the insurer operates.
Insurance companies run 'books' just like the ones which cater for horse races or casinos. Too many of one type of 'bet' and it skews the risk.
If an insurer finds itself with say, a lot of younger male drivers, it will seek to offer better terms to older females, to balance the risk profile out.
Too many house owners in an area which has seen an upsurge in burglaries, and it will charge you accordingly, even if your home remained untouched by the thieves.
Knowing this can explain why some of us see our premiums hiked on renewal, despite a perfectly uneventful, claim-free year driving our cars or living in our home.
Research issued this week by the Competition and Consumer Protection Commission (CCPC) shows an immense difference in prices for car insurance - up to €1,249 p.a. in one case. That's just looking at eight insurers across nine customer types.
At the higher end, the insurer simply didn't want the business. It can be difficult to believe that, but it's absolutely true. Pricing customers 'out of the market' is easier than declining the quote - they don't expect you to pay; they expect you to go elsewhere.
A reader contacted me recently, and he's not alone, utterly shocked at the five-fold increase in his house insurance premium. That's really excessive and there was, quite simply, no reason for it.
There was no claim, no flood, no burglary, no fire. He was simply priced out of the market by a company who'd had enough of his type, whatever that may be. A quick ring around to some other insurers and he's paying the same premium he was before.
We're always told to 'shop around' or 'switch' by well-meaning commentators, (yes, like me), but apathy is an Irish trait and we're desperately slow to move insurer, bank or utility provider.
So sometimes it takes a frightening renewal quote to make us phone up, check the internet or get a broker.
We still think 'loyalty' is worth something. This is especially true of the older generation. They may believe that 30 years paying into the VHI entitles them to special treatment if they get sick. It doesn't - this year's premium payment does.
Likewise, if you believe your five years claim-free time with Axa or Allianz is going to affect your car premium, it will, but no more than carrying the same five-year no claims bonus anywhere else.
Irish insurers should be more consistent. In the UK you don't see the price variation on view here: the main reason is that courts operate a capped system on personal injury claims.
In Ireland, the Personal Injuries Assessment Board was set up to independently agree damages arising from motor claims, but it doesn't appear to have worked to the extent it should; we are litigation-happy and many will take their day in court. It all costs money and everyone pays.
The other reason insurers are suffering is that some of them made expensive mistakes: RSA has to be bailed out (it owns the www.123.ie brand) and then there's the sorry mess that was Quinn Insurance, for which we'll all pay an extra 2pc on every policy until 2037.
If you've got a crazy quote, take heart. Someone does want your business - but the roll of the roulette wheel to find out who takes time.