Car Insurance Named Driver Algorithms

Sandtree

biscan25 said:

 Admiral got in hot water for underwriting by name/ email address resulting in racist quotes.

Do you have a link to the story?

Curious if they are actually underwriting using it or using it as a seed for pricing sensitivity testing or similar

biscan25

https://www.bbc.co.uk/news/uk-wales-42795981
My colleagues and I (pensions actuaries) didn't believe this so we tried it ourselves and sure enough it affected the premium. I also changed tried my name to my sister's and that saved £4.

Sandtree

biscan25 said:

https://www.bbc.co.uk/news/uk-wales-42795981
My colleagues and I (pensions actuaries) didn't believe this so we tried it ourselves and sure enough it affected the premium. I also changed tried my name to my sister's and that saved £4.

They deny it so its a bit hard to say whats really going on. Pricing overall is complex and there are subtle factors that can make differences.

Years ago had to fix the issue of pricing sensitivity testing -v- marketing messages about online discounts... in principle we want to be able to randomly increase 10% of customer's prices by 5% and randomly decrease 10% of customers prices by 5%. By looking at the relative conversion rates by segments you can the start to predict the impact of proposed pricing changes.

The problem was that we said "save 10% online" but the two systems were separate so we needed a method of random allocation that was repeatable so if the identical person went from phone to web or visa versa they would always be assigned to the same pricing adjustment and so the marketing message was accurate. It took a lot of backwards and forwards to agree a formula and a seed that was random enough such there was no correlation to other attributes but would repeat the same answer each time. 

Our final solution didn't use name but first X letters of name was one of the proposed seeds for the formula.

You have my sympathies for being a Pensions Actuary... I've done some work on annuities in the past and would always rather stay on the non L&P side of the world.

Shedman

I've certainly had it where when adding 2 named drivers the order that you add them has had an impact on the premium...presumably it's assumed the 1st named driver will likely drive more than the 2nd?