Just recently there have been a number of threads about insurances of several types. None of us like to be ‘ripped off’ by high prices and there are a number of practices that do irritate, like non competitive renewal premiums because the companies think that us, the punter, will just accept what they say. I do think that is a practice that will die out as we all get more savvy. HOWEVER…….

With all of these posts there is something I believe we all our missing and that is the basis on how insurance premiums are basically calculated. Now I am not an expert in insurance, but I do have a lot of experience in another filed that relies on similar principles and they are called actuarial tables.

To put it simply these are tables of data that list every thing possible that could affect an insurance claim or risk that is to be covered (or what ever the subject mater is that the table relates to). Every one of us is different, and no two of us are likely to answer those multitude of questions on an insurance form the same. That in its self, will alter our individual risks and hence the premium paid.

With travel insurance age and medical background will have a lot of to do with it. Blueyonder and I have taken trips without travel insurance as we perceive the risks against the premiums are such that we are prepared to take the risk (our choice). A few years ago I took my 90 year old mother to Canada to visit my eldest sister, despite the fact she had nothing to declare on her medical history her age alone was enough to cost nearly £400 for a three week visit because the actuarial tables say that most people of that age don’t travel or have problems.

Another example that will nearly all ways be asked on insurance questionnaires is about criminal convictions. What has that got to do with your caravan insurance…….?????? Well actuarial tables will show that those with a criminal conviction are likely to be more reckless than others and that is an increased risk for the insurer.

Another example might be (and this is only an illustrative example and not part of the tables) two people might apply to the same insurance company for car insurance for the exact same car, All the details will be exactly the same other that one car is red and the other car is blue. Now if actuarial tables show that red cars have had more accidents than blue cars, the insurance premium will reflect this fact.

While I accept is is a common subject to ask about insurance, I do think peoples answers must be some what tempered by the fact that none of us are the same, our life styles are different, our backgrounds are different, our usage of the insurance systems are different as well as our residential post codes. All of these things have an affect and to be honest none of us can make comparisons with out all the minutiae details that effect each and every one of us individually.

The one thing that actuarial tables are not good at, is the personal that is because they are made up of recorded facts (i.e. over the last 10 years red cars have this X meny accidents and blue cars Y meny accidents). The answer to your questions are feed into the 'old computer' and then are compared against the recorded (anonymous) data and so your risks, and hence premiums are determined, irrespective of your personal traits. So as they say don’t take it personally.

My views for what they are worth.

Clippie