So, Where Are Our Discounts?
Sydney Morning Herald
Friday April 25, 2008
Insurers demand safer cars but don't always reward owners of such models with cheaper premiums, reports Richard Blackburn.
SOME insurance companies are refusing to cut premiums for people who buy cars with crash avoidance systems, despite overwhelming evidence the technology prevents crashes - and subsequent insurance claims.Most insurance companies, including those tied to motoring clubs such as the NRMA, RACV and RACQ, have been vocal supporters of new technology such as electronic stability control, which can detect a skid in a corner and in most situations bring a car back under control.But few make it cheaper to insure cars fitted with the technology.The country's largest automotive insurer, Insurance Australia Group, which includes NRMA Insurance, RACV, SGIC, SGIO, CGU and Swann Insurance, has lower premiums for cars fitted with stability control as standard equipment but not for those that have it as an optional extra.The NRMA Insurance website says stability control is "one of the greatest advances in driver safety since seatbelts and airbags with the important difference being it actively prevents accidents from happening".Robert McDonald, NRMA Insurance industry research manager, defends the company's decision to offer the premium savings only to cars with standard stability control. "We wanted to push car companies to make the equipment standard, rather than optional," he says. NRMA research shows very few people realise the benefits of stability control and even fewer are prepared to pay extra for it."We are one of the first countries in the world where stability control is recognised by an insurer in the premium," McDonald says. The company is looking at extending cheaper premiums to cars with optional stability control but argues it is difficult to maintain an accurate database of these cars. "We can't go and inspect every vehicle," he says.Other insurers give no incentive to owners of cars fitted with standard stability control.Allianz spokesman Nicholas Scofield says the company does not charge lower premiums for cars with stability control because it doesn't have any solid data showing it will reduce the number of claims made against the company.This is in stark contrast to studies in Europe and the United States which show a marked reduction in single-vehicle crashes among cars with stability control.Scofield also says accident avoidance makes up only a small part of a vehicle's insurance premium. "[Anti-lock brakes] and stability control may have some benefit in terms of having an accident and reducing the damage but that applies only to at-fault accidents. "It doesn't make any difference if someone runs into you or if there is a theft or break-in, or hail damage," he says. "At-fault accidents are a relatively small part of the overall premium equation."Scofield says the insurance companies do not have enough information about the effect of stability control on insurance claims to warrant a reduction in premiums."In principle and theory, there appears to be a positive impact from stability control but we would need a history of claims data and information for it to qualify for a potential discount." The Suncorp group, which includes AMP, GIO, AAMI, Shannons and Just Cars, does not have cheaper premiums on cars fitted with stability control either, although a spokesman says that position is reviewed regularly.Andrew McKellar, the chief executive of the Federal Chamber of Automotive Industries, says people who invest in the technology should be rewarded with lower premiums."There is no doubt this technology reduces the risk of an accident, so you would think there is a pretty strong argument for [reduced premiums]," he says. "I would have thought that if the risk of accident was reduced, then the likelihood of a claim is also reduced," he says.The chamber estimates almost half the new passenger vehicles sold in Australia now have stability control as standard equipment.
© 2008 Sydney Morning Herald
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