COVERBOX
CAR INSURANCE TELEMATICS
PRESS RELEASE
February 23, 2012.
CAR INSURANCE: DITCH POSTCODE-BASED PREMIUM-SETTING, USE 17TH CENTURY SHIPPING RISK ASSESSMENT.
Car insurance premium-setting-by-postcode should be ditched and replaced by a rating process based on a system of risk assessment developed for 17th century shipping.
That’s the view of insurance pioneer Johan van der Merwe who says that advanced but established 2012 telematics technology would produce far more representative insurance premiums based on where and how a car is driven rather than socio-economic factors relating to the owner’s home address.
Mr Van der Merwe and a group of fellow investors acquired UK pay-as-you-drive car insurer Coverbox earlier in 2012, and with it they acquired telematics technology which monitors the time, place and manner in which a car is driven, all of which he says are more significant in calculating insurance premiums than where the car owner’s home is.
“Theft of a vehicle from its owner’s home is a minor consideration for insurers when compared with the third party injury consequence of an accident. The cost of compensation for injury after even a relatively minor accident can be huge, and increases pro-rata with the number of occupants of vehicles involved,” said Johan van der Merwe.
“Currently premium and risk calculations are worked backwards from claims rather than forward from actual risk. Claims are themselves flawed and as such not an accurate measurement of risk.
“But insurance premiums are rated on the home postcode of the car owner or user, and that car can often spend only a part of the day or night there, with a comparatively low theft risk.
“The remainder of the day it is driven through the rush hour, or on a school run, or on a shopping trip, and then parked in a location which may be more or less risky than the home location.
“But there is more danger of an accident in an urban rush hour than a motorway rush hour, more danger of accident if driving overnight or through an accident black spot and so on. So somebody who lives in a high-risk postcode but parks their car for most of the day in a low risk area is perhaps being charged too high a premium, while somebody who lives in a low-risk area and drives through accident black spots in the rush hour is being charged too low a premium.
“This is where 17th century insurance risk assessment comes in, when underwriters sat in dockside coffee houses and assessed the risk value of each and every ship leaving the port according to cargo, route, season, state of repair of the ship and level of experience of the captain.
“Telematics – on-board measurement, movement, location and systems monitoring and recording – track the vehicle, how and where it is being driven, and provide us with information which enables us to accurately assess the insurance risk of that specific car based on route and driving behaviour.
“The system will generate the technological version of a wince if the car is being driven through an accident black spot at peak time, but be far more relaxed if the route and time of travel is less risky. That will be reflected in an according premium adjustment, and, because the driver can go online and see what the system thinks about driving behaviour or location, may even cause him or her to alter their driving standards or routes they travel. That obviously has massive potential for bringing down, for instance, young drivers’ insurance costs by changing their behaviour.”
Coverbox pay-as-you-drive insurance allows drivers to take out comprehensive cover paid for by the mile, with the price per mile varying according to the time of the day or night: off-peak, peak or “super-peak” times.
All Coverbox policyholders have a personal website enabling them to see precisely how many miles they are driving, and what the cost is. The technology behind Coverbox is based on proven equipment and technology.
Ends
Further information:
Iain Macauley
@Press_Relations
07788 978800
