From Preferred to Non-Standard Auto and Back

1
From Preferred to Non-Standard Auto and Back

• A Pricing/Underwriter/Agent Perspective
• Casualty Actuarial Society
• Ratemaking Seminar
• March 2001

2
Nationwides Current Book

• Top five writer of Personal Lines
• Writing through Exclusive Agency, Independent
  Agents, and Direct
• Significant writer of NSA
• 90 Standard and Preferred

3
Pricing Considerations

• NSA
• Higher Average Premium
• Lower Retention
• Higher Frequencies
• Lower Average Severity
• New Business Effect

4
Pricing Considerations

• Preferred / Standard
• Lower Average Premium
• Higher Retention
• Lower Frequencies
• Higher Average Severity
• New Business Effect

5
Preferred / Standard Growth Example
6
Preferred / Standard Growth Example
7
Preferred / Standard Growth Example
8
NSA Growth Example
9
NSA Growth Example
10
NSA Growth Example
11
Underwriting Considerations

• of SVLO
• Prior Insurance
• Undisclosed Drivers
• Fraud
• Payment Plans
• MVR / CLUE / Credit Reports
• Rate Evasion

12
Agent Considerations

• Limited Retention
• Cost / Frequency of Servicing
• Ability to cross sell
• Need to inspect vehicles
• My share

13
Conclusion

• While there are similarities between writing NSA
  and Preferred / Standard
• it is the differences that
• will make or break
• you!