Page 226 - ic92 actuarial

The Insurance Times

press dishonest claims, some people may be more
cooperative in submitting claims or in helping to defend
claims. Most of these differences are quite subjective
and difficult to quantify in a rating variable.

Wherever higher costs can be discerned, the insurers
refuse to insure an individual, rather than try to determine
an accurate rate. Finally cost differences may also result
from the extent of the damages, given that an accident
occurs. Crashworthiness of the automobile is an obvious
rating variable.

The same type of accident can damage the cars
differently. The speed with which the car is driven, will
also affect damages. The use of safety devices, such
as air bags or seat belts, affect costs. Some of this though
may only be relevant to certain coverage.

To some extent , existing rating variables consider these
differences in costs. Sports cars are often surcharged,
presumably because they are driven at higher speeds,
are prone to greater damage, cause greater damage, or
are more prone to trigger lawsuits.

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