Risk profiling is an assessment of a risk to be insured in the event of an accident happening or a claim being made from that insured/person covered risk. This assessment will result in what insurers/takaful operator would charge for that risk.
In motor insurance/takaful, various parameters are used for the assessment of a risk. However, each of these parameters may apply differently to an insured's/person covered risk. As such, the parameters listed below are subjective and will be based on the Underwriting Guidelines adopted by the respective insurance company.
Some of the parameters that can be used by an insurance company and takaful operator in assessing the risk profile of an insured/person covered could be as follows:
- Age of the vehicle - It will become obvious that an older car will be subjected to more wear and tear, and the mileage run/used will mean that it will be prone to more repairs, breakdowns and worst still, parts failures, which may result in an accident or even fatality.
- Age of the driver - It is an acceptable fact that a younger driver will be more prone to accidents because of inexperience and youthful vigour. Statistics have shown most serious accidents were recorded by motorists aged between 17 and 23 years.
Likewise, much older motorists also have higher perceived risk because age causes a slowdown in reflexes and have intentions to drive extra cautiously or slower (thus being a hazard on the road). Health issues and illnesses like Dementia, heart problems and Parkinson's disease have also caused accidents.
- Gender of the driver - There are many studies conducted in developed countries that have proven that females make better drivers than males. They are more patient and less reckless behind the wheel, thus resulting in safer driving habits. In the UK, men pay more than women for a similar motor insurance policy.
- Driver's claims record - A motorist, who is constantly involved/causing accidents and making insurance/takaful claims, is obviously a high risk case and will have to endure a higher motor premium/takaful contribution.