Vehicle Rating

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/Comprehens
  ive 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
• Manufacturers bodystyle
• What are its competitors?
• How will it be driven?
• Ex Ford F150 Lightning
• Not an exact science

7
METHODOLOGY

• Calculation of Factors
• Vehicle experience
• Bodystyle experience
• Prior years factor