Motor insurance rating, an actuarial approach

Abstract

This paper is largely based on a Ph.D. thesis (Coutts (1983)) and provides an actuarial approach to the technical aspects of motor insurance premium rating, where equal weights are given to both the practical and statistical elements of the problem. The methods described are applicable to the competitive United Kingdom motor insurance premium market. However, it is also contended that in countries where motor rating tariffs are in operation, the analyses proposed are still necessary for management to judge where in the portfolio the business is potentially unprofitable.