2 Factors that influence insurance premiums.

2 Factors that influence insurance premiums.

There are many factors that influence the cost of the premiums when you apply for an insurance policy. Two of these facts have a significant impact on insurance premiums and are applied not only to travel insurance but also motor insurance, income protection insurance, life assurance or private medical insurance.

Age affects insurance premiums:

If you have already purchased life, travel or medical insurance you probably know that age is one of the important factors that will affect your insurance premiums. It has been noticed that in some cases the insurance premiums, especially for motor and travel insurance premiums are not always proportionate to the policyholder’s age.

Due to these allegations, ABI (Association of British Insurers) has entered into an non-statutory agreement with the British Government to improve insurance pricing for motor and travel insurance policies.

Since 30 June 2012 the Association of British Insures is obligated to publish information that is relevant to the use of the AGE factor in the risk assessment process for private motor or travel insurance policies.

All of the UK based insurers use relatively wide age bands when deciding the costs of premiums. These widths of the band will vary between insurers but typically they are 0-17, 18-60 and one over 60 years.

According to ABI statistics, people aged between 66 and 70 were two and a half more likely to make a claim than 21-25 year olds but the cost of the premiums were five and a half times more expensive for the 66-70 groups. The same study shows that people over the age of 81 are 4 times more likely to file a claim than medium aged groups (46-50 year olds) but the premiums costs were 7 times greater.
statistics

Gender and insurance premiums:

The other factor that effects insurance premiums for all the types of insurance mentioned above is gender. This problem has been discovered a few years ago and from 6 April 2009 the Sex Discrimination Regulations amendment has been implemented. Through this legislation the ABI can specify the conditions where insurers are allowed to differentiate pricing by gender.

Before a UK based insurer is permitted to differentiate insurance prices by gender they must base the differentiation on relevant and accurate statistical data. Another condition is that the statistical data used must be compiled, published and updated regularly accordingly to the guidance issued by HM Treasury.

Age and gender will definitely affect the premiums if you choose to purchase a travel insurance policy but they are not the only factors that make a difference. Most of the times in the price of a policy the insurer includes expenses and commission and other factors such as location, lifestyle, work places affect the premium cost.

To make sure you get the best deal and choose the insurer with the fairest pricing we recommend you use an insurance quote comparison tool. This will help you make an informed decision when buying insurance.

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