The Mathematics Behind The Insurance Premium


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I have always wondered on this topic, but haven"t got a clear answer. So i think this is an apt forum to go ahead with my doubt looking for answers.

Considering an hypothetical situation and assuming the following
- It is a common insurance (say third party) from a same vendor
- the cost of the vehicle(ex-showroom) (Brand A, Brand B) is same
- the same family handles both Brand showrooms in the city (uniformity of business practice)

Is there a chance that Brand A and Brand B have the same insurance cover and the same premium?

I find every showroom of the same brand has a different cost, every insurance vendor gives different quotes (some expect bargaining as well) and insurance premium to be different. Also in case of an accident different insurance vendors cover differently on terms and on money.

So what is the mathematics behind these calculations? Do they have a common practice / formula? Or is it based on the concept "Make Hay when the Sun shines?"
 
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The taxes and premiums should be same for a particular item. But, the dealer's margin may be different from each other. So, the outcome payment would be differ from each other.

Let me share my experience.

1. I visited a showroom and asked the Insurance: He quoted some 26,000 for the chosen car.

2. Then I visited the same Insurance Brand office and asked quotation: He gave some 20,000 for the same car.

3. Then I visited the same brand's website and in their live chat I asked the quotation for the same car. The quotation is about Rs. 13,000/-

Just for info, The insurance coverage is same for all the above instances. I asked the sales guy in the live chat, why the difference from each other?. He openly said, the difference is because of the dealer's margin and the taxes would be differ from each other. As per his words, If we take the policy online, the taxes would be bare minimum and the outcome policy premium would be almost half to the showroom.
 
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@icecool, I assume by Brand A and Brand B you mean two models of cars with same ex showroom.

In such case also the insurance premium will be different for both. As each model will have diff spares cost, diff ASS services etc.
 
Thread Starter #4
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@icecool, I assume by Brand A and Brand B you mean two models of cars with same ex showroom.

In such case also the insurance premium will be different for both. As each model will have diff spares cost, diff ASS services etc.
yes i understand that diff spare cost and ASS service.. but how do they calculate? Costing based on previous accidents of the same brand? or just random addition of spare parts with highest probability of damage and then doing maths on the premium? OR in other words which brands get preference on lesser premium (Honda/maruti?)

Also in case of an accident (in my case only), the same insurance, but the insurance representative had quoted different value in two different service centers ( Advaith and Trident). I assumed the difference to be the dealer's cut as I didnt get a clear answer then. Was i correct in my assumptions?
 
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That's one useful topic. Had this doubt for a long time. I'm almost zero in this topic.
Thanks for the thread. Subscribed to it.
 
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I think it is same as ,same car cost different from different dealer.
Let's say you are doing the renewal from a agent, then agent will have some share or commission on that renewal process. Suppose that agent decided to give you some discount , then he may give some cut from his commission. So you get a different price from different place or people.
So when you are going with online, there is no agent or dealer or any other third person involved. so the company need not give any commission to anybody and you get a lower price.

NCB (No Claim Bonus) also play a major role in the premium amount. If you have retain the NCB then discount will come directly from the company and hence some lower rate and apart from that more discount will depend how and where you are doing the renewal.

From outside I understand this.
 
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Thread Starter #7
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Just adding numbers here.
What I have done here : In magazine WHATCAR, the premiums(which I suppose is best number they get by the insurance company they are tied to) and on road price.
What observations I make : newer brands / European cars demand higher premium because of added A.S.S costs
 

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