Automobile Insurance – The Most Important Rating Factor

Anyone who needs to buy auto insurance is likely to find that the various quotations required by insurance companies are very different. Historically, this has always been the case. Considering the rise of online fee comparison websites, this situation is more serious. You can visit one of the main websites, enter details, and get up to 50 different quotations. These quotations vary from top to bottom, ranging from 200% to 2000%.

It is generally believed that all insurance companies assess risk in almost the same way. This is partly true, depending on how much data they have and their risk assurance experience. Different insurance companies have different professional levels in specific geographical regions, specific automobile brands, specific personal age groups and demographic data. This experience will affect the understanding of risk, which may be very different from other insurance companies. In these areas, these experiences will be more.

Risk rating is not just a mathematical formula. Although theoretically this is basic. Insurance companies assess risks according to their own standards and then assess returns at a very small profit margin, but this is only half the story.

There has always been a theory and practice about how insurance companies rate risks. In theory, they will assess risks, basically expressed in percentage figures, and this is the premium they charge. In fact, this is the fee they can charge. Or, to a large extent, it depends on whether you can get away with winning business and making money.

This has greatly strengthened the transformation to many online auto insurance. Insurance companies can more easily establish contacts with other types of insurance, multiple public utility reimbursement accounts, credit cards or loan financing, which means that insurance companies can carry out strategic cooperation with other companies to obtain business beneficial to both sides.

Insurance companies usually reduce the price of each other in the way that many enterprises adopt to attract customers. As time goes on, the retention of customers can not only increase the insurance premium, but also hope that customers can maintain their business instead of moving to other places. This is a fairly basic principle of the way insurance companies work, but it is much more difficult to do this online. It is much easier to do this on paper. Today customers can easily change insurance companies, which undoubtedly weakens their loyalty to previous insurance companies.

Another important factor is that insurance companies have gained a lot of benefits from investment premiums, rather than pure insurance benefits. For most types of insurance, premiums are paid in advance, but claims are made much later. For automobile insurance, the really big claims are often liability claims. As we all know, this is difficult to solve, and it usually takes several years to reach an agreement.

although this may happen, it is not necessarily because the insurance company is holding back. For liability claims, it usually takes a long time to truly assess the damage to individuals, what impact these damages have on their lives, and how to conduct them.

This also means that the insurance company basically does not need to claim for compensation for a period of time. They can pay in the middle, but it is usually up to them to decide. This means that the company can retain the premium without paying any claims for a considerable period of time. This will result in a substantial return on investment and offset the level of evaluation with these returns to attract the business that needs it.