Car insurance companies use a list of factors to calculate your risk and determine premium rates.
And while there are some commonly accepted boxes that need to be ticked off when calculating your insurance costs – like the type of car, or where it is parked – it’s impossible to know the exact formula each insurance firm uses in SA.
Speaking at a recent insurance gap round-table event in Johannesburg, Johan Minnie, director at Liberty holdings, indicated that the insurer has seen success in using its risk assessor to ask 20 questions to help determine a risk profile.
The assessor uses a combination of more traditional questions such as “how often you exercise” and “whether you smoke”, but includes questions such as the colour of your car.
While Liberty is understandably quite tight-lipped about the actual methods used to calculate this risk, Minnie indicated that broadly speaking, red, black, charcoal and gold are seen as more risky, while green and white cars are seen as less risky.
He also noted that the colour risk assessment was influenced by visibility, road rage and hijackings.
Speaking to BusinessTech, Henk Meintjes, head of risk products at Liberty confirmed that visibility was one of the main factors with regard to car colour – with the lighter, brighter coloured cars being more visible.
“Personality traits are also reflected in the colour of the car you drive. Often, faster cars (or ‘passionate drivers’) will have red cars while a white car may indicate a higher degree of risk-aversion.”
Discovery Insure’s head of technical marketing, Precious Nduli, said that the group does not take the colour of a car into account when calculating premiums.
“To determine premiums, we look at how likely you are to claim, and if you do claim how much will it cost us to repair. The main determining factor according to our data is driving behaviour and what you do behind the wheel of a car that increases your risk of claiming.”
Nduli said that from a severity perspective, or “how much is it going to cost us”, it is not the colour of a car but the paint type; for example, a metallic type paint would cost more.
Insurer Santam said it does not use the colour of a vehicle as a factor for car insurance.
Santam noted that all standard production vehicles in South Africa that are roadworthy are insurable. However many factors including model, age, value, age of driver, are used to determine the rating.
For Discovery, traditional risk factors are used to determine the likelihood of a driver making a claim and the likely amount the insurer expects to pay for that claim.
These risk factors include a person’s age, gender, past claims experience, where a person lives and works, vehicle type and the mileage a driver expects to drive among others.
“These factors are used because traditionally insurers have no way of determining upfront or during the policy how a person actually behaves behind the wheel which is the biggest factor that determines the likelihood of an accident,” said Nduli.
“Discovery Insure is in a unique position because our telematics technology, which we call DQ-Track is able to measure driving behaviour which means we have a much more accurate measure of risk.”
Lifestyle choices, such as smoking, drinking and driving habits (number of tickets) show your underlying risk aversion, said Meintjes.
“Together with marital status and family composition etc., these combine to give a broader picture of an individual’s likely accidental risk profile with parents expected to behave more responsibly than bachelors for example.”
“It is important to note that the answers to all the questions given are assessed holistically, to give the calculated risk profile,” Meintjes said.