Ratemaking for the Personal Automobile Physical Damage Coverages

As with any other line of insurance, the ratemaker's goal is to develop rates that will cover losses and expenses (including underwriting profit) arising from policies in force during a specified future period. In order to accomplish this goal, a proper match between premiums (or exposures) and losses plus expenses must be established. This is particularly important when starting from an experience period which may reflect conditions which have changed or which are expected to change prior to or during the period for which rates are being made. The ratemaker must know what coverage was and will be provided. Has the insurance policy itself changed? Has the legislature, insurance regulator or court changed the interpretation of the policy resulting in a de facto change in losses? Has the term of the policy been modified? Has there been a shift in insureds by deductible? Deductibles