Do you really understand how insurers determine your monthly premium – which factors are taken into account and why?

Most insurers bunch people into groups of similar profiles and then use the average EXPECTED behaviour to determine basket premiums for the group.  For example, a 26 year-old female, driving a Citi Golf and living in Boskruin will pay X premium per month.  Other more individual factors such as her licence type, previous insurance history or security options on her vehicle  will also be taken into account, but ultimately she is bucketed into a group profile EXPECTED to behave in a particular way.

Understanding the factors that drive your premium will help you to control them.

The truth is that many of the above factors are only partially within your control.  Fortunately, competitive pressure to innovate and create increased consumer value, as well as advances in technology and internet communication, is forcing insurers to relook at current rating models.  A wave of growing consumer consciousness is compelling insurers to move to a more scientific, individual way of determining monthly premiums.

Leading the insurance rating revolution is pay-as-you-drive type insurance solutions, already widely used in Australia and Europe.  These insurance packages give consumers the opportunity to influence at least a portion – the distance they travel – of their monthly premium.  But this is merely one of the factors that influence rating.

Embracing the challenge to deliver truly individualised insurance is MiDriveStyle from MiWay.

MiDriveStyle addresses the need to take into account your unique driving behaviour when determining your monthly premium.  More importantly, the technology takes into account how your driving behaviour and patterns change over time.  “Individual driver behaviour rating” means that your age and licence type and the colour of your car become less important when determining your premium, and factors such as how, when and where you drive become far more important. Individualised driver rating also addresses very successfully the problem of past claims history.  Insurers would typically rate you on your accident history over the last 3 years, irrespective of whose fault the accident was.  Individualised rating and the monitoring of your driving pattern over a period of time will now mean that you have the opportunity to influence your premiums far quicker than with the traditional insurance models.

Age, licence type and the age of driver’s license are factors that affect young drivers.  Current rating means that if you are a young driver, you will have no option but to pay high premiums based on the perception that you are a higher risk driver.  With individual Drivestyle rating, you get the opportunity to disprove this perception and save significantly on premiums.

Saving on premium is a choice.  There is also the case of drivers that would like to save on their monthly premiums simply by driving less recklessly, choosing to drive at safer times or by taking alternative routes.  With MiDriveStyle, saving on your monthly premium now becomes an incentive to change your driving behaviour – maybe this could herald a new movement towards safer, more responsible driving for all?

What does the future hold? Initiatives such as MiDS is changing the way drivers behave and emphasizing the benefits of  slower, more carefully driving.  In the long-term this could result in safer roads with less accidents and fewer cars traveling in peak times, ultimately leading to less carbon emissions.  Who would have thought Insurance had a green angle…

Kind regards,

Click here for more information about MiDriveStyle and individual driver behaviour rating.