When you apply for insurance, you impart far more than just your claims record and circumstances that could directly lead to future claims. Should there be limits on what insurers consider relevant to your price?
For fun, complete a car insurance application questionnaire. While you’re doing it, count the number of answers – all the discrete items of information that you provide the insurer. Age, your residency in the UK, your job, marital status, whether you have a mortgage, whether you have home insurance, and so on.
Your number will probably be between 30 and 50. Now, how many of these titbits is the insurer using to figure out how ‘risky’ you are? Answer: more than you might assume; perhaps all of it.
Insurers are highly secretive when it comes to how they apply the information you provide when assessing whether to accept you and on what terms. There are areas that are legally out of bounds of their risk models – such as ethnicity, religion, sexuality and gender. As for the rest, updates on what’s used and how tends to come to light via the intermittent news story or general hearsay.
Last week, Admiral admitted that it factors in the email addresses (or more specifically, the domain names) of its customers, and that these can affect what they’re charged. This came after an investigation by The Sun found that in certain instances, drivers applying with Hotmail accounts were being quoted between £5.60 and £31.36 more than if they were Gmail users.
This is head-scratching stuff, although certain other revealed uses of information have teetered on the outright discriminatory.
A while ago, we reported Hastings Direct and Admiral to the Equality Commission for charging car insurance customers more if they’d been born overseas – even if they’d grown up in the UK.
Last week’s investigation by The Sun also alleged that several insurers were quoting higher premiums for customers named ‘Mohammed’ than they were for those named ‘John’ – although the insurers deny that they do this.
A less inflammatory – but still perplexing – factor that can intrude on your premium is your marital status.
Other quirks are matters of presentation: whether you choose to describe your occupation as ‘journalist’ or ‘researcher’, or ‘chef’ or ‘kitchen worker’ can nudge the dial on your insurance quote. And it’s possible that in the near future even your social media activity might make a difference.
Many of us would consider the relevance of much of these to be stretching credulity, but insurers clearly feel differently.
When calculating your insurance premium, they’re trying to predict your future. The more ancillary details they can obtain about you, the better they can compare you with customers that they already have and so, in theory, the more accurate their prediction will be.
That’s one side of the argument, anyhow. An argument against is that what tends to happen to people ‘like’ you is far less relevant than your own lived experience. This may explain the growing demand for ‘telematics’-based car insurance policies that monitor your driving minute-to-minute and calibrate your premium to fit.
Do you think it’s reasonable for insurers to use your email address or other factors that don’t seem particularly related when considering your driving risk Or do you think their making maximum use of the data you provide is the surest way to a quote that best reflects you?