Insurers do not quote racist premiums, writes François-Xavier Boisseau, CEO insurance at Ageas UK, urging the sector to better educate the public on how pricing works.
The national media has been peppered recently with stories about large car insurance premium rises at a time when higher inflation and low wage rises are already making it harder for people to afford essential items like car insurance. But this simple ‘fat cat’ caricature became even more unpalatable at the end of last month when a new dimension was added: racism.
In an article run by a national newspaper, it was claimed than an individual with Muslim sounding forename could be charged almost £1000 more for car insurance than an individual with a traditional English name.
Those of us who work in the insurance industry know that this accusation of racism patently isn’t true. Nevertheless, this isn’t the first time the media has justified the underlying premise of a story by generating a quote that seems to support the accusation of unfair treatment.
The inconvenient truth for the insurance industry is that it’s almost impossible to create a true comparison quotation as, to do so, a journalist would have to find real people who live in very close proximity, are exactly the same age, have the same driving and claim record, own identical vehicles (model and mileage) for the same length of time and have the same renewal date.
These essential criteria are obvious to those of us who know about insurance, but are not obvious to a member of the media, because they trigger the fraud factor. Enter the name of an unknown person at a known address and ID checks will fail. Multiple quotes for the same vehicle, or even using multiple names at the same address, will cause systems to act as if the request for quotation is an attempted fraud.
All of this sounds like smoke and mirrors when the system doesn’t generate a decline and the media is presented with a heavily loaded premium and the justification they need to write the story, however wrong.
This reporting only fuels confusion about the way insurers price at a time when insurance, as an industry is working to improve transparency. With this in mind, we can no longer afford to watch our reputation corrode under the drip, drip, drip of misleading information. There is a very great risk that the misrepresentation of our industry will cause the government, regulator and most importantly our customers to doubt the validity of their own personal experience with an industry that exists to help people in their time of need.
We must do more to shift the focus away from fake pricing scandals to educating customers and groups of key influencers, like MPs, about protecting themselves and their possessions, helping them to understand how insurance is priced and demonstrating our transparent approach.
To do this, we can showcase the good that the industry does every day, talking openly about the care we give customers at some of the most difficult periods of their lives when an unforeseen event has occurred. It is for this reason that insurance companies ultimately exist.
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