A trend has developed lately, went all the way to Parliament Committee Discussions, about the matter of higher premiums being charged as soon as a driver turns 70.
The issue has elevated to a general feeling that insurance companies are in the business of “elderly racism”, leading the (hardly ever present Insurance Association of Cyprus, regarding developments in the industry, legislation and other issues), asking for statistical information from its members, regarding premiums/ claims applying to the age factor, within very strict deadlines.
Having worked in mostly the claims department (not underwriting) of our company, the writer has NOT drawn any conclusions that drivers 70+ are more prone to accidents, and hence more claims (both in number and cost per claim), that in fact would warrant an increase in premiums. But – it is a truth universally acknowledged throughout the industry that the “safe” age, when drivers pay the “normal” premiums is that of25-70 years old. Therefore, the industry, and each individual insurance company have most likely devised their own manuals, regarding their premium calculations for drivers below or over above this age range.
Some indisputable facts:
• It is very rare for any company to provide comprehensive insurance cover to a driver under 25 y.o., due to their lack of experience.
• If a Motor Policy applies to “any driver”, i.e. there are no named drivers- there is a prerequisite of the any driver to be 25-70y.
• As soon as the driver hits 70, there will be an increase in premium.
• It is an assumption that after 70, several faculties (eyesight, reflexes, heart health, etc.) start declining, just like the truth (not an assumption) that drivers under 25 y.o. are inexperienced.
• Regardless of age, premiums will increase in the event of an accident when the driver is at fault.
• Regardless of age, an insurance company will no longer insure someone with a bad claims record, and shall refer them to the Cyprus Hire Risks Pool, where they will have insurance and pay a higher premium.
• Some companies will refuse to renew a policy for older clients (usually 80+) regardless of their claims record, and will divert them to the CHRP.
• Some companies choose to not let any client of any age go, especially if they have a good claims record, and specifically, if they have, or are connected with non-Motor Insurance Policies – another truth universally acknowledged- the non-Motor Insurance Sector is more profitable.
Some experience/ factual -based facts:
• We do not have the data to prove, no matter how much statistics and workings we try, that drivers 70+ are causing more, or more serious accidents.
• Elderly drivers may be more inattentive or absent-minded whilst driving, but usually they do not drive under the influence, nor do they usually go over the speed limit.
• Younger inexperienced, excited drivers, will go over the speed limits, and are more likely to drive under the influence of alcohol/ drugs. They are also more likely to check their mobile phones whilst driving, a practice not applicable to older drivers.
• Within the “normal” range of drivers between 25 and 70, the insurance industry has paid millions – be it be pure negligence, collision through inadvertence of lack of proper lookout, driving under the influence, just driving in a manner that rendered them liable for an accident.
• Amongst younger drivers, those under 25 y.o,. any accident can usually be attributed to their real lack of experience – for example, we have had under 25 y.o. drivers, colliding on the back of a moving bus, crashing on trees, capsizing vehicles, all due to underestimating speed.
• High speeds on motorways and other areas are common amongst most drivers – except the elderly, who tend to drive slowly.
• High speed is not always the cause of an accident – common lack of look-out, because of declining faculties amongst the elderly might lead to a serious accident, if, for example, an elderly driver (due to declining peripheral vision) misses the red light on a pedestrian crossing and hits a person crossing- that would be an example of “proof” that the elderly must be paying higher premiums (?) in such an event.
There are millions of claim scenarios, factoring in age, type of vehicle, circumstances etc. The fact is, each insurance company should be allowed to create their own set of regulations on premium adjustment, depending on their own chosen factors. One company might actually want the 87- year old, charge them less, because he has not caused an accident and his wider family are important clients to them. Another one, has and should have the leeway to reject a brand new 71 y.o. proposer expecting to take out one single Motor Policy. Underwriting is the gist of insurance, and premium calculation, that includes discounts, perks, terms and conditions, is a profession – one that requires Continuous Professional Development, and each company can divert from their own policies on any matter, or take any decision they feel is right, for their benefit of the company.
- Parliament should stay off the matter – insurance companies are legal ent ces, just like any other company. As long as they comply with the legal and regulatory framework as controlled by the Supervisory Authority, they should be allowed to underwrite – it’s their job.
- The Association should deal with other matters tantalising our Industry.
- If the Government is worried that the old don’t drive “as well” after a particular age, instead of a dr’s note, they should ask the old drivers to retake a driving test – why not? Why subject them to unnecessary medical exams, irrelevant to driving, when they have resources to practically judge and decide whether an 80 y.o. can drive like an 18y.o.?
o “Old” drivers ARE “loyal” clients for any company. And if we want them, we can keep them, as long as they also want us to keep them. “Elderly abuse”? The elderly have families who can judge whether their person is in a position to drive or not. Cyprus is known for tight family bonds. It would be a rare scenario for an elderly person’s family to let them drive, when they obviously are not in a position to, let alone the fact, that as faculties naturally decline, the elderly person would not even wish to drive!
o There are solutions – they can be found as long as the authorities/ associations do not put everything in the same basket.
• As a final note, how does RCI handle the matter?
Our company values their older clients, because they are usually older clients – as in loyal to our company for years. We want to give back, so, even though we cannot claim that a premium increase is not imposed on them, we have a whole range of discounts applicable for them. They are rewarded with special discounts in varieties of scenarios:
o A clean claims record
o The whole family’s insurance business
o Property insured with us
o Authorised drivers on their policies
o The client’s profile in general – both on a personal and an insurance collaboration level
o … and more – we use meticulously prepared algorithms to calculate a number (the premium) that is considered fair for our devoted clients.
INSURANCE, Motor or non-Motor should NEVER be dealt with as a “holistic” issue to be “solved”. Each person, young, middle-aged, old, has a right to dignity – at least an assessment as to whether they are a danger in the road or not!
