BACKGROUND
Motor insurance premiums are usually governed by a fixed rate (aka tariff) to ensure all vehicles on the road are adequately covered with insurance especially third party coverages. Third party coverages are legal liability on damages cause to other person or property.
In view of increasing claims incurred from a fix pool of premium charged, some countries have opted to go detariff and allow the free market concept take reign.
ISSUE
Motor insurance premiums are usually governed by a fixed rate (aka tariff) to ensure all vehicles on the road are adequately covered with insurance especially third party coverages. Third party coverages are legal liability on damages cause to other person or property.
In view of increasing claims incurred from a fix pool of premium charged, some countries have opted to go detariff and allow the free market concept take reign.
ISSUE
Most of European countries have adopted the detariff approach with positive and negative consequences. I stumbled upon an article reporting that some folks are paying more for their motor insurance premiums based on where they live.
London Evening Standards reports that "Drivers in east London are paying over three times more for their car insurance than those living in the west of the capital."
London Evening Standards reports that "Drivers in east London are paying over three times more for their car insurance than those living in the west of the capital."
Source:- www.standard.co.uk
CAUSES & EFFECTS
CAUSES & EFFECTS
London Evening Standards put it that differences in prices may be due to large numbers of third party injury whiplash claims in east London. (www.standard.co.uk 2014)
VIEWS
(http://levelnineatwork.blogspot.com/2014/06/the-ups-downs-of-de-tariffed-motor.html)
Here is another article blaming expensive premiums on high cases of whiplash cases in east London.
Do whiplash cases play a pivotal role in premium prices? Are the insurers’ data sufficient to justify pricing based on factors selected?
Here is another article blaming expensive premiums on high cases of whiplash cases in east London.
Do whiplash cases play a pivotal role in premium prices? Are the insurers’ data sufficient to justify pricing based on factors selected?
If postcodes apart from the vehicle type can be used to determine the premium rates, how well are they controlling and monitoring the correct info placed in the customer's data?
Will this lead to customers using alternative addresses when purchasing policies?
Assuming Malaysia adopts the detariff approach for motor insurance in the near future, how effective will we be at pricing premiums based on postcodes as most districts will consist a wide customer demographic.
