The first episode of the series explains how insurers use pooling and risk-based underwriting to price insurance policies. The video also demonstrates why potential EU rule changes that restrict the information that insurers can use to calculate risks could reduce the availability of insurance and make it more expensive. "What happens if an insurer does not have that data or cannot use it? It will probably have to increase everyone's premiums to be sure there is enough money in the pool for an uncertain level of claims. This makes insurance less attractive or even unaffordable," the explanation came, adding that if insurers cannot price policies based on the risks posed by the insured, some consumers will pay too much relative to the risk they bring to the insurer and others too little. Insurers may also need to withdraw certain products, leaving people unprotected.
It is, therefore, important for all consumers that insurers are allowed to continue risk-based underwriting.
The video is available on Insurance Europe's YouTube channel here.