Adjust insurance for Gear

The discount is feasible IMO. Similar to winter-tire discounts that are not uncommon, it would be based on the honour system. The insurer would never deny you a claim simply because you didn't have your winter tires on, but I suppose the could nail you for misrepresentation and cancel your policy (red flag on your insurance record). I think a "Gear Discount" would work similarly.

It would be tough to initially quanitfy such a discount, because we don't have data showing how gear can reduce your claims. I suppose we could start it out at a 5% discount, collect some data for a few years, and then see how the ATGATT riders compare to everyone else. This is how I am implementing Winter Tire discounts.
 
VifferFun said:
The discount is feasible IMO. Similar to winter-tire discounts that are not uncommon, it would be based on the honour system. The insurer would never deny you a claim simply because you didn't have your winter tires on, but I suppose the could nail you for misrepresentation and cancel your policy (red flag on your insurance record). I think a "Gear Discount" would work similarly.

It would be tough to initially quanitfy such a discount, because we don't have data showing how gear can reduce your claims. I suppose we could start it out at a 5% discount, collect some data for a few years, and then see how the ATGATT riders compare to everyone else. This is how I am implementing Winter Tire discounts.
Click to expand...

Sorry, Viffer. Usually your posts are well positioned and I feel are the final word. But I used to work in the insurance industry in many different areas over a 15 year period and in the footsteps of my father before me. So I feel I have a little knowledge (enough to probably make me dangerous voicing opinions...)

But, I feel these 'honour' type discounts muddy the statistical analysis and overall cause premium increases. The artificial lowering of rates without data or verifiability on the insured's part as well as the inability of recourse (claim denial) will cause everyone's premium to be inflated.

If ATGATT discount is not verified and the insured sustains a claim, how is the extra "risk" spread into the pool. Rates were lowered for this rider based on the lower claim payout. The pool has less $$ to fund the higher claim. That means the overall pool has to be increased and everyone's rates go up.
 
Major said:
Sorry, Viffer. Usually your posts are well positioned and I feel are the final word. But I used to work in the insurance industry in many different areas over a 15 year period and in the footsteps of my father before me. So I feel I have a little knowledge (enough to probably make me dangerous voicing opinions...)

But, I feel these 'honour' type discounts muddy the statistical analysis and overall cause premium increases. The artificial lowering of rates without data or verifiability on the insured's part as well as the inability of recourse (claim denial) will cause everyone's premium to be inflated.

If ATGATT discount is not verified and the insured sustains a claim, how is the extra "risk" spread into the pool. Rates were lowered for this rider based on the lower claim payout. The pool has less $$ to fund the higher claim. That means the overall pool has to be increased and everyone's rates go up.
Click to expand...

What you are saying is certainly true in many respects. When a new discount is implemented, it's effect on the pool of insurance dollars is offset by charging more to the people who don't qualify for the discount. For example, if 10% of clients qualify for an ATGATT discount of 5%, then rates would approximately change as follows:

1.) 10% of clients (with ATGATT) will see a 5.00% decrease
2.) 90% of clients (without ATGATT) will see a 0.56% increase

If a discount is given for a reason that doesn't lower claims payouts, then the people without the ATGATT discount are essentially subsidizing the clients with the ATGATT discount. This is not inflating rates on an overall basis, but rather for the people who don't qualify for the discount.

I still think the implementation method that I described above is sound. Most people do not lie about their winter tires to their insurer, since this is easily verifiable (especially in the event of a claim) and I don't think ATGATT would be any different. If the ATGATT discount is completely unwarranted, it be discovered after data has been collected for a few years and a decision can be made to eliminate the discount. In a perfect world, we would have the claims data prior to considering the implementation of a new discount, but it would be VERY difficult to get brokers to properly code the information if it has no immediate effect on the premium.
 
DSoup said:
Highlight of my day - Viffer saying my idea was not stupid :cool:
Click to expand...

I have seen discounts given for more ridiculous reasons :P

I've actually contemplated such an ATGATT discount in the past. Has there been any studies done to determine the effect of wearing gear in the event of a collision? I know it's common sense, but perhaps someone has already quantified it somehow?
 
I thought there was actually study proving that something like 80% of all injuries (mostly road rashes) are avoided when the person is ATGATT.
 
You must log in or register to reply here.
Back
Top Bottom