Land Rover Insurance - it's back with a twist

Motor premiums have hit the headlines again, with some clients and insurers reporting increases up to 60% says Martin Lewis of MoneySavingExpert. So what's going on?

Inflation, cost of repairs, shortage of parts and desperate people stealing cars for ill gotten gains. I’ll finish on that note and move on to the topic of Land Rover Insurance or Range Rover Insurance more specifically.

Land Rover have inconveniently (or maybe conveniently for them) made their cars very easy to steal while being very desirable for thieves and their new owner whether that's a whole car or just the parts, these cars are still being stolen daily but so are others now. 

You’ve seen our post about the notorious Ferrari thief? 

But we have exciting news, we can now insure Range Rovers huraaahhh, oh no we can’t, oh yesss we can ...it’s behind you…. Oh no it isn’t. Oh shhh, this isn't panto, well it seems a bit like panto in the Land Rover Insurance world because not long along their current provider went bust so Land Rover insurance was off the market but now it's back with a twist! 

Wrisk Partners, the new underwriters for Land Rover’s white labelled insurance, have setup a new, interesting scheme, insuring Land Rover’s, well some models and clients but not all, yet!

This launch is interesting for a few reasons.

Monthly policies only. Huh, I’ve heard of monthly payments of a 12 month premium but not monthly only. You have to ask why? Here’s my take. 

If you run a scheme that isn't profitable, loss ratio goes over 100% of premiums earned you’ll either go bust or if you have plenty of cash still you'll just pull the scheme. 

If you let people buy 12 month contracts you have to honour them until expiry even if you pull the scheme, if in year one you take, for example, £500,000 in annual premiums but pay out £600,000 in claims, that's only 6 total losses, you’ve lost £100,000 and you'll be pulling out however you may decide to do that after 6 months of running the scheme, meaning you could have another 6 total losses for the remaining 6 months of the policies you have to offer. 

That's not the case for policies that are only for one month at a time. You want to pull after 6 months, give 30 days notice to all policyholders and you're out, cutting out the possibility of all future losses.

The flaw, in my opinion here is, that the basis of insurance is usually a 12 month contract, all those 12 month premiums go into one pot to pay claims. Even if you pay on a monthly DD you are still obliged to pay the premium in full in the event of a claim, that's the deal right? 

But what if you only have month by month premiums coming in. Say you insure 1,000 Land Rovers that pay £150 a month for their monthly policy (not 12) that's £150,000 for 1,000 cars. The chance of one of those 1,000 being a total loss in even the first month of writing business is sky high so a claim is paid, Range Rover Sports and full fat Land Rover Autobiographies are £100,000-£150,000 so one claim within the first month equals a 100% loss ratio immediately. Where’s the business model? Am I missing something? Surely there isn't any small print that makes you pay an annual premium in the event of claiming?

In short, Wrisk are on risk, but one month at a time, not 12 months at a time.

Second point here is that they are VC backed. Their eyes are on profits and returns for their LPs. Why does this matter?

Say the scheme runs well, they could have an amazing first year while premiums are sky high then cash out? Yes I'm speculating and let's hope that isn't the case and the scheme runs successfully, after all Land Rovers are not being insured anywhere else! Or it could easily go completely the opposite way too.

Third point here is, Wrisk goes steady. Land Rover has launched a new insurance product but not all clients can buy a policy. It seems if the criteria doesn't quite match what Wrisk wants then off you trot. From the cases we’ve seen so far factors affecting acceptance by Wrisk are location, value of car, experience and type of car. SVRs, Defenders among some that have been unable to buy insurance, yet. 

What do they mean yet?

Well here’s my guess.

Softly and slowly is the approach here. A new underwriter wants to manage the uptake in their policies, they know full well the market is in a desperate need for someone to insure Land Rovers so if they open up the floodgates it may all end in tears, sooner than expected. So pick the vanilla risks, take on 50% of what they could, be sensible about the underwriting and the scheme may run better than planned. 

Only Wrisk will know.

Watch this space.

Meanwhile if you would like a quote for your performance or luxury car please complete our online form here