On Sky, insurance, and why I’m not biting
A little over a year ago, I cancelled on BT. They were giving me the runaround and treating me pretty poorly when trying to set up the Internet, television and phone in the new flat. Not caring for the treatment, I turned to their competitors. Sky seemed like the best deal out there, so Sky it was.
And I have had no regrets. Sky’s service has been friendly and problem-free.
The stuff that comes with Sky’s service — the Sky+ box (essentially a DVR) and satellite — came with a one year warranty. That year has come to an end, and Sky sent out a warning letter letting me know. If an engineer comes to call, it will now cost me £65. They also invited me to take out their insurance policy … at £97 per year.
In my younger days, not too long ago, I spent a large amount of time working for insurance companies and in close quarters with actuaries and their formulas. They’re pretty bright, as a group. Their job is to figure out what the likelihood and cost of a risk is. From there, it’s a simple hop-skip and jump to figuring out how much to charge for an insurance policy.
In short, the insurance always costs more. Always. Even when you “win” at insurance by getting a payout from the company, or being happy that you had it, the insurance company is winning even more. The basic premise is that the average customer pays out considerably more than what they receive in return, over the life of the policy.
So why get insurance, then? There are three basic reasons to buy:
1. It’s mandatory. In some situations — such as car insurance — it is required by law that you are insured. What the legislators really want to be sure of is that anybody who is driving a car can afford to pay for damage they might do should they crash. But there is no way for the police to check, and it is unlikely that most people would consistently have sufficient balances. Insurance is the way out.
2. You cannot afford what is insured. An example of this would be medical insurance. Most of us could not afford to have an operation, on any given day. But because operations are rare for the individual person, the cost of insuring against such a thing occurring are affordable.
3. To spread the pain. Perhaps you can afford to go to the dentist — the prices are not astronomical. But if you have a number of dental problems in close proximity, you might not have the funds available. Alternatively, if there is major dental work to be done, it might make it difficult to both pay up and pay the rent. Better to pay a bit more on a monthly basis than end up in a potential hole.
Which brings us back to the Sky insurance. The cost if things break down — £65 — is not a cost I cannot pay, and is certainly not mandatory. This leaves reason three: spreading the pain. Again, there is not much pain to be had unless it breaks down repeatedly in a short period of time.
But should this occur, I would be dissatisfied with Sky’s service — I do not want television, internet or telephone services that break down regularly. In fact, it happens so rarely I cannot think of an instance where this has happened to me or someone I know. The services go down from time to time, but not locally to an individual home.
Should the service break down in such a manner repeatedly over a short period of time — say a year — I would most likely switch services. I would never get to the second service call during a year, making my largest possible out of pocket expense £65.
Sorry Sky, but I am not interested in paying £32 to feel obliged to stay with you if your service suddenly becomes terrible. And I hope that this is not an indication that you are planning anything of the sort.
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