Car Insurance Companies Worry About Gender-Related Price Hikes

Car Insurance Companies 300x156 Car Insurance Companies Worry About Gender Related Price HikesOne ofBritain’s largest car insurance providers, The Royal Bank ofScotland, is taking part in the usage of the black box technology. With this telematics technology on their side, insurance providers are rendered more capable in monitoring and calculating the risk that each motorist presents while driving.

With the European ban slowly getting into action, car insurance companies are afraid of losing customers due to the exorbitant insurance premiums that they would be forced to administer. Hence, the once expensive telematics technology is now considered as a possible saving grace by certain insurers.

According to James Rakow, an insurance partner at Deloitte, “There is certainly a renewed interest in the telematics technology and the gender-ban directive is not the least of the reasons for it being so.”

Female drivers are known to pay less in insurance premiums than male policyholders. This is hugely due to the fact that statistics show women as more careful driver. However, by the start of next year (2012) this will start to change as the gender-ban will be taken into action. The estimated increase in women’s insurance coverage rates is currently at 11 %.

Car insurance providers are afraid that the expected 11 % increase in women’s premiums could drive women out of the insurance market altogether. This is why telematics is regarded as a saving grace because its effectiveness could help the retain revenue while still following the insurance directive.

Richard King, chief executive at Ingenie, has mentioned that with the interest of the insurance industry intensifying, the prices of black boxes are starting to lower. The black box was first introduced to the market by ex-football player Gary Lineker in order to promote the technology.

According to Richard King, “The telematics technology has become a lot more affordable and a lot more advanced. I believe that it has reached its tipping point last year.”

Aviva Insurance,Britain’s second largest insurance provider, has mentioned that they had to give up their first trial of the telematics technology due to staggering overhead costs. This trial headed by Aviva Insurance was the first ever major telematics trial in theUnited Kingdomwhich occurred back in 2009. According to their results before they closed down the trial, there were 27 % cuts in car insurance premiums which allowed insurers to reduce premiums by nearly 33 %.

Telematics technology is slowly gaining its ground throughoutEuropeand the rest of the world. In theUnited Statesalone, around 60 % of car insurers have been accounted on taking part in this upheaval. Hopefully, as time goes by, more insurance companies in other countries would also be open to this technology.

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