Insurance is not a massively profitable business to be in. Profit, compared to turnover, is tiny. It's also a risky business, and many companies end up posting losses a lot of the time. Some companies operate the insurance system at a loss, with the proviso that the money they invest gives them a bigger return than the loss made. Competition between companies is fierce, pushing prices down pretty much as low as they can go.
Check the fact that they aren't nearly as profitable as a lot of other services, any news site will be able to show that.
If prices were lower, more people would use the service. That is a fact. But the drop in price combined with the increase in uptake would not offset the loss in profits for the insurance company. Again, fact.
But still most of the people who didn't declare mods before still won't, because it is cheaper for them not to. Maybe a few more do, but it won't be all of them by a long shot. So now you've got a similar amount of people with invalid insurance, and an insurance company desperately trying to claw back profits by other means (putting call centers in India, exempting more in your policy, increasing the excess, and so on).
It will never be cheap to declare mods. They look at the people who modify cars, and lo and behold, they seem to crash more, be broken into more, be stolen more.
which is cheaper?
