The Interpretation of Liability Increased Limits Statistics

Several papers in the Proceedings deal with established ratemaking procedures for various lines of insurance and two such papers discuss in detail the methodology for liability insurance lines. In both papers attention is restricted to ratemaking techniques for basic limits coverage. The papers mention that statistics are collected for coverage above the basic limits, but they do not describe analysis of these statistics, l This limitation of the papers is understandable since their objective is to describe established ratemaking techniques and since there are no widely accepted methods in the increased limits area. Almost without exception both individual companies and rating bureaus express the premium for increased limits coverage as a function of the premium for basic limits coverage. Usually, the rates for increased limits of coverage are obtained simply by applying a factor to the appropriate basic limits rate.