Instead of a cumulative per-wreck penalty, which nearly negates the point of buying insurance at all, a ‘safe driving award’ system means that there are only two tiers of pricing (based on #accidents, at least—other factors are still open for discrimination), which caps the potential adverse selection without forcing the company to ignore a valuable piece of data about the client’s skill and driving habits.
Also, it could be taken as a signal that quoted prices don’t reflect an unrealistically idealized customer.
Ditto for car insurance commercials that boast that they don’t penalize people for having accidents—they just reward people for not having accidents.
That one might actually make sense.
Instead of a cumulative per-wreck penalty, which nearly negates the point of buying insurance at all, a ‘safe driving award’ system means that there are only two tiers of pricing (based on #accidents, at least—other factors are still open for discrimination), which caps the potential adverse selection without forcing the company to ignore a valuable piece of data about the client’s skill and driving habits.
Also, it could be taken as a signal that quoted prices don’t reflect an unrealistically idealized customer.