Page 224 - ic92 actuarial

The Insurance Times

h) Cost variation in automobile insurance - Cost
variations can be classified into four broad categories:
(i) use of automobile (ii) driving ability (iii) interaction
with the claims mechanism, and (iv) the extent of
damages.

In many of these areas, the available evidence is more
subjective than objective. Whatever is relevant to costs,
is presented, though concrete data may be elusive.
Different uses of the automobile contribute to varying
cost potential.

More driving should produce more exposure to liability
an collision claims. Driving conditions, like time of the
day, traffic density, weather etc are also important. Since
automobile theft is a significant factor for comprehensive
coverage, location of the car in higher crime neighbor
hoods is relevant for the coverage.

Mileage may be used directly for rating, though
commonly the only distinctions are annual mileage over
and under a certain amount and mileage to work.

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