Wide-scale deregulation of the auto market in European countries grew out of the European Union’s Third Nonlife Directive, which said all types of insurance needed to be competitive.
Italy was among the first European countries to deregulate its auto market.
Before deregulation in the mid-1990s, age and gender were not used as underwriting criteria, only the size of the vehicle and where the policyholder lived.
Deregulation necessitated moving from a two-variable product to a multivariable product.
To reprice their auto product more competitively, Italian insurers needed to develop a database of loss experience based on age and gender.
It was difficult, because that information was not gathered by underwriters.
To collect the data as Italy began to deregulate the line, Tillinghast-Towers Perrin dissected motorists’ social security numbers, which are coded to include age and gender information.
Age experience from one country to another is very similar. It is true in most countries that young drivers are more expensive.