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The Association of British Insurers has published new data today* which shows why age is an important factor in deciding premiums for motor insurance policies. The data shows the average premiums that customers of different age groups pay for their car insurance, compared to the cost of the average claim they make.

Younger drivers between 18-20 years pay the highest average premium of £972, because their claims are likely to be expensive, an average of £3,667, and more frequent than other age bands. The group with the cheapest average car insurance premiums are 66-70 year olds who pay £241, since the cost of their average claim is relatively low at £2,225
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Age of PolicyholderAverage premiumAverage claim
18-20£972£3,667
21-25£649£2,905
26-30£502£2,520
31-35£426£2,274
36-40£378£2,279
41-45£343£2,199
46-50£326£2,265
51-55£306£2,233
56-60£277£2,216
61-65£252£2,180
66-70£241£2,225
71-75£255£2,495
76-80£291£2,572
81-85£352£2,886
86-90£415£3,690
91+£478£3,656
Although 61-65 year olds have the lowest average claim, their average premium is slightly more than drivers in their late sixties because they tend to make more claims.


This data shows that in general drivers aged over 70 pay higher premiums than those in their middle age because they are more likely to make more expensive claims. Drivers aged over 90 pay an average premium of £478, because the cost of their average claim is £3,656, almost 50% higher than those who are twenty years younger. However, these older drivers pay less than those in their late twenties, who pay an average of £502.


The ABI’s average motor insurance premium tracker for Q1 2015 shows that the average premium for all age groups is £360, which has fallen by 5% over the last two years. Drivers aged 86 and over only pay 15% more than this.
 

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Meaningless without frequency of claims data for each group. Insurance payout is proportional to average number of claims x average claim.

On top of that, it needs to take into account the average price of the car driven by each age group, and other factors.
 

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Meaningless without frequency of claims data for each group. Insurance payout is proportional to average number of claims x average claim.

On top of that, it needs to take into account the average price of the car driven by each age group, and other factors.
Still very interesting though. Putting all the above data in would probably make the post virtually unreadable except for the very bored.......
 

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The caveat Baron is that the figures quoted are the average so no doubt all the other underwriting criteria has been accounted for ?
 

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It is a very simplistic analysis that doesn't really tell you anything you probably didn't already know . Interesting nonetheless .

I was pleasantly surprised that when I put the change of car details on my insurance to change it to an XF , I got a refund against the premium I paid for a 10 year old Mazda 6 .
 

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Over here, for most cars, the price of the car is almost irrelevant. Most of the insurance premium goes to cover the personal liability risk.

I traded in a $21,000 steel Mustang for a $70K Corvette and my premium went up by $32/year. Since vehicle theft is non-existent here, and people at a lot more expensive to fix than people, most of my premium ($7,000/year for 3 cars with 2 teen drivers) goes to cover the $4M in personal liability coverage.
 

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What's missing is the gender split. Women make far fewer claims than men. This chart represents a stand in for two human characteristics: testosterone levels in the blood (which accounts for the bulge from 18 - 30), and the "eye sight" factor which is in turn a stand in for the combination of perception and experience which accounts for the undulation of the curve.

Gender based insurance premiums were tried over here and banned as "discriminatory" ( well duh) under equality legislation. Young men's insurance rates are grossly and unfairly subsidized by young women drivers. It's outrageous.
 

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Young men's insurance rates are grossly and unfairly subsidized by young women drivers. It's outrageous.
Its ok. In turn women health insurance costs (be them funded by premiums or taxes or a combination) are being funded by men.

And since men and women are often in family units, and are roughly in equal numbers, it evens out in the end :)

In the end, the best predictor of insurance claims (auto, health, home, etc) is your credit score. That is the best tool and keeps insurers out of the gender, race, age game.
 

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Its ok. In turn women health insurance costs (be them funded by premiums or taxes or a combination) are being funded by men.

And since men and women are often in family units, and are roughly in equal numbers, it evens out in the end :)

In the end, the best predictor of insurance claims (auto, health, home, etc) is your credit score. That is the best tool and keeps insurers out of the gender, race, age game.
Back to not making any sense again, I see. I am not aware of any evidence that women's health care costs more than that of men. Even if it were so you make no sense by suggesting that unfair assessment of car insurance premiums can be considered fair because health care cost is also unfair but in the other direction.

Insurance companies use actuarial analysis to assess premiums required to cover risk. So do credit rating processes used by lenders. The two are otherwise entirely unconnected. Any correlation you may believe exists is just that and not a cause and effect.
 

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Actually all car insurance companies in the US rely heavily on your credit scores to set their premiums.

As to gender spent on health care, there are multiple studies done and extremely hard data. Most studies seem to indicate that per capita women expenditures on health care are 1/3 higher than men's. But of course you could use that "free' service to find that out: G o o g l e.

