the precise premiums you would charge the particular commercial property or commercial liability risks that you insure; if so, how are commercial property risks and commercial liability risks categorized for rating purposes. Or are risks individually rated, based on the judgment of the company? To the extent that judgment is applied, do you have guidelines to be followed in applying that judgment? Is it possible for two identical risks to be charged different premiums?
Company A IAO consistent base rate from actual loss statistics
Use judgment; monitor deviations from rates and compare to actual experience
Company B Not written
Company C Judgment rating only is used
Company D Commercial: Risks individually rated
Scheduled credits and debits can be applied Possible to have two rates for same risk
Company E Commercial packages for retail stores, offices, and small contractors set by statistical data; these rates are not flexible
Also set individual rates for commercial market which have different risk characteristics
Use a manual as a guide; rates vary at discretion of the underwriter (within reasonable limits)
Also use CGI as a guide if do not have own liability premium
Flexibility permitted an underwriter depends on that underwriter’s prior results
Company F MGA proposed prices
Company G IBC industry classes + supplemental classes
Risk Grade and Hazard Grade Company appetite
Company H CGI/IAO, subject to credits or debits
Company I IBC codes, commercial industry experience, CGI liability for Atlantic Region Various criteria, size and scope of business, individual
claims experience, financial viability, CREDIT SCORE
Company J Individual rates based on manual
Rates and underwriters’ assessment of a risk Compliance to “rating practices”
Company K Rating guides
Industry Identification codes Nature of operation;
Province;
Construction of building;
Size and loss experience of individual risk
Risk management feature i.e., underwriters’ assessment
Company M Commercial: Premium tables for small business and contractors packages Non-package business uses “a well established and long time standard industry established schedule rating format for determining rates. The schedule rating is based on both building characteristics and operational characteristics.” Maintain manuals for commercial property and liability
Company N Based on “rating engine”
No rate manuals
Judgment of company used in both rating and underwriting Two identical risks could have different premiums
Company O Actuarial-developed base rates on own experience
Also CGI
Commercial: Underwriters assess individual risks and make rate adjustments
Small business rate tables • guidelines
Question 10 Do you apply surcharges or discounts to your personal property, commercial property, or commercial liability risks based on the risk’s claim experience? If so, describe your program of surcharges or discounts. What would be the impact of excluding non-at-fault claims (such as damage caused by wind) in determining the surcharges or discounts to apply? Please discuss the viability of this as a solution to the concern of insureds that they are penalized for things outside their control.
Company A Personal Property: 3 years claims-free claims, 10% discount;
5 years claims-free: 15% discount
Most Personal Property losses, not at fault
Commercial property: Use loss history; “a loss for which the insured bears no responsibility should not result in a surcharge”
Company B Claims-free: 3 years, 10%; 5 years, 15%
Surcharge: 1 claim/5 years, 5% 2 claims/5 years, 25%
More than 2 claims/5 years, 50%
Claim-free discount would be reduced or those not eligible have increased rates What is outside of one’s control is subjective
Company C Discounts and surcharges based on risk’s claim experience “determined at
judgment of underwriter”
Company D Commercial: No surcharge, but commercial individually rated on claims experience
Company E Personal Property: Claims-free discount (permits one claim under $300)
No claims surcharge, claims frequency results in re-offer with higher deductible or coverage limit.
Also, have not counted Hurricane Juan claims
Company F NA
Company G Personal Property: No surcharge for claims experience
Claims-free discount: no claims in 3 years, 10% $200 deductible
Not-at-fault very difficult
Commercial: No specific discounts or surcharges
Commercial: Based on individual risk and loss experience Company H Personal Property: Yes Claims-free: 3years, 15%
Commercial: No specific surcharges or discounts Claims history is important
Most claims not at fault
Company I Claims-free: 10%, plus other discounts ranging 5-10%
Surcharge: Homes more than 64 years
25% surcharge for tenant in commercial premises Claims surcharges
Company J At fault is judgmental
Company K Personal Property: Claims-free discount if no claim in 3 years Commercial: Reviewed individually
Company L Burglar discount, new homes, electric heat, seniors discounts, and claims-free Surcharges for wood stoves, non-standard heat, and older oil tanks
Few claims are direct result of insured’s action This would penalize those without claims
Company M No
Company N Claims-free discounts: 5-15%
Surcharge: 2 or more claims in 5 years, 10%
Commercial property: Surcharge and discount based on risk’s claim experience, varies: –6% to +6% (excludes B&M and crime)
Commercial liability: Based on limit, deductible, kind of loss, status of loss, amount of loss, number of years of loss experience, industry code
Maximum credit 30%; no maximum debit.
“Discounts and surcharges are statistically proven and show that past claims experience is indicative of future claims experience.”
Excluding not-at-fault claims introduces subsidization
Company O Claims-free: 3 years, 10%
Surcharge: Second claim in 3 years, 15%
Question 11 Do you use an insured’s credit score in determining any of your rates? If so,