When an insurer forgets to bill you -- and then suddenly remembers

Q: "My insurer is supposed to take my monthly payment out of my checking account, but didn't do it for three months. Now they want me to pay for three months all at once. Can they do that?"

A: Sorry to tell you, but the short answer is yes, since they provided coverage for those three months. But since they erred by not taking the payments on time, it's worth asking if they'll allow you to pay in installments, so you don't get hit with a triple bill all at once.

When you know that a monthly insurance premium is supposed to come out of your bank account and you notice that it doesn't, don't wait and hope that that means you get free insurance. Call your agent or insurer and find out what's going on.

Claims Inflation - a known unknown

Over the last year I worked with two colleagues of mine on the subject of inflation and claims inflation in particular. I didn't expect it to be such a challenging topic, but we ended up with more questions than answers. The key question and biggest challenge is to define what inflation, or indeed claims inflation actually is and how to measure it. We published a summary of our thoughts and findings in this month's issue of The Actuary.

Last year's discussion about the differences between the retail price index (RPI) and consumer price index (CPI) in the UK only exemplified the challenge. The economist Tim Harford illustrated the differences between the RPI and CPI with a simple example of price changes for a shirt and blouse in his Radio 4 programme More or Less. The radio podcast is still available from the BBC. Start listening after about 18 minutes into the show.