The Liberalization Era: Individual Rates in Favor of the Insured
In 1995, the Swiss Federal Council put into effect the legal changes for the liberalization of motor liability insurance. This ended the system of uniform premiums for motor vehicle insurance that had been in place for twenty years. Insurance companies can now create risk groups and therefore different premiums within the framework of their individual rates. This represents progress for the insurance market in favor of the insured. Thanks to product design and pricing freedom, there has been intense competition in the Swiss market to this day.
Political Motions: Old Wine in New Bottles
For calculating risk groups, over 40 so-called tariff features of the insured are used in motor vehicle insurance. Tariff criteria serve to ensure that premiums reflect the risk as accurately as possible. The groups must be large enough so that the risk balance within the collective functions without excessively high fluctuation surcharges. This is the basis of any insurance.
The criteria range from age, gender, place of residence, vehicle characteristics to origin, at least in Switzerland. The latter is often used by comparison portals like Comparis.ch as a one-sided basis for price comparison. Since the other tariff factors are not considered in this comparison, it does not result in an objective picture. However, the one-sided price comparison is sufficient to be tirelessly instrumentalized by politics as an argument for discrimination. This already happened in 2004 with the Zisyadis motion (non-affiliated), in 2006 with the Leuenberger interpellation (Greens), in 2010 with the Hodgers postulate (Greens), in 2011 with the Lumengo interpellation (Social Liberal), in 2012 with the Teuscher interpellation (Greens), and most recently the Hasan interpellation (SP), as far as we know.
Rates are Fair in Price-Performance Comparison
It may sound unfair if one person pays more or less premium for their car insurance than another. However, the price ratio argument falls short. Since the abolition of the uniform tariff, it has been clear that everyone pays an individualized premium, to the extent that benefits have been received or are expected, as statistically proven. In the price-performance comparison at the risk group level, the premiums are fair. The premium calculation follows clear actuarial principles that reflect the polluter pays principle. The majority of vehicle drivers benefit from an individual premium compared to a uniform premium.
Politicians and comparison portals will continue to try to exploit the discrimination argument for media impact, even after the most recent interpellation. It fits the political agenda, even if it is not substantiated factually.
Incidentally, insurers can calculate tariffs without the nationality feature, especially since it disappears anyway for naturalized citizens. According to our conversations with insurance actuaries, if the 40+ other features are included first in the tariff model, nationality loses statistical significance. More decisive for price determination are the driver’s age and creditworthiness, as well as the vehicle’s horsepower. Tariff models were already capable of this 20 years ago. But with this knowledge, it’s difficult to build a media-effective narrative.
Background Information
- https://www.streetlife.ch/artikel/nicht-per-se-diskriminierend-bundesrat-verteidigt-praemien-nach-nationalitaet
- https://skmr.ch/assets/publications/160526_Teilstudie_1_Grundlagen_des_Diskriminierungsschutzes.pdf
- https://www.watson.ch/schweiz/auto/361668030-hoehere-autopraemien-fuer-auslaender-in-der-schweiz-sorgen-fuer-kritik
- https://www.svv.ch/sites/default/files/2017-11/konsumentenschutzstudie.pdf
- https://www.20min.ch/story/auslaenderzuschlag-autoversicherung-kosovaren-zahlen-bis-zu-74-prozent-mehr-103171145
- https://www.20min.ch/story/autoversicherung-bundesrat-verteidigt-aufschlaege-fuer-auslaender-103347956
