Sunday, January 07, 2007

How does it work

I was taking to Ian in the pub tonight though don't worry I am still keeping to my new year resolutions, coke for me all evening ;) We start having a discussion about the cost of insurance. I just renewed mine the weird thing was I have been with the AA for the last couple of years there renewed came in at £395 I decided to shop around, using a variety of internet using the excellent www.confused.com amongst others. I finally found a lower quote of £326 with peoples choice. Now so far that's normal right shopping around I find a better rate, but some things wrong both the AA and peoples choice are brokers they sell insurance policies from major insurers. Both the AA and people choice offered me the same policy from Alliance insurance, knowing this I went back to the AA but they could not or would not go any cheaper so next year I will have the same policy through a different broker.

This is much the same with loans recently I heard an interesting tale about how a market leading company make there money on their headline loans. They ill call them company A advertise a market leading low interest rate. How can they afford to be so cheap you might ask? Well actually its easy they money is not being made from that loan, in fact only a small proportion of the people applying will qualify under the rather strict lending criteria. What bank A will do however is bury a clause in the terms and conditions which allows the customers details to be passed onto a third party. The declines leads will be sold to a broker who will attempt to place these customers. Bank A will get a fee for these leads and a kickback for any loans sold to these customers, the bonus is the risk of lending and the work is passed to a third party. I think it is fascinating how the world of finance and insurance really works, money seems to move about in all sorts of interesting ways in order to spread out the risk and costs.

Ian was on good form this evening we had a good chat about life the universe and everything. We have been talking about taking a trip to Japan after summer its somewhere he wants to go and I would love to try out my Japanese for real.

I spoke to Maia today she seemed happy she sent me some photos of her in Italy, she is looking beautiful. I am pleased for her but I guess upset I cannot play a role in her happiness. Oh well that ship has sailed a long time ago time I should just let it drop its always my problem I find it hard to let go.
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