Are You a Low-risk or High-risk Driver?
Are you a Malaysian driver who is aware of your personal risk profile as a driver?
More importantly, do you know what risk profiling is and how it affects your car insurance plan?
Following the detariffication of motor insurance in 2016 and 2017 by Bank Negara Malaysia (BNM), Malaysian car insurance providers were given the ability to independently determine the premium rates they would charge for their insurance plans.
As a result, every car owner pays a unique premium for his or her insurance plan today, depending on the assessment of various factors by insurance providers, including the kind of coverage being sought, the attachment of add-ons to a plan – and, as highlighted in this article, the owner’s personal risk profile as a driver.
This is why you should know what risk profiling is, along with being familiar with your own personal risk profile!
| See also: What is Motor Personal Accident Insurance (DPPA)? |
What is risk profiling?
Put simply, risk profiling is the process through which an insurance providers assesses a driver’s personal risk level by evaluating a number of parameters that the driver possesses. These parameters fall under various categories, such as personal details like age and external items like the age of the car being insured.
Once these parameters have been assessed, the insurance providers assign a risk profile to that driver – usually rating them as ‘High-risk’ or ‘Low-risk’ – and determine the premium that this driver will be charged accordingly.
The key takeaway here? The higher a driver’s risk profile, the greater the premium they will be charged for an insurance plan.
With this understanding in mind, can you determine your own risk profile? Are you entirely sure that you are in the ‘Low-risk’ category, and not a ‘High-risk’ driver instead?
- Older cars generally require more repairs and are often regarded as being weaker due to extensive wear and tear.
- Newer cars are in better shape, naturally they fall under the low-risk category as they require less repairs and maintenance.
- Drivers aged below 30 are often regarded as the highest risk group of all, according to MIROS (Malaysian Institute of Road Safety Research).
- This is followed by those aged 50 and above as they are deemed to have slower reflexes and are more prone to diseases that affect their mobility and agility.
- Between 30 and 50 years of age, and are seen to be experienced enough to manage road conditions while not vulnerable to degradations in their mobility and reflexes.
- According to PIAM, studies have shown that males are usually poorer drivers.
- Studies have shown that females are better drivers and carry lower levels of risk than their male counterparts who are more prone to being distracted easily.
Traffic Violations Record
- Those with a colourful record with our law enforcement authorities will likely be subject to higher car insurance premium pricing once this factor kicks in
- Clean as a whistle and with no saman under your name? You'll be seen as a driver with a low risk.
Driver’s Claim Record
- You are considered high-risk if you are a driver with a long record and history of insurance claims arising from previous vehicular accidents in the past.
- A driver who hasn’t made any insurance claims previously and does not have a history of accidents is considered low-risk. Keep in mind that drivers who fulfil these criteria will enjoy a healthy NCD on their car insurance premiums.
Now that you are aware of some of the important parameters that are assessed by insurance providers in the process of risk profiling, you should be able to better estimate your status as a ‘High-risk’ or ‘Low-risk’ driver, and also anticipate whether your corresponding premium will be higher or lower in nature.
However, do keep in mind that other factors are also influential in determining the premium rate that you will have to pay. These include the kind of coverage you opt for and the addition of add-ons like passenger protection and special perils policies.
So when you're on the road and tempted to run that red light, think twice! You'll be glad you didn't when you're rewarded with cheaper insurance premiums.