Direct Insurer Targets "Careful" Motorists Amid Fears of Uninsurable Areas

Strategic Insights -

A direct insurer has been launched in the UK, targeting motorists who are classified as "careful" with a new underwriting philosophy that assesses risk based on postcode, lifestyle, and claims history. Prospero Insurance, the Lancaster-based arm of Provincial Insurance, has developed a system called "Premium Watch" that identifies the best risks and offers competitive premiums. However, the launch has sparked concern among consumer groups that higher-risk motorists will be left out in the cold, leading to the possibility of uninsurable areas emerging.

Key Takeaways:

  • Prospero Insurance, a direct insurer, has launched a new underwriting philosophy that targets "careful" motorists.
  • The insurer uses a system called "Premium Watch" that assesses risk based on postcode, lifestyle, and claims history.
  • Prospero has developed a system to identify "micro localities" with specific risk profiles, allowing for more precise premium pricing.
  • The insurer offers a 24-hour claims line and video cameras at its approved garages for quick and easy damage repair quotes.
  • Concern is mounting among consumer groups that the higher-risk motorists will be left out in the cold, leading to the possibility of uninsurable areas.
  • A spokesperson for the Association of British Insurers stated that there are no areas where motorists can't get cover, although it may be more expensive in some areas.
  • The Department of Trade and Industry has the power to intervene under the Insurance Companies Act if uninsurable areas do arise.
  • The Consumers' Association has expressed concern that government intervention may be necessary to prevent uninsurable areas from emerging.
  • Jean Eaglesham, a spokesperson for the Consumers' Association, stated that the industry should create a broad pool from which higher-risk insurance can be funded.
  • Some experts suggest that a Californian-style insurance commissioner, established in 1988, could provide a check on premium-rate rises and prevent discrimination against particular areas or types of people.

Statistics:

  • 15 houses: The number of households that Prospero's system identifies as a "micro locality" with a specific risk profile.
  • 2 hours: The time within which damage-repair quotes can be given and approved at Prospero's network of approved garages.
  • 1988: The year the Californian authorities established the insurance commissioner.
  • 1994: The year in which the article was written (no specific date mentioned).

Sources:

  • The Sunday Times, 1994
  • Association of British Insurers
  • Department of Trade and Industry
  • Consumers' Association