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Vehicle Rating

Vehicle Rating . CAS Spring Meeting MAY 18, 2004 Dan Charbonneau Allstate Insurance Company. OVERVIEW OF EGR (Experience Group Rating) . Designed to improve upon the symbol adjustment process Vehicle experience determines if symbol is adjusted up or down

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Vehicle Rating

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  1. Vehicle Rating CAS Spring Meeting MAY 18, 2004 Dan Charbonneau Allstate Insurance Company

  2. OVERVIEW OF EGR (Experience Group Rating) • Designed to improve upon the symbol adjustment process • Vehicle experience determines if symbol is adjusted up or down • Adjustment based on combined Collision/Comprehensive experience • Limited to full symbol adjustments

  3. OVERVIEW OF EGR • How EGR Differs • Treats cost new symbol as fixed starting point, applies an additional factor to vehicle based on its experience • Allows factors to vary in continuous manner rather than by full symbols • Collision and Comp can be rated independently • Liability coverages can be rated • Initial rating for brand new vehicles based on like vehicles • History • First implemented in 1999 for MY2000 vehicles • New set of factors developed for each subsequent model year

  4. METHODOLOGY Data: • Countrywide • Summarized by year, coverage,vehicle and model year • Calculate factors for BI & PD combined, Med, PIP, Collision, and Comp

  5. METHODOLOGY Bodystyles: • Although Allstate insures about 1 out of 8 vehicles in U.S., when one considers all the make/model combinations, there is not enough countrywide experience to be fully credible at the vehicle level. • In order to determine a more sound estimate of experience, vehicles with similar characteristics are grouped together to form bodystyles. • The combined bodystyle experience is used to supplement that of an individual vehicle. • Example Bodystyles (14 in total) • Small Van • Large Van • Subcompact • High Performance

  6. METHODOLOGY Bodystyles – How Are They Determined? • Physical Characteristics • Marketing • Manufacturer’s bodystyle • What are it’s competitors? • How will it be driven? • Ex: Ford F150 Lightning • Not an exact science

  7. METHODOLOGY Calculation of Factors • Vehicle experience • Bodystyle experience • Prior year’s factor

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