{"id":287367,"date":"2020-03-27T15:38:56","date_gmt":"2020-03-27T15:38:56","guid":{"rendered":"https:\/\/www.smartdatacollective.com\/?p=287367"},"modified":"2020-03-27T15:39:05","modified_gmt":"2020-03-27T15:39:05","slug":"how-insurance-companies-use-data-to-measure-risk-and-choose-rates","status":"publish","type":"post","link":"https:\/\/www.smartdatacollective.com\/how-insurance-companies-use-data-to-measure-risk-and-choose-rates\/","title":{"rendered":"How Insurance Companies Use Data To Measure Risk And Choose Rates"},"content":{"rendered":"\n<p>The <a href=\"https:\/\/www.smartdatacollective.com\/why-data-analytics-insurance-industry-is-major-game-changer\/\">auto insurance industry<\/a> has always relied on data analysis to inform their policies and determine individual rates. With the technology available today, there\u2019s even more data to draw from. The good news is that this new data can help lower your insurance rate. Here is the type of data insurance companies use to <a href=\"https:\/\/www.smartdatacollective.com\/data-scalability-raises-considerable-risk-management-concerns\/\">measure a client\u2019s potential risk<\/a> and determine rates.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Demographics\n<\/h2>\n\n\n\n<p>Traditional data,\nlike demographics, continues to be a factor in risk assessment. This\nincludes:&nbsp; <\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Age.<\/strong> Teens and young adults are less experienced\ndrivers and, therefore, at risk for more car accidents. <\/li><li><strong>Gender.<\/strong> Gender is still a factor but may be on its way\nout. Research shows that men are riskier drivers yet <a href=\"https:\/\/www.usatoday.com\/story\/money\/cars\/2019\/03\/18\/car-insurance-rates-gender-should-cost-same-men-women\/3142110002\/\">women tend to be charged higher rates<\/a>. This gender discrepancy has led to seven\nstates in the United States banning the use of gender as a factor in auto\ninsurance rates.<\/li><li><strong>Marital status<\/strong>. Statistics show that <a href=\"https:\/\/cover.com\/blog\/car-insurance-married-vs-single\/\">married people have fewer car accidents<\/a> than singletons. The assumption is that\nmarried people tend to drive more carefully with children in the car. <\/li><li><strong>Location.<\/strong> Where you live and if your car is parked in a\nlocked garage influence your insurance rate. Insurance companies have access to\ncrime statistics and can track the number of car theft and break-ins per\nneighborhood. <\/li><li><strong>Occupation.<\/strong> Insurance companies place certain professions in\na lower risk category or offer discounts to others. These include teachers, law\nenforcement officers, medical professionals, and military personnel. <\/li><\/ul>\n\n\n\n<p>Other types of\ntraditional data auto insurers consider are your credit score, driving history,\nand how frequently you submit claims. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Type\nof Vehicle <\/h2>\n\n\n\n<p>It goes without\nsaying that more expensive cars cost more to insure. However, that\u2019s not the\nonly thing insurers look at. Insurance companies have access to stats on what\nmake and model of car is stolen more often or involved in more crashes. For\ninstance, the 2000 Honda Civic is the <a href=\"https:\/\/insurify.com\/insights\/updated-2020-the-10-most-stolen-cars-in-america\/\">most stolen car in America<\/a> and the Mitsubishi Mirage (in the\n2013-2017 model range) has the <a href=\"https:\/\/www.autoblog.com\/photos\/photos-most-dangerous-cars-fatalities\/#slide-1280687\">most fatal crashes<\/a>. <\/p>\n\n\n\n<p>To get an\nestimate of what the average insurance rate is for the make and model of your\ncar, use The Zebra&#8217;s <a href=\"https:\/\/www.thezebra.com\/auto-insurance\/vehicles\/\">insurance by vehicle calculator<\/a>. It gives you the annual average\ninsurance rate according to the make and model of your car, the area you live\nin, and allows you to compare costs across different insurance providers. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Telematics\n<\/h2>\n\n\n\n<p>Vehicle <a href=\"https:\/\/towardsdatascience.com\/telematics-in-auto-insurance-a886a03b5a88\">telematics is revolutionizing vehicle\ninsurance<\/a>. It involves\ninstalling a usage-based insurance (UBI) device to your vehicle\u2019s OBD-II port.