Startling ways car insurers determine your premium, from vehicle colour to marital status

GOT a white car? Single? Buy your insurance policy in the morning? All of these things could impact how much you pay for your cover. Seriously.

INSURERS are charging owners of white cars lower premiums and will soon offer better prices to consumers who buy a policy in the morning.

Marital status may influence price too.

These stunning insights about the dark art of actuarial analysis emerged at a Senate inquiry into general insurance in Sydney yesterday and came as the industry finally opened the door to consumers being able to compare major providers’ policies side-by-side. It also came to light that:

* insurers don’t consider “kickbacks” on strata cover to be illegal; and

* some communities are being subjected to a practice called “red-lining”, where insurers decide they won’t offer coverage on any terms.

But it was the impact on prices of time of purchase that was arguably the most surprising evidence.

Allianz communications head Nicholas Schofield told the hearing consumers who buy their policies in the morning “have a better claims experience”.

“Ultimately that means the market will probably price for that,” Mr Schofield said.

Parliament is looking at how to set up a government-run home and car insurance comparison service to increase competition and transparency. Picture: Simon Cross

Earlier, Choice had said the owners of white cars got lower premiums.

It’s understood that this differentiation first occurred because white paint cost less. Some insurers were also finding that owners of these cars made fewer claims. Meanwhile, behavioural studies suggested drivers of red cars could be a greater risk.

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At the inquiry, insurers were also queried about the influence of marital status on premiums. They requested to be able to take the question “on notice” and provide an answer later. It is becoming increasingly common for consumers to be asked about their marital status when using insurers’ online quoting engines.

Inquiry member Senator Nick Xenophon later said: “If you are a single male, own a red car and buy your insurance late at night, you’re pretty much stuffed.”

How car insurers determine premiums is a dark art and startling things from car colour to marital status can impact price. Picture: Bill Hearne

The inquiry is examining transparency and competition in general insurance, including whether there is a need for a comprehensive, independent comparison service. The Government already operates such a website for health insurance.

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Previously, insurers have indicated they opposed such a site because it would be likely to be too focused on price. The industry is also critical of private-sector comparison sites, describing them as a sales channel for some smaller providers. Major insurers in the $16 billion home and car insurance markets don’t participate in these sites.

Insurers have indicated they opposed a comparison site because it would be likely to be too focused on price.

At the inquiry, Senator Xenophon asked the Insurance Council of Australia whether a comparison site which concentrated on value would be helpful to consumers.

“Senator, your use of the word ‘value’ is crucial. That’s what we believe is necessary,” Insurance Council CEO Rob Whelan said.

“If the industry is deeply involved in doing that … then it’s a possibly that we are able to do something far better than it exists today,” Mr Whelan said, before adding that the Government may not be able to do that as well as industry.

PETITION: Join the campaign to end the insurance rip-off here

In the inquiry it was put to Mr Whelan that “secret commissions” or “kickbacks” were being paid by insurers to strata management companies.

“It’s a commercial transaction which is as far as I’m aware a normal part of business in strata,” Mr Whelan said. He did however agree to examine what was going on in further detail.

Car colour, marital status and the time of day you buy your policy — just some stunning insights about the dark art of actuarial analysis that emerged at a Senate inquiry.

When asked about a little-known practice called “red-lining”, the council’s risk manager Karl Sullivan told the inquiry: “It might be more accurate to say red dots than red lines.”

If a home or street was subject to a red dot, an insurer would not offer coverage at all.

It could happen for whole communities, Mr Sullivan said.

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