’If we use occupation, postcode, all those [types of] things, then we are going to discriminate against vulnerable consumers,’ says chief executive
The factors the insurance industry use to assess risk and price motor insurance are “fundamentally discriminatory”.
That was according to Sam White, chief executive of Stella Insurance, who said at the ABI Conference that “trying to pretend” this was not the case was an ”insult to society”.
“If we use occupation, postcode, all those [types of] things, then we are going to discriminate against vulnerable consumers,” she warned.
“We have this situation that the insurance industry needs to profitable and it needs to work. However, there is this system that has ended up being fundamentally discriminatory.”
Telematics
In turn, she felt the traditional way the industry determined risks was outdated and needed to be tackled head-on.
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And White noted that there was technology to help the insurance industry do this, such as telematics.
Telematics-based motor insurance policies utilise a device – also known as a black box – to track a combination of driving behaviour, location, time spent driving, distance driven and speed, among other factors.
By leveraging this data, insurers are able to offer reduced premiums to certain customers that present lower risks, with the approach being particularly popular among younger drivers.
“Fundamentally, telematics is a much more fairer way to rate consumers for motor insurance,” White said.
”The answer is there and technology.”
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