You might have searched car insurance companies and policy specifics on the web and discovered clients talking about “redlining.” Although it might be the first time you came across that term, it can be important for all vehicle policy owners out there. In this article, we will talk about redlining details and are there legal redlining mechanisms that a car insurance company might use.
What Is Redlining With Car Insurance
If we are talking about a general definition, it is intended denial or adjustment in the pricing of specific services to particular clients. We first encountered this term in the United States during the 1960s. At the time, the local banks avoided investing in local communities where black people were the dominant group. They refused to issue loans and provide other services to clients of color. The experts indicate that there is also the term “reverse redlining.” That involves providing services to particular clients, but only at a higher price than usual.
Are Car Insurance Companies In Malaysia Redlining?
It is hard to talk about redlining and not mention discrimination. These two go hand in hand, but some discrimination types are not allowed by law. Malaysia is a multi-ethnic country, but you won’t see car insurance companies getting involved in racial discrimination. However, if we scratch below the surface, it is easy to find redlining characteristics among the services provided by car insurance policies. The best example of redlining is the practice of determining the cost of car premiums.
Males Will Pay More Than Females
The statistics indicate that males are riskier drivers than females. According to experts, men cause a bigger number of accidents than women, a red flag for car insurance companies. Based on these statistics, they increase the cost that males pay for their premiums. Living in urban areas and crowded cities might also be the reason why you pay more for your car insurance policy. That is because there is a higher risk of accidents on roads with high-intensity traffic.
Young Drivers Are Riskier Than Older Ones
If you only recently acquired a driving license, you can expect to pay more for the car insurance policy than an older person. However, that only applies if the older person didn’t cause any accidents and didn’t have a poor driving history. Young drivers start from scratch, but instead of offering them a clean slate, insurance companies take the safe path. That is why they might increase the premium cost when compared to standard prices.
Is It Legal For Car Insurance Companies To Redlining In Malaysia?
Let’s take a look at things from the perspective of vehicle insurance providers. For starters, they will rarely refuse to approve an insurance policy to a car owner (unless it’s a justified decision). Next, the agency will consider your gender, age, and other potential risk factors when determining the insurance rate. That might seem like the companies are discriminating against some drivers, but it is also an opportunity to reward others. For example, those with a No Claim Discount (NCD) will have a lower price from the second year. As for the legality, it seems that the vehicle insurance providers are doing everything by the law at the moment. If you have any suspicions, there are legal mechanisms for complaining. However, including age and gender in risk factors has become common since there is no alternative to accurately determining the driver’s risk.