Here is a study for you that found a 32% higher female vs male health care costs:
http://www.healthcarefinancenews.com/news/analysis-gender-delineation-seen-medical-spending

Which is not surprising, given that the female body, in addition to doing all we do, has an estate of the art assembly line to produce other humans.
 

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My insurer has not ever gathered any credit information from me nor solicited my consent to secure a credit report. Insurance premiums are regulated in my jurisdiction.

I'm pleased you have uncovered the obvious reason why female health care costs are much higher than for men (though still not if you consider the delta to be health care costs for the unborn child which would be the rational way to look at it.) Would you like to know my views on why men should heavily subsidize those costs? The reason would not be a reasonable factor to consider when insuring automobiles.
 

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I don't know what jurisdiction is that, but a quick G o o g l e search indicates that insurers in Canada are increasingly using credit scores to set premiums.

http://www.cbc.ca/news/credit-scores-can-hike-home-insurance-rates-1.890442

"Insurance companies across Canada are increasingly turning to credit scores to help assess risk and determine the cost of premiums."

And regardless if they all use it or not, if it is legal or not in a particularly jurisdiction, the point that I was making is that a person's credit score is the best predictor for claims. Just like it is a good predictor for a good employee, and is a better predictor of propensity to commit crimes than a criminal background check.
 

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"Home insurance". I think you'll find it difficult to use claims experience for home insurance risk assessment. Once the house burns down....

The primary method used by home insurers, illogical though it is, in Canada, is number of claims. Just try making three claims in two years and see what happens. Statistically, this is nonsense but that's what they do. Using credit rating as a substitute for this crazy method may be rational.

For car insurance they use your age (relying on compilations of accident statistics) and driving record (equivalent to examining poultry entrails).

as I say, in my jurisdiction the insurance industry is regulated, and in most Canadian jurisdictions auto insurance is socialized and provided by government at a cost determined by politicians so bears no relationship to anything rational.
 

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I'd like to see a breakdown of claims by occupation. I used to work for a bank, then decided to become a full time musician. I was working in a show in the west end, only using my car for social use which was a rover 400 at the time. All of a sudden my insurance went up. 'Hold on I'm still the same person, why am I now a worse driver' reply 'I may give elton john a lift', 'what in my old rover, when he proberly has a new bently to ride in'. Statistically I was less likely to have an accident at that time. Anyway that enough of my ranting. I've also noticed looking at quote on compare the market, that insurance prices have rising in the last week. A quote on a 3.0d premium XF was £590 last week is now £680.
 

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If by "full-time musician" you mean playing in a band in clubs, bars, etc, yeah your premium should at least double. Most drivers working at a bank commute to/from work during daylight hours. Most band musicians working at bars/clubs commute to/from work during night time hours, including the deadly 11PM-2AM hours. The incidence of accidents/mile-driven late in the evening vs daytime is incredibly higher.

Add in the fact that most band musicians will have more blood chemicals while commuting vs your typical bank clerk, and they have a pretty good case to charge you higher premiums.

In fact, I'd bet some insurance companies may decline coverage all together for such a profession. And some parents may also not like if their daughters dated you. And some banks may not give you a mortgage. And some landlords may not rent to you.

There are usually two sides to a story - yours and theirs :).

P.S. If I ran an insurance company, I'd not insure any of the people that I know that are "full-time musicians" either.
 

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If by "full-time musician" you mean playing in a band in clubs, bars, etc, yeah your premium should at least double. Most drivers working at a bank commute to/from work during daylight hours. Most band musicians working at bars/clubs commute to/from work during night time hours, including the deadly 11PM-2AM hours. The incidence of accidents/mile-driven late in the evening vs daytime is incredibly higher.

Add in the fact that most band musicians will have more blood chemicals while commuting vs your typical bank clerk, and they have a pretty good case to charge you higher premiums.

In fact, I'd bet some insurance companies may decline coverage all together for such a profession. And some parents may also not like if their daughters dated you. And some banks may not give you a mortgage. And some landlords may not rent to you.

There are usually two sides to a story - yours and theirs :).

P.S. If I ran an insurance company, I'd not insure any of the people that I know that are "full-time musicians" either.
Yes, at the time, I was working in the west end and only used my car for social and domestic purposes. Not driving home late from shows. But the reason the insurance company gave me was because I might give Elton John a lift in my car. Not due to driving late at night. to be fair they did reduce the premium when I told them I didn't know Elton John.

You are also correct, many insurance companies do not quote for such a profession. However, their reasons for the increase are not correlated to an increase in driver risk with that profession and no such figure exists when I asked the AIB about it. It is because of the potential for increase personal injury should I give a ride to a famous person.
 

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I thought most musicians put down "unemployed" as their profession - that should keep your premiums down - famous people don't like to ride with the un-employed. And full time musician would be your "hobby". Win-win. :)
 
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