if women are really that bad drivers, why are auto insurance rates for women lower than for men?
3 comments:
Anonymous
said...
Thats because risk is evaluated on multiple dimensions.
Pricing is dependent on probability of the damage to the car.
Women might be bad drivers but they might drive lesser distance. So the probability of a collision in a given time interval decreases. There are lots of other variables i.e., they don't go on drag races as much as men.
So driving skill is just one variable among many that goes into the evaluation of risk premium.
->Indian King: While taking multiple variables, if one variable value is high, it overrides the effect of the other variables. Donc, my question still remains valid. If women are bad drivers, even if they drive less, the probability of an accident is more (considering the probability has a bunch of factors) and not less. Going into races are special cases and cannot be included in calculating general probability
3 comments:
Thats because risk is evaluated on multiple dimensions.
Pricing is dependent on probability of the damage to the car.
Women might be bad drivers but they might drive lesser distance. So the probability of a collision in a given time interval decreases. There are lots of other variables i.e., they don't go on drag races as much as men.
So driving skill is just one variable among many that goes into the evaluation of risk premium.
Indian King.
Yeah.. they shud change it.
->Indian King: While taking multiple variables, if one variable value is high, it overrides the effect of the other variables. Donc, my question still remains valid. If women are bad drivers, even if they drive less, the probability of an accident is more (considering the probability has a bunch of factors) and not less. Going into races are special cases and cannot be included in calculating general probability
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