Multivariate Models, Probabilities of Ruin & League Tables; so, are you paying too much for your Car Insurance?, a talk by John Birkenhead
IMA Scotland/RSS Glasgow joint event
Abstract
I’m sure we’ve all had a bit of a groan when we receive our car insurance renewal premiums; typical questions which arise are:
- How can the premium be so high when I’ve never had an accident?
- Why has the premium gone up when I have one more year’s no claims discount?
- Why won’t my current insurer price-match the cheapest quote I can obtain? I’m a good risk!
- I’ve had no claims this year, can I have my premium back?
- I’ve just obtained three penalty points for speeding but my renewal premium has gone down. Surely this is a mistake?
It’s not always as cut and dried as you might think and this talk will explain what is going on! We will examine the theoretical statistical basis of risk (multivariate probability distributions), EU regulations concerning theoretical “probabilities of ruin”, theoretical “customer lifetime value” models as well as seeing the theories in action with some real-time examples from price comparison websites. We will also look at forward pricing, statistical quirks in the data and some pricing anomalies, all explainable from the theoretical considerations.
So, are you paying too much for your car insurance? Come and listen to the evidence for and against, given by an experienced and independent actuary (and car insurer payer!) deeply involved in insurer pricing, solvency and regulatory management of insurers and draw your own conclusion!
John Birkenhead is an independent consulting actuary. The winner of the 2015 Finance Monthly Global Awards for UK Actuarial Services, he specialises in the quantification and communication of risk. He is a STEM Ambassador, a Careers Ambassador for the Actuarial Profession and is a sought-after speaker at schools for enthusing careers in maths.
