Why does age take precedence over years of experience?

[adri]

I understand that riders under 25 are more likely to make claims (according to statistics never shared with the public, published by sources we'll never know). Let's assume that's correct.
My unscientific study, after 5 years on GTAM, is that the 16-25 age bracket is when a large number (possibly even most) new riders first get their motorcycles.

If it's safe to say the majority of riders have claims in their first few years, and the majority of riders start riding under 25, well obviously statistics will say the younger riders often make claims, but this completely disregards years of experience, and experience is absolutely critical on a motorcycle is it not? So why aren't insurance companies looking at their stats from a "X amount of years" perspective?

Let's take an example: When I turn 24, I will have nearly 6 years (hopefully still claim free) experience. My premium will not reflect the average rider with 6 years claim free, it will reflect the average 24 year old rider. They won't measure years riding, they'll just look at birthdate and out comes a four-digit number.

I'm sure if you compared stats for someone with 5 years experience, vs someone 24 years old, there would be a huge difference. Rather than finding some sort of equal measure of balance between the two, age is essentially all that matters. Why is that?

[adri]

PS: I read and enjoyed Viffer's thread Why young males pay more: Insurance Math in Layman's terms - great effort to clarify things for us - I just never understood why age was used as the x-axis and not experience. Seems kind of counter-intuitive on something as skill-intensive as riding a motorcycle.

Hope to hear all your input, feel free to comment/flame/share whether or not you have an answer

[insert]

more profits if you group by age. by experience they would have to charge you less money for every year of experience you have. this way they get to bend you over and pull out that bottle of lube and have the time to finish the whole bottle before they give you a price cut.

[invictus43]

more profits if you group by age. by experience they would have to charge you less money for every year of experience you have. this way they get to bend you over and pull out that bottle of lube and have the time to finish the whole bottle before they give you a price cut.

sigh..

[adri]

I'm not getting the common courtesy of a lubing

[VifferFun]

First off, GTAM is comprised of young guys under 25yo because these are the ones who frequent the Internet and forums. Your average 40yo to 50yo does not spend as much time online as your average 16yo to 25yo. You can't based your distribution of new-rider age based on the membership of this forum, since it is heavily biased.

BOTH age and experience are considered . . . at least, they are for companes that are accurately matching risk to premium. My example that you linked to used only age purely out of simplicity -- in reality, there are many factors that determine your level of risk, including (but not limited to) and in no particular order:

• Age
• Experience
• Claims History
• Convictions History
• Motorcycle Type
• Motorcycle Displacement
• Geographic Location
• Usage of Vehicle (i.e. Pleasure, Commute, Business, etc.)
• Number of kms traveled per year
• etc.

It just so happens that age is a very strong statistical indicator when you are under 25yo.

If you were to take equal-sized groups of inexperienced 19yos and an inexperienced 43yos riding the same bikes, the 43yo's will claim significantly less.

If you were to take equal-sized groups of 3yr experienced 19yos and 0yr experienced 43yos riding the same bikes, the difference in claim patterns becomes less clear (which is why we rate on both age and experience as variables).

[VifferFun]

more profits if you group by age. by experience they would have to charge you less money for every year of experience you have. this way they get to bend you over and pull out that bottle of lube and have the time to finish the whole bottle before they give you a price cut.

Wrong. Read my post above.

It is in the best interest of the insurance company to lower premium as your risk reduces, because this will help attract these good risks to their company. When an insurance company increases profitable business volume, it increases profits. If a company does not reduce the premium as the risk reduces, then their policyholders will leave for another company who does.

[turbodish]

more profits if you group by age. by experience they would have to charge you less money for every year of experience you have. this way they get to bend you over and pull out that bottle of lube and have the time to finish the whole bottle before they give you a price cut.

That's completely inaccurate.

What's more accurate is that young new drivers make more frequent and more expensive claims than older new drivers, and the insurance pricing reflects this increased risk.

[adri]

If you were to take equal-sized groups of inexperienced 19yos and an inexperienced 43yos riding the same bikes, the 43yo's will claim significantly less.

If you were to take equal-sized groups of 3yr experienced 19yos and 0yr experienced 43yos riding the same bikes, the difference in claim patterns becomes less clear (which is why we rate on both age and experience as variables).

