Chapter 7 Flashcards
How does age, gender, and marital status of applicant effect rates ?
statistics indicate a definite relationship exists between these factors and loss frequency. A single male drivers under 25 years old have traditionally had the worst driving records with collisions often resulting from reckless driving or risky behaviors such as showing off. but once they are married the fact that other people’s will beings is tied to their own tempers of their driving habits young woman have historically tended to take your chances and thus have had better driving records. But recent trends show this may be changing.
What location involves higher frequency of rear end collisions and gender benders?
Urban areas
What kind of accidents are expected from long distance highway driving?
It results in accidents at high speeds or multiple vehicle pile ups with severe injuries, death, and heavy damage to or total loss of vehicles.
What kind of accidents happen on suburban roads?
Single vehicle accidents, such as upsets, because of speed poor road conditions or visibility or collisions with wildlife. Gravel roads are hard on windshields and lights.
What does VIN stand for ?
Vehicle identification number
Define law of large numbers
The mathematical premise that states that the degree of uncertainty is reduced as the number of events increases
Define pure premium
portion of the total premium that is needed to pay expected losses. It does not take into account money needed for company expenses
Expense loading
The part of the premium rate that represents the cost to the insurer of producing and maintaining the policy
Acquisition cost
the cost of putting a business on the books and acquiring the premium. The items involved are not standard with all insurers but generally include agent/brokers commissions field representative cost premium tax and perhaps some of the relevant head office acquisition cost of operation
Commission
compensation based upon the amount of production for example Independent Insurance agents are compensated on the basis of a percentage of the premium period the percentage of areas with different lines of insurance
Reinsurance
Insurance purchased by an insurance company from another insurance company insurer to provide a protection against large losses on cases it has already insured essentially insurance for insurance companies. A transaction in which one party the reinsure, and consideration of a premium paid to it, agrees to indemnify another party, the reinsured, for part or all of the liability assumed by the reinsured under a policy of insurance it has issued.
Automobile statistical plan
a collection of statistical information that all automobile insurers who write business in Canada must record and file as prescribed by the superintendent of insurance. Commonly known as the green book
Commercial liability statistical plan - Ontario
Emmanuel that sets out the statistical data reporting requirements of each participating jurisdiction currently only Ontario participates in this plan
Ontario statutory accident benefits statistical plan
Every insure that rights automobile insurance in Ontario must report this data in accordance with the osabsp manual. The osabs be was 1994 to provide insight into the cost drivers of accident benefits claims
Define fleet policy
In automobile insurance a policy ensuring a number of cars for one owner
Define private passenger vehicle
four wheeled motor vehicle for the private passenger station wagon or van type design for the use on public highways and subject to motor vehicle registration
What is the general insurance statistical agency?
a federally Incorporated not for profit corporatization The general Insurance statistical agency acts as the statistical agent on behalf of Newfoundland and labrador, Prince Edward island, Nova scotia, new brunswick, Ontario, Alberta, yukon, Northwest territories, and none of it.
Who is the general insurance statistical agency governed by?
g i s a is governed by a board of directors, with representation from nine participating Insurance regulatory authorities, the property and casualty Insurance industry and the public. It provides governance accountability and oversight of the mandated statistical plans.
Why did general Insurance statistical agency enter into a service agreement with the insurance bureau of canada?
g i s a entered into a service agreement with the insurance bureau of Canada to provide statistical plan services under specified terms and conditions and to receive the information prescribed by the plans from insurers. This information is used to provide industry-wide statistics for analysis by regulators and rate makers
What is known as the appointed statistical agent for Quebec
GAA
3 components of loss costs
Paid losses - known amounts
Outstanding losses - provision for claims that are reported but not yet paid, usually referred to as estimates in claim files
Incurred but not yet reported losses IBNR - liability for future payments on losses that have occurred but not yet been reported to the insurer
Define trending
The process of adjusting statistics for premiums and losses to current or anticipated future levels to represent changes in Insurance experience from economic and demographic forces and to use data to determine present and anticipated future levels of cost
Canadian loss experience automobile rating
a method for classifying different models of cars for insurance purposes by using historical claims data including collision, comprehensive, direct compensation property damage, and accident benefits coverages
Insurance bureau of Canada
The trade association of the property - casualty insurance industry in canada. It concerns itself with such matters as public relations, the collection of statistics, the promulgation of forms
What provinces have rate boards ?
Alberta BC Manitoba New Brunswick Newfoundland Nova Scotia Ontario PEI
The provinces and territories that do not have rating boards
Northwest territories Nunavut Quebec Saskatchewan Yukon
Adverse selection
occurs when those with higher risks May purchase insurance in greater amounts than those with lower risks much of insurance law and practice is designed to control adverse selection. Insurers protect themselves from adverse selection by attempting to measure risk and either charging more for their higher risks or refusing to cover them at all
What is usage based insurance?
usage based Insurance programs feature a telematics device that can be plugged into a vehicle’s diagnostic on board computer to track mileage and driving habits, a smartphone app that tracks driving habits, or a combination of both devices depending on the insurance mix of end use products and devices. Data are collected on mileage and driving behaviors while the car is used which can be used in a combination of other rating factors calculate the insurance premium for that car
How is premium calculated for traditional reading?
In traditional rating, the rates are devised using actuarials studies of a aggregated historical data ( law of large numbers ) to produce rating factors including driving record, personal characteristics of the insured, and vehicle type among others.
