Personalized Insurance Pricing: Advancing Customer Fairness and Financial Empowerment
WHAT IS PERSONALIZED INSURANCE PRICING?
Insurers price policies based on expected future costs across a large, diverse population of drivers. Although the pricing mechanism is complicated, the goal is very simple: price each policy according to its expected costs. The best—and most fair—way to price policies is to use a large number of actuarially sound and predictive driving and non-driving rating variables, known as “risk-based factors.”
HOW DO YOU BENEFIT?
- Fair, Lower & Accurate Rates
- More Choices in the Market
HOW THE INSURANCE INDUSTRY IS HELPING
Insurers are currently implementing new practices, like making it easier to shop for the best rates, that make auto insurance more affordable. Insurers also are partnering with federal, state, and local policymakers to improve community and traffic safety as an important step to reduce these losses.
However, the work is not complete, and insurers are working to increase insurance access and affordability for all communities; and are working to reduce all accidents and costs by supporting highway safety laws, reducing distracted driving, and lowering litigation and vehicle repair costs.
- Studies prove that personalized insurance pricing accurately predicts loss, reduces costs and prevents subsidization.
- Actuarial science proves personalized insurance pricing gives consumers the fairest rates.
HOW IS THIS REGULATED?
Insurers follow strict state rate setting laws, which require rates to be adequate, not excessive, or unfairly discriminatory. Data and actuarial science to support rating plans are supplied by the companies to regulators to demonstrate the predictive nature of pricing tools.