Insurance

Opinions about brands with bad drivers don’t affect premiums

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When it comes to prejudice on the roads, there is often little to compete with a road user’s view of the worst drivers and the make of vehicle that the perpetrators own.

These passionately held views were again confirmed in recent surveys about drivers and cities with the worst reputations. The surveys sparked spirited online comments about the drivers of brands all the way from Alfa Romeo to Zotye.

If road users are to be believed, then surely the alleged and relative recklessness of drivers of certain brands must have some impact on insurance rates, right? No, not at all says Soul Abraham, general manager for Car & Home at Regent Insurance.

“For insurance companies, risk assessment is considerably more scientific than perceptions about the dangerous driving habits of others,” he says.

Abraham says no single factor on its own determines a driver’s risk profile. Over the years Regent Insurance has developed highly sophisticated statistical models and algorithms that take into account all the factors in a vehicle user’s risk universe and that determine the overall risk profile and premium.

“It is the unique combination of a driver’s age, gender, geography, nature of travel, vehicle make, model and age, among dozens of other factors, that determines a risk profile,” adds Abraham.

He notes that all insurance companies have their own tools to evaluate risk and that opinions about which brand’s drivers are the worst just do not feature in any model.

With that said, how can an individual improve his or her risk profile?

“Although there are a number of factors that can’t be changed, such as your age and home address, one thing you can do to develop a more favourable risk profile is to install a telemetry tracker.”

Abraham says that this is an especially good idea for young or inexperienced drivers in the 18 to 35 age group.

“Claims experience consistently shows that younger drivers are riskier to insure, which means that they are charged higher premiums than those with more of a track record.”

According to Abraham, the sooner these drivers are able to demonstrate an improvement in their driving habits and build up a clean record, the less time it will take to earn a reduction in premium.

“Installing a telemetry device is an excellent way to achieve this, provided that the telemetry does not show the driver to have riskier habits than what their risk profile would suggest.”

Telemetry systems highlight poor driving behaviour like speeding, harsh acceleration and braking, where and when you drive and how often you are behind the wheel. Conversely, if the tracker records good driving behaviour or any improvements, a driver’s risk profile will automatically adjust over time.

Abraham notes that many inexperienced drivers do not insure their vehicles because of the high premiums they are typically charged. Premiums for a younger driver are often in excess of 50% of their monthly vehicle repayments and the cost is not always worth the benefit in their eyes.

“Realistically the only way to make car insurance more affordable and work for a young driver is to install a telemetry device with a view to improving his or her risk profile early on.”

Abraham adds that by this logic, individuals driving with telemetry devices should be adopting safer driving habits. Better driving behaviour also reduces the cost per kilometre through more efficient petrol consumption and slower wear and tear on tyres.

In May this year, South Africa was ranked as worst out of 36 countries when it came to the number of road fatalities. The Road Safety Annual Report compiled by the International Transport Forum revealed that in 2011 there were 27.6 deaths per 100 000 inhabitants in South Africa.

“These kinds of statistics confirm what South African road users already know; our roads are dangerous, and drivers and pedestrians alike have to have their wits about them at all times.”

Abraham says that using telematics in insurance positively influences driver behaviour by encouraging individuals to honestly assess their own driving before pointing fingers at drivers of those vehicle brands perceived to wreak havoc on the roads.

“The one sure thing we can all do to help  reduce the carnage on the roads is to each take care of our own driving habits while spending less time yelling ‘typical’ at the drivers of other brands. Telemetry systems are therefore a great tool for trying to change behaviour while reducing insurance costs,” says Abraham.

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