The Problem of Substandard Automobile Risks

I'd like to give a vote of thanks to Dutch Day, Tom Murrin and the audience that participated in this session. Both sessions of the seminar were well attended. The chairman brought out that both the young and the old have substandard risks which cannot find an insurance market other than in the assigned risk plan or a specialty company for substandard risks. Elden Day covered the substandard risk as he is known through assigned risk plans. In general, incurred losses on assigned risks have exceeded premiums for many years. In 1959, the assigned risk plan incurred loss ratio, countrywide excluding Massachusetts, was about 98%. A sample study of 500 assigned risks in New York State shows these risks are not attributable to any small group of specialized producers. These risks account for 800 applications approximately; the policies stay in force for approximately 11 months; 13% are in the plan for the full three year period; 50% of the new applications are renewed. Tom Murrin developed the thought that the substandard risks are inextricably wound into the assigned risk plan and that it may be necessary to establish a different classification and rating system for such risks, in contrast to that for voluntary risks. He pointed out that although classification rate differentials presently appear adequate, it may take considerable time for substantial segments of the young driver class to obtain voluntary insurance.