\nOnce installed, this device provides insurers with exact data on your driving\nbehavior that allows them to create a more accurate risk profile. <\/p>\n\n\n\n<p>UBI devices track\nthings like speeding, rapid acceleration, hard braking, and sharp cornering. If\nyou practice safe driving, installing one of these devices can substantially\nlower your insurance premium. For risky drivers, this type of tracking device can\nbe an incentive to start driving more cautiously if they want the benefit of\nlower insurance rates. <\/p>\n\n\n\n<p>Pay-as-you-drive or pay-per-mile insurance makes use of these UBI devices to track how many miles you drive and adjust your rate accordingly. <\/p>\n\n\n\n<p>Telematics data can also include information on the locations you\u2019ve driven to, speed limits, the duration of the trip, weather, and the time of day. Many UBI devices allow drivers access to information via an app on their smartphone, so you\u2019ll be able to check your driving stats and improve your driving behavior if necessary.<\/p>\n\n\n\n<p>As <a href=\"https:\/\/www.smartdatacollective.com\/how-connected-cars-insurance-influenced-by-big-data\/\">connected cars<\/a> become more popular, this sort of technology will\nalready be installed. Telematics is changing how insurance companies assess\nrisk as it measures individual driver behavior rather than basing it on average\ngroup data. It also places data collection and analysis directly in the hands\nof the insurance company. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Safety\nFeatures <\/h2>\n\n\n\n<p>How safe your\nvehicle is makes a difference in insurance rates. If your vehicle is equipped\nwith safety features like emergency automated braking, lane keep assist, drowsy\ndriving detection, and blind-spot monitoring, you\u2019ll score lower insurance\nrates. <\/p>\n\n\n\n<p>Insurance\ncompanies take into account a vehicle\u2019s safety ratings. The <a href=\"https:\/\/www.iihs.org\/ratings\/top-safety-picks\">IIHS\u2019 Top Safety Picks<\/a> assess how well a vehicle withstands a crash and\nthe type of crash-avoidance and mitigation technology it has. If your car makes\nthe cut your risk, along with your rate, drops.<\/p>\n\n\n\n<p>Older cars don\u2019t\ncome equipped with the latest safety features but there are some <a href=\"https:\/\/www.consumerreports.org\/cro\/magazine\/2013\/11\/safety-upgrades-for-your-car\/index.htm\">aftermarket safety products<\/a> like blind-spot detection systems and\nrear backup cameras that can be installed in an older car. Inform your insurer\nonce installed and it should help lower your rate. <\/p>\n\n\n\n<p>While traditional data still gives insurance companies useful information for risk profiling, technology-driven data is the way of the future. It\u2019s a win-win situation for both parties. Insurers can more accurately measure risk and, if the odds are in their favor, consumers can benefit from lower insurance rates.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The auto insurance industry has always relied on data analysis to inform their policies and determine individual rates. With the technology available today, there\u2019s even more data to draw from. The good news is that this new data can help lower your insurance rate. Here is the type of data insurance companies use to measure [&hellip;]<\/p>\n","protected":false},"author":1010,"featured_media":287378,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"48","_seopress_titles_title":"How Insurance Companies Use Data To Measure Risk And Choose Rates","_seopress_titles_desc":"Data is playing a big role in the insurance industry. Here's how insurance companies use data to make big decisions about their businesses.","_seopress_robots_index":"","footnotes":""},"categories":[15,48,3162,9],"tags":[150,131],"class_list":{"0":"post-287367","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-analytics","8":"category-big-data","9":"category-data-collection","10":"category-smartdata-collective-exclusive","11":"tag-data","12":"tag-insurance"},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.smartdatacollective.com\/wp-json\/wp\/v2\/posts\/287367"}],"collection":[{"href":"https:\/\/www.smartdatacollective.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.smartdatacollective.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.smartdatacollective.com\/wp-json\/wp\/v2\/users\/1010"}],"replies":[{"embeddable":true,"href":"https:\/\/www.smartdatacollective.com\/wp-json\/wp\/v2\/comments?post=287367"}],"version-history":[{"count":3,"href":"https:\/\/www.smartdatacollective.com\/wp-json\/wp\/v2\/posts\/287367\/revisions"}],"predecessor-version":[{"id":287379,"href":"https:\/\/www.smartdatacollective.com\/wp-json\/wp\/v2\/posts\/287367\/revisions\/287379"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.smartdatacollective.com\/wp-json\/wp\/v2\/media\/287378"}],"wp:attachment":[{"href":"https:\/\/www.smartdatacollective.com\/wp-json\/wp\/v2\/media?parent=287367"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.smartdatacollective.com\/wp-json\/wp\/v2\/categories?post=287367"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.smartdatacollective.com\/wp-json\/wp\/v2\/tags?post=287367"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}