Page 322 - Motor Insurance Ebook IC 72

The Insurance Times

Q.1. What is the necessity of Statistics in motor
Ans: insurance? Why interpretation of statistics is
as important as collation?
Motor insurance market in India has entered a highly
competitive state. The presence of both private and
public sector insurers and the freedom to decide the
premium rates makes it imperative that the insurers
follow sound underwriting techniques and charge
sustainable premiums.

It is therefore essential for them to ensure the
Information at their disposal is accurate and up to date
for appropriate decision making. This requires statistics
of previous underwritten risks.

Information appropriate for underwriting purposes are
age of the vehicle, condition of vehicle, particulars of
refurbished vehicles, imported vehicles and other
information culled from the proposal forms.

As rates of premium are based on past loss experience
it is most essential to maintain a detailed statistical
structure for Motor insurance.

The rate of premium depends upon for factors-claims
cost, commission, expenses and profit. The last three
can be fairly estimated. But the claim cost is the

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