Age discrimination - young drivers

AlisonCVS

lazer wrote: »

I actually agree, that age discrimination in insurance should be banned, however, this doesn;t mean high premiums should be

It should be based on experience not age.

A 18 year old who has jus tpassed their test, should be paying the same premium as a 40 year old who has just passed their test.

Quite right - just as I said in an earlier post - if they are using such judgements it should be experience not age.

2sides2everystory

I think there is sufficient evidence available in the nation's renewal quotes daily to show quite clearly that Underwriters do not actually underwrite based on raw actuarial statistical analysis at all. Look at the diversity of quotes you get from different companies. I saved 40% earlier this year moving from LV to eSure and those two did not represent the extremities.

Underwriters use their actuaries to re-plan and to model behaviour they have already decided through a mixture of ways suiting their culture and offer.

Insurance companies are constantly adjusting their offer to create hype that will sell more units and creating complexity that will make it harder to claim. These things have long been known by "underwriters" to be far more effective at leading directly to bottom line profit than any valid statistical underwriting in the mix.

Age is simply not a valid proxy for deciding motoring risk.

In the UK's cities on a Friday night we see young women behaving "laddishly" and that includes behind the wheel whilst blaring music in the street with their mates swilling vodka around them. We also do not notice young male drivers who behave like mature adults who actually drive more safely than their parents in some cases. Their parents might be the ones who are anxious to remain and feel "young" and to demonstrate their experience of motorway lane behaviour to wait until the last minute to veer across to their chosen exit lane. It might actually sometimes be safe to continue at 90 in the fast lane and steer across the other two lanes which actually may only be doing 60 maximum, but it is no good example of what type of maneouvres to attempt and it clearly upsets some more conservative drivers :eek: Those experienced parents may be prone to a mistake in their fluency one day, and they may already be the type to leave havoc in their wake. Perhaps their motoring knowledge is flawed and this might be revealed in a written test. What other shortcuts do they take? Could this tendency to extra risk or disposition to actual risky behaviour be discovered by looking at their job description, the length of their commute, or their vehicle servicing history?

I find it is interesting that Aviva are sponsoring driving lessons for 12-16 year olds. We perhaps should not look upon them as targeting young drivers so much as them targeting new drivers a bit like tobacco companies grooming young smokers but perhaps with a better intention. I don't much like Aviva but am prepared to give them the benefit of the doubt on this one.

I quite firmly believe that it is individuals who should be assessed. We are talking very serious money now for motor insurance and it changes the economics of individual assessment versus some arm-waving "statistical" exercise.

I think even more rigorous knowledge testing is required and those results should be available for underwriters to use in rating "new" drivers.

I also believe that another valid rating factor is the vehicle itself and I do not just mean the make and model. I believe that insurance company motor engineers could be usefully employed in briefly inspecting the vehicles proposed for what traditionally might be "higher risk" policies - perhaps those that might otherwise attract a £1,500 premium or more.

Insurance companies used to do much more individual risk assessment before taking on larger risks whether it be a carpet warehouse in a dodgy part of Croydon or a Suburu Impreza in a sleepy village in Essex.

There is no good argument for not going back to that style of underwriting other than it is "easier" for "underwriters" to play the "compare the market" rating engine game, constantly re-positioning their "offer" in ways that manipulate banners and landing clicks, and frankly engaging in cartels, than it is to bother about the realities of the actual individual risks they are constantly taking on and "winning" and "losing" daily to/from competitors.

If insurers started to truly underwrite again then they might have to wait a while to see if they had got it right, and customers with high knowledge scores and well kept vehicles might get a very good deal whilst the insurance company truly fared according to its underwriting ability not its marketing spin and cartel activity.

Waiting a while to develop a formula for a fair profit unfortunately is not what financial companies are about now, is it?

Financial companies are only about tweaking their cartel machine which they call "the market" and creating trends to exploit for short term profits. That's the reality.

Herding the real market i.e. us, in ways that encourage us to condemn each other as those deserving of paying more through direct discrimination based on age and gender and even race (because that is the effect of some postcode ratings) is simply obscene.

dacouch

2sides2everystory wrote: »

I find it is interesting that Aviva are sponsoring driving lessons for 12-16 year olds. We perhaps should not look upon them as targeting young drivers so much as them targeting new drivers a bit like tobacco companies grooming young smokers but perhaps with a better intention. I don't much like Aviva but am prepared to give them the benefit of the doubt on this one.

Aviva are not interested in covering young drivers as they had their fingers seriously burnt by young policy holders and fronted policies a few years back. They showed me their claim and premium figures, they had numerous claims of upwards of a million pounds and at one stage were paying out over £3.00 for every £1.00 in premium they received for young driver / fronted policies

mikey72

dacouch wrote: »

Aviva are not interested in covering young drivers as they had their fingers seriously burnt by young policy holders and fronted policies a few years back. They showed me their claim and premium figures, they had numerous claims of upwards of a million pounds and at one stage were paying out over £3.00 for every £1.00 in premium they received for young driver / fronted policies

That just shows somehow they messed up the premium they charged to adults that put there kids on a named drivers, if they are blaming it on fronting. But the insurers still can't get it right. My kids insurance is cheaper for them in their own name, than me adding them as named drivers on our cars.
And I agree with the me me me attitude that is encouaged, and the back stabbing between the various groups in the insurance market that are more then happy to squabble over loading on everyone else as much as possible.

