What You Need to Know: Individualized Auto Insurance Ratings
What are ‘individualized auto insurance ratings’?
Recent advances in big data analytics have altered the way that insurance companies structure their policies, allowing them to track more and more variables. This shift within the industry has changed the way that insurance providers offer coverage to individual policyholders. Providers are now able to create more accurate profiles of individuals, allowing them to provide more accurate rates and better value for their coverage—these are ‘individualized insurance rates’.
How does this affect you?
These recent innovations may have a positive impact on your insurance rate, offering a huge opportunity for policyholders. There will be a lot of disparity during this shift, as companies adopt the new technology. Many insurance providers are currently in the process of transitioning to updated databases and algorithms, which they’ll be using to implement the new ratings system. Once the transition is complete, rates will be more consistent from company to company. For the time being, it’s important to get the support of a local broker to find the best rate on the market.
What will this new rating system track?
The old insurance ratings system based on your rate on a few defined segments and variables, with the exact number depending on the provider. These variables included geography, age, purpose of the vehicle (work, leisure, etc.), daily mileage, annual mileage, and so on. The new rating system will track millions of variables, dividing them into many segments to determine your insurance ratings on a highly individual basis.
When transitioning into the new system, it’s very important to provide accurate information to your insurance provider. Until we have spent more time in the new system, it is hard to know what information could improve your rates—or affect you further down the line, if inaccurate. For examples, detail-oriented questions like ‘when did you buy your car?’ or ‘are you married?’ will likely become commonplace.
The bottom line is that any changes in your life can impact your insurance rates moving forward. If you haven’t talked to your insurance broker in over a year, it’s important to contact them.
Significant changes in your life could also have a big impact on your rates—and your broker will be the best person to bring you up to speed!