A New Kind of Insurance - Black Box Insurance
With MyDrive, motor insurance is made fairer and more accurate. There is no need for pooled statistics and broad estimates – instead, each customer pays according to how well they drive as an individual. It’s simple, but revolutionary.
You go into a restaurant and order a green salad for £4. But when the bill comes, you’ve been charged £20. You complain to the staff, but they shrug their shoulders: ‘Sorry, but that’s the average cost of a meal here. It’s the fairest we can do.’
You wouldn’t accept this system in a restaurant, so why accept it for insurance?
Unfair Proxies
Currently, insurance companies rely heavily on the demographics of each customer in order to calculate their individual risk levels, and therefore their price. Indeed, given the available statistics, this makes sense.
This is coupled with your history of claims. The fewer claims you’ve made, the lower the price of your insurance. This seems a fair way of measuring someone’s levels of risk on the road, but it’s actually fairly misleading and inaccurate. Government statistics estimate that only one in three collisions are reported to an insurance company – customers would rather pay for the damage in cash, or not at all, than lose their no-claims discount. This, again, is unfair.
You’ve just been cut up on the way to work, causing you to swerve and badly dent you side door. But if you get your insurance company to pay, you’ll lose the no-claims discount you’ve had for so long. Is it fair that you will have to pay more for someone else’s bad driving?
As well as this, you get charged more for insurance if you belong to a certain demographic. Is it fair that you should have to pay more because of your age or your gender? According to the EU Charter of Fundamental Human Rights, it isn’t.
A Change in the Law
On 1 March 2011, the European Court of Justice banned gender discrimination in insurance pricing, a ruling that comes into effect on December 21 2012. What could this mean?
The ruling will push up premiums for women under 25 by an average of almost 25%, while male drivers in the same age group will benefit from a typical 10% reduction in their insurance costs, according to the ABI's research.[1]
From the end of 2012 insurance companies will need more accurate and less discriminatory ways of targeting their pricing plans – black box insurance - that’s where MyDrive has the solution.
With MyDrive, we develop a detailed picture of each driver’s risk levels – a picture that gets more accurate with every journey made. Your insurance price is then adjusted according to how appropriate your driving style is to the road you’re on. This way, dangerous drivers pay more, while safe drivers pay less.
[1] Rupert Jones, ‘Q&A: How will the ECJ gender ruling affect my insurance?’, The Guardian, 01/03/11, http://www.guardian.co.uk/money/2011/mar/01/ecj-gender-ruling-insurance