Spiderham

2sides2everystory wrote: »

Age is simply not a valid proxy for deciding motoring risk.

What makes you say this?

2sides2everystory wrote: »

I quite firmly believe that it is individuals who should be assessed. We are talking very serious money now for motor insurance and it changes the economics of individual assessment versus some arm-waving "statistical" exercise.

How do you "individually asses" people though. The problem is that the costs of the "individual assessment" could well be prohibitive and actually increase costs to consumers. I also don't see how you think statistic based pricing is an "arm waving" pricing. What do you suggest would be better?

2sides2everystory

Spiderham wrote: »

What makes you say this?

Because there are so many examples of wise young drivers who cost insurers nothing and idiot drivers of all ages who cost insurers a bomb.

How do you "individually asses" people though. The problem is that the costs of the "individual assessment" could well be prohibitive and actually increase costs to consumers. I also don't see how you think statistic based pricing is an "arm waving" pricing. What do you suggest would be better?

Not necessarily. Someone with an engineering degree or even just good Maths and Physics at GCSE might know a lot more about how to remain in control of a 1.5 - 2 tonne projectile in adverse conditions than someone armed with only fluffy knowledge. Only they might fully understand that if they hit a brick wall at 30mph they will smash themselves up four times as badly as hitting it at 15mph. Only they might know something about the theory of aquaplaning and differential braking. A married young person with kids might also be more of a responsible thinker if he/she also has a good education. But if he/she is a smoker then he/she is less likely to have had a good education and will self-evidently already be a higher risk to him/herself and those around him/her etc...

Age or Gender is merely a convenient handle for persons or businesses who do not wish to find out stuff or who are still labouring under old prejudices and using outdated stereotyping. Instead of insurance companies using their cartels to rig market pricing then they could use them to share the cost of human factors research in the same way that they share the cost of crash dummy research and repair cost research at Thatcham.

There may be no need for newer more correct ways to cost the earth to develop, merely a need for more enlightened thinking.

Idiophreak

AlisonCVS wrote: »

Quite right - just as I said in an earlier post - if they are using such judgements it should be experience not age.

But on experience of what? IMHO life experience is just as important when driving as driving experience is...I know for sure I make more mature decisions when driving now than I did 10 years ago...and that's not to do with 10 years of driving, it's to do with growing up, basically....

Spiderham

2sides2everystory wrote: »

Because there are so many examples of wise young drivers who cost insurers nothing and idiot drivers of all ages who cost insurers a bomb.

And averaged out with all other correlating factors taken into account, more is paid out in claims for younger drivers than older drivers. That is to say the expected paid claims for two identical motorists driving the same car with one aged 18 and one aged 45, the 18 year old is statistically likely to cost the insurer much more.

2sides2everystory wrote: »

Age or Gender is merely a convenient handle for persons or businesses who do not wish to find out stuff or who are still labouring under old prejudices and using outdated stereotyping. Instead of insurance companies using their cartels to rig market pricing then they could use them to share the cost of human factors research in the same way that they share the cost of crash dummy research and repair cost research at Thatcham.

There may be no need for newer more correct ways to cost the earth to develop, merely a need for more enlightened thinking.

What makes you say that it's old processes and outdated stereotyping. Do you honestly think insurers are too stupid and aren't bothered about making money as efficiently as possible to keep their research up to date? It is a lot easier to make money if all your prices are relative to each other completely fair, then you can safely estimate how much profit is increased/loss reduced by increasing all rates by the same amount.

Insurance cartels? Seriously? I can guarantee you they don't exist, FSA would be on that like a ton of bricks. Your suggestion of across the board assessment of demographic factors would remove the specialist insurers which allow people to find bargains and would not be consumer friendly.

Insurers are constantly refining their pricing models, adding new factors in and changing the impact of existing ones all the time in line with their experience. Many use very sophisticated techniques to ensure they are rating on relevant factors and not things that just happen to correlate.

I ask again, how do you make pricing individual? Also, how do you determine what is and isn't a fair factor to rate on?

babymoneyblagger

I don't understand how every teenager could be classed as a higher risk when they are new at driving, it seems to me that they are painting them all with the same brush!! I think that the co-op box is a good idea, but not only should it be offered for new teen drivers but also OAP's as they seem worse at driving than the teens, especially when they think that driving slow (seen going at 40mph) is safe along a motorway!!

dunstonh

I don't understand how every teenager could be classed as a higher risk when they are new at driving, it seems to me that they are painting them all with the same brush!!

Nearly but not quite. They are being pooled and risk assessed. Statistically, their age group will suffer more claims and result in greater losses than other age groups. So, as a collective they pay more.