How are insurance premiums calculated?
Discussion
Other than the drivers age, postcode, licence, points, make of car, value of car etc what else is taken into account to calculate an insurance premium? Im sure frequency of crashes must be up there as youngsters may often find a 1.8 Mondeo is cheaper to insure than a 1.25 Fiesta, as the latter is a common youngsters car etc.
On my Rover 75 2.5 V6 which i collected yesterday (very happy with it by the way
) i eventually got insurance down to £503 a year which i thought was quite high for what it is. Ive been looking ponderously at a Jeep Grand Cherokee as well, 4.7 V8 and ive been quoted £328 a year. Thats with them both at the same address on the same mileage (the Jeep wouldnt do that sort of miles but i did it for comparison).
Who the hell works this stuff out?
On my Rover 75 2.5 V6 which i collected yesterday (very happy with it by the way
) i eventually got insurance down to £503 a year which i thought was quite high for what it is. Ive been looking ponderously at a Jeep Grand Cherokee as well, 4.7 V8 and ive been quoted £328 a year. Thats with them both at the same address on the same mileage (the Jeep wouldnt do that sort of miles but i did it for comparison).Who the hell works this stuff out?
Basically, the companies gather a huuuge mass of sample data; extract statistics on the number and value of claims over variations in a number of different criteria (such as age, gender, postcode, vehicle type, mileage,...) and then use all of the resultant independent distributions to produce a mean payout estimate for your set of input variables, then add a bit on for profit and hope that their statistics were vaguely representative.
The answer to "who works it out" is two-fold. Various different people are involved in deciding which variables to model (that's the difficult bit), then computers are responsible for the data-mining, distribution generation and premium calculations.
The answer to "who works it out" is two-fold. Various different people are involved in deciding which variables to model (that's the difficult bit), then computers are responsible for the data-mining, distribution generation and premium calculations.
Edited by kambites on Thursday 17th November 14:20
marshalla said:
Which is more fragile and difficult to repair ?
Never looked into that tbh as i have no intention of ever using my insurance as on a car i only paid £995 for i dont view it as economically viable to risk higher future premiums for. I wouldve thought the Jeep would have some pretty expensive parts though.
t and giggles, devide it by your age, then by the age of your pet (or wife). Then reverse the numbers, remove one, add a random one then publish.martin84 said:
Has anybody noticed you can go onto comparison sites three times a week enter in the same cars with the same details and get different cheapest prices everytime?
Rates change all the time, especially with the advent of comparison sites insurers are reacting to changes in the market very quickly these days, whether that be to increase business or push business away.I work as a broker and there is some bizarre outcomes like the ones you listed. We use many different insurers, some only want people with 5 years NCB and no points and will load their prices to deter anyone outside of this demographic from joining, the next company might want to attract young women because its not a competitive sector and they can pick up the biggest premiums and limit it some way like no more than 3 points and 1 claims etc. to try to deter the very worst from joining.
In short it is not just worked out by each company having similar mathematical equasions and similar data, it is also decided by marketing and corporate strategy (older firms generally want predictable growth and low risk, but a new firm may be willing to take higher risks to build their client base.)
Also no firm at all wants to cover anything outside of the usual, because they have accurate calculations based on the most common factors car/age/mileage etc and anything outside of this is unpredictable and so to be avoided.
In short it is not just worked out by each company having similar mathematical equasions and similar data, it is also decided by marketing and corporate strategy (older firms generally want predictable growth and low risk, but a new firm may be willing to take higher risks to build their client base.)
Also no firm at all wants to cover anything outside of the usual, because they have accurate calculations based on the most common factors car/age/mileage etc and anything outside of this is unpredictable and so to be avoided.
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