Insurance questions - What and why
Discussion
Following on from a few threads and a few experiences I have had though it would be interesting to see folks assumptions about risk and how insurance works.
If anybody from the industry want to chip in and correct any wrongs, please do.
Simply post a usual question an insurer would ask and then the reasoning below.
What is your date of birth?
This clarifies the age of the person. Generally the older the better. Older drivers often have more experience and a more mature attitude to driving.
Not much you can do about this one. You take it as it comes. Rumours are it drops off at 25 and again at 30 but not sure thats true. It was a more gradual drop in my experience.
If anybody from the industry want to chip in and correct any wrongs, please do.
Simply post a usual question an insurer would ask and then the reasoning below.
What is your date of birth?
This clarifies the age of the person. Generally the older the better. Older drivers often have more experience and a more mature attitude to driving.
Not much you can do about this one. You take it as it comes. Rumours are it drops off at 25 and again at 30 but not sure thats true. It was a more gradual drop in my experience.
How many miles a year do you do?
I'd guess the lower the better. The less you're on the road the less the risk. Certainly the extreme high mileages 20K+ would attract a higher premium.
I've not noticed much of a reduction in premium for say 10K down to 5k. Worth checking. If it's the same you may as well go with the higher figure.
The only other thing I'd say is I'm not sure how they could accurately verify your milage bar estimating from the last MOT. They don't ask for it at commencement so how would they know how many you had done? Maybe this is one of those things taken on best faith.
I'd guess the lower the better. The less you're on the road the less the risk. Certainly the extreme high mileages 20K+ would attract a higher premium.
I've not noticed much of a reduction in premium for say 10K down to 5k. Worth checking. If it's the same you may as well go with the higher figure.
The only other thing I'd say is I'm not sure how they could accurately verify your milage bar estimating from the last MOT. They don't ask for it at commencement so how would they know how many you had done? Maybe this is one of those things taken on best faith.
Don't work in insurance.
I think you're getting it the wrong way around. The risk process would be to produce pools and then see how they populate. So things like Age, car (with numerous sub pools), postcode, experience, mileage etc. You then combine relevant ones (in what must be a horrible equation), and work out what each claim cost you.
There's no rationale for a premium beyond this cost. They don't say, "the've got more experience so let's knock a few quid off", or "this guy does 20,000 miles a year he's gonna bin it", instead they look what claims associated with similar groups groups actually cost in real terms then they project the risk and average costs.
For that reason you can get what look like bizarre premium pricing. Like my circumstances where parking on my driveway is more expensive than the road. It's odd, but it's most like because someone with similar details to me (therefore similar risk) had their house broken into for their keys.
It's a really tightly controlled process. There's not much speculation and where there is, I think, there are guidelines to follow.
I think you're getting it the wrong way around. The risk process would be to produce pools and then see how they populate. So things like Age, car (with numerous sub pools), postcode, experience, mileage etc. You then combine relevant ones (in what must be a horrible equation), and work out what each claim cost you.
There's no rationale for a premium beyond this cost. They don't say, "the've got more experience so let's knock a few quid off", or "this guy does 20,000 miles a year he's gonna bin it", instead they look what claims associated with similar groups groups actually cost in real terms then they project the risk and average costs.
For that reason you can get what look like bizarre premium pricing. Like my circumstances where parking on my driveway is more expensive than the road. It's odd, but it's most like because someone with similar details to me (therefore similar risk) had their house broken into for their keys.
It's a really tightly controlled process. There's not much speculation and where there is, I think, there are guidelines to follow.
Edited by Prof Prolapse on Monday 10th February 17:38
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