Following the implementation of the liberalisation of motor insurance tariffs in July 2017, the premium rates for Motor Comprehensive and Motor Third Party, Fire, and Theft products were determined by individual insurers and Takaful operators. As a result, they are taking many factors into account in order to determine the insurance premium. As such, the factors include the driver’s risk.
Understand what risk profiling means
Risk profiling refers to an assessment of a risk to be insured in the event of an accident happening or a claim being made from that insured risk. This assessment will result in what insurers would charge for that risk.
For instance, driver risk factors are one of them. In general, higher-risk drivers need to pay a higher premium.
*Note: Various variables or factors are considered in carrying out the risk assessment. However, according to the General Insurance Association Of Malaysia (PIAM), each variable may vary toward the insured risk. Therefore, these variables are subjective and will be based on Underwriting Guidelines used across the insurer providers.
What are the guiding risk factors?
The following explains the risk factors of drivers for high-risk drivers and low-risk drivers:
Age of the driver
| High-risk drivers | – Motorists aged between 17 and 23 years. According to the statistics, the most serious accidents were recorded by this group. – Motorists above 50 years as they have slower reflection and are prone to diseases that can affect driving. Examples are dementia, heart failure, and Parkinson’s. |
| Low-risk drivers | Motorists aged between 30 and 50 years have a better experience and reflection to counter any unexpected situation when driving. |
Age of the vehicle
| High-risk drivers | Older cars over 10 years old are at a higher risk of breaking down |
| Low-risk drivers | New cars are usually still in mint condition and have a lower risk of damage |
Gender of the driver
| High-risk drivers | Male motorists are in a higher risk group than females in most developed countries |
| Low-risk drivers | Female motorists drive more carefully and have a high tolerance limit and behave less recklessly when driving |
Driver’s claims record
| High-risk drivers | A motorist, who is constantly involved/causing accidents and making insurance claims, is a high-risk case. Thus, they have to pay higher insurance premiums |
| Low-risk drivers | A prudent motorist who has never made an insurance claim is considered a low-risk driver |
Installation of systems/ theft devices
| High-risk drivers | Vehicles with no anti-theft security systems are higher-risk cases |
| Low-risk drivers | Vehicles with no anti-theft security systems are mid-risk cases. Installation of devices such as telematics or GPS tracking can reduce the risk. Thus, motorists can enjoy lower premiums. |
Traffic offence records
| High-risk drivers | Motorists with frequent prosecution for traffic violation are at higher risk and may endure more expensive premiums |
| Low-risk drivers | Prudent motorists are seen as low-risk case |
Driver’s risk: Keep a good profile
In brief, your profile is essential in determining a lower premium.
Therefore, ensure to keep your profile at a safe level. Be a prudent motorist and practice safe driving to avoid any untoward incident while on the road.
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