Models in Motor Insurance

Abstract

The introduction of high-speed electronic computers has opened the way for analyses of motor insurance risk statistics on a scale not previously possible. We may regard the purpose of the analyses which form the subject of this note as being to test the validity of the existing rating structure by finding out how the claims experience varies from one rating cell to another within that structure; and, more generally, to explore the possibility of devising a more efficient rating structure by defining new levels within the existing factors, or by using new factors in addition to, or in replacement of, those already used. To achieve this purpose it is appropriate to consider on the one hand a detailed investigation of the experience over a limited period, analogous to that carried out when constructing a new standard life table and, on the other hand, a system for keeping the emerging experience under more or less continuous review. For this second aspect it is natural to think in terms of making comparisons between the actual experience and that expected according to the standard table.