Thanks Viffer. It still seems like a lot of "these are the stats, because the insurance company says so". Will, at any time/place, these statistics be available publicly?

It's not unusual for corporations to come to corporate oligarchy. The airline industry was caught doing this a few years ago when it was discovered that companies worked together to set rates so as to effectively avoid any kind of price war that would hurt all of their profits. We've seen oil companies to the same general marking ups, and more locally, it was widely speculated that the Canadian cellular industry was also involved in regulating prices within the industry prior to its opening up in the past year or so. The Canadian motorcycle insurance is even smaller and more closely knit, unless the stats are out there somewhere it's hard not to take them with a grain of a salt y'know?

[turbodish]

It's not unusual for corporations to come to corporate oligarchy. The airline industry was caught doing this a few years ago when it was discovered that companies worked together to set rates so as to effectively avoid any kind of price war that would hurt all of their profits. We've seen oil companies to the same general marking ups, and more locally, it was widely speculated that the Canadian cellular industry was also involved in regulating prices within the industry prior to its opening up in the past year or so. The Canadian motorcycle insurance is even smaller and more closely knit, unless the stats are out there somewhere it's hard not to take them with a grain of a salt y'know?

Airlines and oil companies are not subject to price regulation. It's free market, charge what the market will bear. The only prohibition is against collusion with other companies to fix prices.

Ontario has strict price and profit regulation when it comes to insurance rates. No matter how insurance companies use their stats and databases to compute their particular rate structures, they are still restricted in the amount of profits they can earn on collected premiums. The rate approval process requires them to submit detailed financial statements to regulators every year. Government auditors and analysts pore deep into those numbers, and there's no real opportunity to cook the books without it being detected.

[adri]

Cool, that answers half my question, thanks turbodish =)

[VifferFun]

Thanks Viffer. It still seems like a lot of "these are the stats, because the insurance company says so". Will, at any time/place, these statistics be available publicly?

No, not at the level of detail you are requesting. The data is the intellectual property of the insurance company. Historical claims data is what can give one company a competitive edge over another, and they aren't about to share.

It's not unusual for corporations to come to corporate oligarchy. The airline industry was caught doing this a few years ago when it was discovered that companies worked together to set rates so as to effectively avoid any kind of price war that would hurt all of their profits. We've seen oil companies to the same general marking ups, and more locally, it was widely speculated that the Canadian cellular industry was also involved in regulating prices within the industry prior to its opening up in the past year or so. The Canadian motorcycle insurance is even smaller and more closely knit, unless the stats are out there somewhere it's hard not to take them with a grain of a salt y'know?

I can assure you there is no "price fixing" in the insurance industry. It is highly competitive, and if a company can get your business by offering you a lower premium than a competitor (without going below expected claim costs), then they will most certainly do so.

In addition to the competition, there is also a regulator (FSCO) that must approve the actuarial analysis before we can ever take an increase. It's not uncommon for FSCO to refuse a rate increase even if it is justified.

[adri]

Well, looks like I'm now more educated, albeit still ******. Blah Thanks Viffer.

[lil red bird]

Well, looks like I'm now more educated, albeit still ******. Blah Thanks Viffer.

Try home for chrome there was a $400 difference between them and co-op for my valkaryie.
http://www.homeforchrome.com/

[VifferFun]

Well, looks like I'm now more educated, albeit still ******. Blah Thanks Viffer.

No problem

[adri]

Try home for chrome there was a $400 difference between them and co-op for my valkaryie.
http://www.homeforchrome.com/

Hey lrb, didn't know you owned a Valkyrie, nice =) I tried to get on online quote but it warned me "Our online quote tool is designed for riders who reside in Alberta or Ontario and are 25 years of age and older."

However, it also says "If you do not meet these requirements or you own a Sports bike, please call 1-866-758-7869 to speak to an agent who will be able to assist you." I'll try them tomorrow.

[Platinum Cycle]

When I was 16 I guarantee I was a better rider than most adults. I could control my motorcycle much better flying through the air (Did I mention I had been riding dirt bikes since I was about 6) than most old men on V-Star 650's could on solid ground.

But, despite being able to control a motorycle extrmely well, I was still a stupid 16 year old......Kinda explains the crash into the bridge that day.......Oh well, that's for another day's story time.

Point is, age is still a pretty high factor when it comes to rating.