Young and driving a red car? Get ready to fork out more on your car insurance! Aided by sophisticated research data, car insurers are designing products based on the colour of the car and the age, profile and gender of the driver.
For instance, younger car owners in the age group of 18-25, who are seen as more of a risk by insurers, could be charged higher premiums. Similarly, Red is the favourite colour among the youth, hence, could attract higher premiums.
“The thinking in our company is the risk of accident comes out of the nature of the car and also the driver. Certain cars are seen as more risky than others. For example, red cars are typically driven by people between 18 and 24. So, the premium could be higher, as the accident rate is higher in this age group,” said Hemant Kaul, chief executive officer and managing director of Bajaj Allianz General Insurance Company. “So, what we are looking at is can we charge people based on age group, professions and behaviour types?”
Taking a leaf out of the concept of customer-based risk pricing in foreign countries, Indian private insurers have introduced some segmentation based on the type of fuel, model of the car and geography.
“We have observed the person who buys a red colour car often is the one who is aggressive and energetic than the other lot. He is also one who lives a fast-paced life. There have been many instances where a red car is involved in an accident,” said Sudipta K Sen, regional director, south east Asia CEO & MD, SAS Institute (India). SAS is the leader in business analytics software and services, and the largest independent vendor in the business intelligence market.
According to Sen, a person buying a red car may possess the best of driving skills and this is where further profiling of the person takes place. So, based on the findings of different sophisticated analytical reports, private insurers are trying to build data sets that would enable them introduce customer profile-based pricing for private motor insurance.
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Some insurers are even trying to develop rating systems for each car owner, taking multiple factors into consideration.
The model would generate score for drivers and each score would have a premium rate attached to it. For example, any score, say, in excess of 75 per cent should be categorised “good” and would have same premiums, he said.