Seasonal Fluctuation in Loss Ratios for Automobile Coverage

Actuaries, underwriters, executives, claim adjusters, agents, and others connected with the business of casualty, indemnity, and fire insurance have long recognized that the number and amount of claims rise and fall with the seasons of the year. A glance at the figures reported monthly for fire claims by the National Board of Fire Underwriters shows the seasonal swing on top of the general increase in burning rate that has plagued the fire insurance business for the past few years. Companies writing accident and health insurance and using a notice average reserve frequently use a lower figure for average cost per claim during the winter months than during the spring and summer months. This paper attempts to analyze the claim figures for automobile bodily injury liability to determine the quantitative as well as the qualitative effect of the seasonal variation in a particular line of insurance. The paper is divided into two chief parts, the development of adjustment factors, and the application of these factors.