Penalizing inexperience the wrong approach?

foggytown

Maybe it's time for another approach to calm down an over-excited and "grabby" market. At least in respect of car insurane, I am reminded of a system many USA states had some years ago (they still may!) to handle the problem of high-risk drivers attracting rape-and-pillage premiums. Certain underwriting criteria would be applied (age, record, experience, location, etc) and if a driver's score was high enough he/she was assigned to a kind of sub-standard risk catchment. All insurers writing the specific class of business in that state would become members of a "pool". Each member of the pool would be required to insure a certain percentage of the substandard risks - I think according to the percentage of the premium of that class of business written by each pool member. The premiums for pool drivers were higher than for normal, but not stupidly so. And after a few years good driving the pool drivers could graduate to normally priced policies. As far as I can recall, you had to be a total road hazard not to be able to get affordable insurance. A bit socialist perhaps but, hey . . . . .

vaio

I think there is at least one mainstream European country that does a similar scheme.

Not sure about socialism, it’s more going back to the traditional roots of insurance where the many share the risk of the few.

dzug1

The system that many US states have to deal with this is to make the compulsory 3rd party insurance cover an absurdly low amount or even not requiring it at all.

That cuts down the payout for high risk drivers by quite a bit I would think. They only have to insure their own vehicle, maybe not even that - not the damage/injury they do to others. They get sued for it, yes - but have no means of paying so they get away with it.

New Zealand is the same I think - car insurance is not mandatory.

HappyMJ

dzug1 wrote: »

The system that many US states have to deal with this is to make the compulsory 3rd party insurance cover an absurdly low amount or even not requiring it at all.

That cuts down the payout for high risk drivers by quite a bit I would think. They only have to insure their own vehicle, maybe not even that - not the damage/injury they do to others. They get sued for it, yes - but have no means of paying so they get away with it.

New Zealand is the same I think - car insurance is not mandatory.

It is mandatory to have a valid vehicle licence and a warrant of fitness. Everyone pays the same though and is included with the fees that are paid every year. Much cheaper generally than the UK but would be more expensive for a female driver in their 40's or 50's with a perfect driving history where the UK would be cheaper.

foggytown

dzug1 wrote: »

The system that many US states have to deal with this is to make the compulsory 3rd party insurance cover an absurdly low amount or even not requiring it at all.

That cuts down the payout for high risk drivers by quite a bit I would think. They only have to insure their own vehicle, maybe not even that - not the damage/injury they do to others. They get sued for it, yes - but have no means of paying so they get away with it.
.

Yes, but IIRC people insured normally (i.e. outside the pool) could buy excess insurance cover in the event they are involved in an accident with a minimally-insured driver and their legitimate claim exceeds the minimum limits.

dzug1

foggytown wrote: »

Yes, but IIRC people insured normally (i.e. outside the pool) could buy excess insurance cover in the event they are involved in an accident with a minimally-insured driver and their legitimate claim exceeds the minimum limits.

Exactly.

But then they are paying more than their 'fair' (whatever that means) share

foggytown

dzug1 wrote: »

Exactly.

But then they are paying more than their 'fair' (whatever that means) share

Yes, but remember that non-pool drivers are also required to insure only to the statutory minimum. So if they choose to top-up then it's voluntary on their part.

dzug1

foggytown wrote: »

Yes, but remember that non-pool drivers are also required to insure only to the statutory minimum. So if they choose to top-up then it's voluntary on their part.

I'm not forgetting that in the least. In order to be fully covered they have to voluntarily top up beyond their 'fair' share. I don't see where the problem is in feeling that this is not quite 'right'.