Australian drivers are paying the price for convenience. They wanted their car insurance to be streamlined, automated and ready-to-go, similar to buying take-away food at a drive through window. An instant, standardised product, seemingly at a very low cost. Car insurance companies responded to this and issued quick, one-size-fits-all policies in five minutes or less, covering "average drivers", based on "average circumstances". But many customers could have qualified for lower prices, had they chosen a more personalised, tailor made, insurance cover.
How can personalised car insurance cover save drivers money with lower rates? It’s simply a matter of risk. All insurance plans are based on certain risk factors, but some drivers take all the risks, whilst others pay the price.
For example, someone who works from home usually drives much less than a person who drives to work everyday. A driver commuting to work can be more at risk of an accident during peak traffic periods, while the stay-at-home worker’s car is safely parked. The same is true of housewives, retirees, public transport commuters and those who park their cars safely. With a blanket, take-away approach, traditional insurers use little to differentiate between their customers. Therefore all drivers are assessed on a relatively similar basis. However, a car insurer with a more personalised pricing approach enables them to more accurately price the risk.
So how does a personalised pricing approach work?
Differentiation really is the key. With a slightly more inquisitive process, insurance companies can more effectively price for certain risk factors. This can really be beneficial in tight economic times. Especially for those people who exhibit lower risk behaviour. For example:
Those who park in secure garages or supervised parking stations during the day are safer than those who park on the street or in undesirable and unmonitored areas. Smart parking habits can help lower rates—but only if the company knows about them!
The same goes for the average distance driven. The car’s mileage factor really is significant. Those who only make short drives, such as to a nearby store or a quick trip to a local office usually pose less risk than regular long distance commuters. Yet if the insurance company is unaware, then no difference in price is possible.
Insurance premiums keep going up and up for everyone, regardless of their personal risk factors. The technology to ask and capture this additional information to better differentiate between driving behaviour is available. However, most insurance companies still haven’t made the switch.
Only a few unique insurers ask for more than just the standard driver’s age, vehicle details, place of residence, driving and accident history data.
There really are so many different factors that can be used to more effectively differentiate between drivers’ risk levels. Parking habits, driving distances, days driven and so on are just the beginning. A more personalised approach to car insurance pricing is possible, but it just might have to be a part of the next generation’s way of life.
About the Author:
Hugo Schreuder
Youi offers tailor-made car insurance that could save you lots of money. At Youi we ask the right questions so that you don’t pay for car insurance you don’t need. You interested? Go to youi.com.au for a smarter way of doing Car Insurance.
How can personalised car insurance cover save drivers money with lower rates? It’s simply a matter of risk. All insurance plans are based on certain risk factors, but some drivers take all the risks, whilst others pay the price.
For example, someone who works from home usually drives much less than a person who drives to work everyday. A driver commuting to work can be more at risk of an accident during peak traffic periods, while the stay-at-home worker’s car is safely parked. The same is true of housewives, retirees, public transport commuters and those who park their cars safely. With a blanket, take-away approach, traditional insurers use little to differentiate between their customers. Therefore all drivers are assessed on a relatively similar basis. However, a car insurer with a more personalised pricing approach enables them to more accurately price the risk.
So how does a personalised pricing approach work?
Differentiation really is the key. With a slightly more inquisitive process, insurance companies can more effectively price for certain risk factors. This can really be beneficial in tight economic times. Especially for those people who exhibit lower risk behaviour. For example:
Those who park in secure garages or supervised parking stations during the day are safer than those who park on the street or in undesirable and unmonitored areas. Smart parking habits can help lower rates—but only if the company knows about them!
The same goes for the average distance driven. The car’s mileage factor really is significant. Those who only make short drives, such as to a nearby store or a quick trip to a local office usually pose less risk than regular long distance commuters. Yet if the insurance company is unaware, then no difference in price is possible.
Insurance premiums keep going up and up for everyone, regardless of their personal risk factors. The technology to ask and capture this additional information to better differentiate between driving behaviour is available. However, most insurance companies still haven’t made the switch.
Only a few unique insurers ask for more than just the standard driver’s age, vehicle details, place of residence, driving and accident history data.
There really are so many different factors that can be used to more effectively differentiate between drivers’ risk levels. Parking habits, driving distances, days driven and so on are just the beginning. A more personalised approach to car insurance pricing is possible, but it just might have to be a part of the next generation’s way of life.
About the Author:
Hugo Schreuder
Youi offers tailor-made car insurance that could save you lots of money. At Youi we ask the right questions so that you don’t pay for car insurance you don’t need. You interested? Go to youi.com.au for a smarter way of doing Car Insurance.
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