Insurance companies develop complex mathematical models to determine rates

Nathan Wilson | Journalist
Insurance specialists called actuaries combine data from traffic incident reports and existing claims to predict the likelihood and cost of insuring their clients against future accidents.
When drivers purchase or renew policies, the quotes they receive are the result of actuarial forecasts. Some factors used by actuaries to determine a driver’s premiums include specific personal information while others are based on broader demographics.
Drivers should disclose the model, year and specifications of their vehicle to their insurance company, as these determine the value of their automobile and increase the cost of repairs or replacement in the event of an accident or flight. Many vehicle features increase the cost of insurance, but some insurers offer reduced rates for vehicles with security and anti-theft features that reduce the likelihood of accidents or theft.
Insurance rates are also based on statistical analysis of accident reports and claims filed. Insurance rates tend to fall as drivers age before rising as they approach retirement, when their income and daily commutes typically decline. Actuarial data do not support the perception that older drivers are more likely to be involved in traffic crashes; instead, their higher rates are based on their increased risk of serious injury in crashes.

This article published in the print edition of April 9, 2022

Other demographic factors used to determine insurance rates for decades have become controversial because they were beyond the control of drivers. The PAID (Providing Accurate Information Directly) Act passed by the US Congress in 2020 prohibits insurers from considering factors such as gender, marital status, and census tract when determining insurance rates. ‘a customer. Where a customer lives and works determines the traffic conditions they encounter while traveling, but industry critics believed these factors played a role in discriminatory pricing and argued that the use of socio-economic factors had led many majority minority neighborhoods and towns to pay higher rates nationwide.
Insurers keep records of a driver’s traffic tickets and accident history to develop an idea of ​​their likelihood of engaging in future high-risk behaviors such as speeding, impaired driving, and refusing to yield. passage to other vehicles. Because behavior plays a large role in accident risk, many insurance companies offer lower rates to customers who participate in defensive driving courses that teach safer driving techniques.
Katie Wilson of Wilson Insurance in Natchitoches points out that some insurers are using mobile apps to collect driver behavior data and better assess their driving habits. “It doesn’t register much as far as details go. They look more at what times of the day you drive, hard braking, quick acceleration. Insurers have used incentives to get their customers to adopt the apps. “When (insurance apps) first came out, it was to offer customers who don’t travel very far, who don’t travel very fast, who don’t travel too close to offer them a discounted rate” , she said. “Now for customers who get a bad rating, they will raise your rate.”
The Natchitoches Parish Sheriff’s Office issued approximately 3,000 citations and recorded 1,599 traffic accidents on parish roads, highways and private property in 2021. That’s more than four traffic accidents per day and n does not include data from the town of Natchitoches. With sheriff’s deputies dealing with more than four traffic accidents each day last year, Cpt. Tony Moran stressed the importance for drivers to use their seatbelts and drive without distractions. “They should be concentrating on the freeway and they’re doing something else taking their attention away from the road,” he said. “It only takes a second without paying attention to be involved in an accident.”

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Kristan F. Talley