Lifestyle the biggest risk factor for local insurers

The ruling handed down by the European Court of Justice banning sex discrimination when determining insurance premiums has led to speculation over whether South Africa could follow the same route. However, according to at least one specialist professional Financial Services provider, while gender and other factors, including age, do play an important role in determining an individual’s risk profile and premiums, just as crucial are their lifestyle and behaviour patterns.

Helen Szemerei, CEO at IntegriSure, the business, motor and household FSP, says that rather than rewarding someone solely for factors which are outside their control, it is as important to offer lower premiums to a person who leads a responsible lifestyle.

She says consumers who are responsible should pay lower premiums as they all contribute to the pool but are less likely to make a claim. “However, for insurers to determine who is and isn’t responsible, a number of factors need to be considered. This includes factors such as marital status, as single persons are deemed riskier.”

“If the client is a non-drinker this also suggests more responsible behaviour as they will not risk drink driving. Other factors such as type of occupation, recreational activities and location are all factors that determine the risk and in many cases, the responsibility, of the consumer.”

“For example, certain insurers offer lower vehicle insurance premiums to women or older drivers because the statistics show that they present a lower risk.”

According to the Road Traffic Management Corporation’s Road Traffic Report dated 30 September 2010, there is a marked difference in the number of road fatalities by gender, particularly in the young driver age group. Road user fatalities among men in the 20 to 24-year age group total 8.65% versus 2.65% for women of the same age.

“Interestingly, while young women tend to make fewer claims or be involved in less serious accidents than men of the same age, our internal statistics also demonstrate that this gap narrows as people get older, with very few gender disparities in the 50-plus insurance pool.”

While these statistics may be accurate in principle and have to be taken into consideration, they do not take into account the huge variation of behavioral patterns between individuals.

Szemerei says there are some key tips that individuals can follow that to help ensure more responsible driving behaviour. “Motorists who tailgate other drivers are particularly irresponsible as any sudden brake could result in an accident. Likewise, people talking on their cell phones, texting or not wearing their seatbelts are also engaging in risky behaviour that could result in a serious accident for others.

“Motorists should remember that the more responsibility they can exhibit, not only to their insurer but also to other drivers, the lower their chances of having an accident, which eventually should translate into a lower insurance premium,” concludes Szemerei.