Insurance premiums affected by job descriptions

 

Richard Alvin says he received vastly different quotes

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What is the difference between a publican and a landlord? Not much to most of us maybe, but the insurance industry charges the publican more for car insurance.

When insurers decide how much to charge a driver for their premium, they look at certain factors to decide the level of risk.

This includes the applicant's age, where they live and their occupation.

But small changes in how the applicant describes their job can make a real difference in how much that person ends up paying.

Mind the gap

Richard Alvin is a journalist by trade. He is also the group managing director of a publishing company.

He says they are both equally valid ways of describing what he does.

But there is a hefty gap in the premiums he would get charged for each job. He has got a two-seater sports car, and his insurance is due for renewal.

So he carried out two different searches on price comparison sites.

Quote differences

  • Publican and landlord: £16.88
  • Barrister and lawyer: £29.88
  • Television announcer and broadcaster: £71.02

Source: Confused.com. Assumptions include a 33-year-old woman, driving a BMW, with 15 years of driving experience and 10 years of no claims bonus.

They were identical apart from one key fact. When he said he was a journalist, some insurers did not want to insure him at all. The cheapest quote he says he found was £829.14.

So he tried again. This time he said he was a managing director. He had many more offers to pick from, and the cheapest he says he found was £496.08.

That 40% saving is because insurance companies consider insuring those who work in the media as carrying a greater risk.

Insurers have spent years building up data on different occupations, and how likely they are to make expensive claims on their policies.

Much of it is common sense. For example, plumbers are likely to drive a lot, and have expensive kit in their cars. So, they pay comparatively high premiums.

On the other hand, teachers and office workers are seen as a safer bet.

Description

However, two job descriptions can seem to be almost identical, but still have different premiums.

Price comparison website Confused.com has worked out costs for publicans and landlords on licensed premises. The website checked the difference assuming that both quotes were for a 33-year-old woman, driving a BMW, with 15 years of driving experience and 10 years of no claims bonus.

The average annual car insurance quote for a publican was £331.52, but for a landlord it was £314.64. It was a similar story for barristers. They were quoted about £30 more than lawyers.

And if someone describes themselves as a TV or radio broadcaster, they could end up being quoted an average of £71.02 more than a TV announcer.

Misleading

Mr Alvin thinks the insurance industry has not moved with the times.

"I was able to do the research, and save myself about £400 on my car insurance. But I think the insurers need to actually look and check the classifications are fit for purpose in today's society," he says.

The Association of British Insurers (ABI) admits it is true that consumers can save themselves some money by thinking very carefully about how they describe their job.

Emma Parker People may risk their claims with false information, Emma Parker says

"Tweaking sometimes is acceptable, providing you are not misleading the insurer," says ABI spokesman Malcolm Tarling.

"Insurers constantly look to update the occupations they take into account. They realise that jobs move on, technology moves on and what people do changes over time.

"So we look to ensure the categories we use for assessing motor insurance reflect the real world."

Fraud

Those looking to renew their car insurance should put some thought into what they write in the job title box, and check they are fully covered, experts say.

The Financial Ombudsman Service says it sees cases from consumers who are upset when they find their claim is not going to be paid because of the way they described their job.

"If you have been upfront with the way you described what you do, then the insurance company should pay up. But if you have deliberately misled them, it is unlikely you will be covered," says spokeswoman Emma Parker.

In law, an attempt to cheat an insurance company is fraud. If a customer provides the insurer with false information, the customer could be added to a fraud list, and then would struggle to get any cover in the future.

Some insurers will ask people who do more than one job to tell them about the one which employs them for the most hours.

Anyone with doubts should check with their insurance company.

 

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  • rate this
    0

    Comment number 24.

    I recall a friend complaining about the insurance premiums for working in the media back in the early 90s (instead she went with secretary, which was also true).

    But surely this results in self-fulfilling statistics?

  • rate this
    0

    Comment number 17.

    For life or health care insurance , of cause it should. For car insurance, possibly not. However, insurance companies use empirical data collection, which shows those people in certain types of professions are more likely to make a claim than those in other professions. So the insurance companies are simple adjusting "the odds" accordingly.

  • rate this
    0

    Comment number 13.

    Comments here about ‘moral judgments’ or ‘gender discrimination’ are nonsense as the computers doing the objective analysis just allocate premiums mathematically based on past claim data to produce a premium distribution of sufficient income to be profitable but at a competitive market rate. Remember that insurance is to share the cost of risk not certainty.

  • rate this
    0

    Comment number 2.

    Insurers use their stereotypical view of people to charge them more money. Students attract a higher premium, regardless of age and market traders are also usually penalised. There is a lot of moral judgement in it.

    Other jobs are attractive more for the other classes of insurance they may bring rather than they are safer drivers.

 
 

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