An Econometric Model of Private Passenger Liability Underwriting Results

This paper presents an econometric model of private passenger liability underwriting results. The model, fitted on data from 1954 to 1983, is used to forecast results from 1984, 1985 and 1986. Premiums, losses, and expenses are modelled separately, with the loss model based on two sub-models (severity and traffic accidents). The paper covers the process of model building from initial a priori analysis, through forecasting. The paper also attempts to provide a general framework useful in the modeling of other lines.