How Auto Insurance Companies Compete
There are just a few basic parts to an insurance policy. Specifically, we’re talking auto insurance policies. The first feature is the premium, of course. It’s the rate. The rate and price that you’ll be paying, either month after month, or quarter after quarter. Not too many people pay the whole year up front. Some do, but not many. And the premium (yeah, back to the premium), it represents a lot of things. For one, it represents your riskiness. Well, what is your riskiness? This is something that’s regarded in a special way, in a unique way, in fact. In fact, it is treated in a rather proprietary way. It’s really all about an insurer’s ability to predict, what exactly will happen. Risks. And this is the insurer’s bread and butter, assessing risk. It’s also the way that they compete with each other, i.e. who can assess risks better.
