Factors That Impacts The Process of Insurance Risk Assessment
Malaysia was in the news for the introduction of phased liberalisation for fire and motor insurance. This has led to a revolution in the insurance sector. Insurance companies can now charge premiums based on the risk profile of the individual instead of the fixed tariff structure that was practiced previously wherein everyone was charged the same premium.
If you are planning to buy car insurance in Malaysia, the premium will be charged based on the risk assessment. Various factors are taken into consideration for this. The criteria for risk assessment varies from company to company but there are some common criteria considered for the purpose of assessment by every insurance company.
Here’s a look at how insurance risk assessment is performed by the insurance companies:
1. Credit history
Some insurance companies take your credit history into account as a good history shows that you are responsible and capable enough to pay the bills on time. Several researches show that adults who have lower credit scores are often poorer drivers. Poor driving behavior means the policy holder has more chances of making claims against insurers. This plays a pivotal role in determining the premium for your policy.
2. Age of the driver
The next factor considered for insurance risk assessment is the age of the driver. It has been observed that young drivers are more vulnerable to accidents than experienced drivers. Thus, it is an accepted rule that drivers under the age of 25 will be charged a higher premium. If you consider yourself as a low risk driver, you can demonstrate that in several ways. It is believed that students with good grades are offered discounts as well as drivers who have a clean driving record.
It has been observed that people living in the city pay more insurance premiums as the chances of accidents, theft, and vandalism are more in the city. In fact, the city you live in also impacts the premium charged by you. If your city has a higher track record of accidents in general, the companies will charge a higher premium from you.
4. Marital status
It may sound strange but married drivers have less accidents as they are likely to drive with their significant other or children and they won’t take any risks. Thus, they are charged lower premiums.
5. Driving record
Your personal driving record will also affect your premium. If you have a history of speeding tickets or accidents, the companies are more likely to charge a higher premium from you. Your past record is an indicator of your driving behavior. If you have a good driving record you will benefit from lower premiums