We at DrivSafe smartphone telematics system, decided to research the impact of difference in interpretation. We created a simple profile of a married couple with 2 cars (Honda Accord and Ford Explorer); both 35 year old with Bachelors degree, good credit, no accidents or violations in last 3 years and commute to work. Then we got quotes from each of the top 15 auto companies (by 2013 revenue) assuming the couple lived in New York City.
There is no direct information about the actual driving behavior of the person or the number of places he or she visits in this historical rating plan. Thus, the demographic profile and credit scores may be interpreted differently, causing the same driver to get different prices from different auto insurance companies.
Historically, auto insurance companies have primarily relied on credit score and demographic profile as a proxy for driving behavior. They have used this information along with vehicle type and driver’s address to estimate auto insurance premium. The complex process of interpreting customer profile, vehicle risk etc. is generally done through an insurance rating plan.
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