A Suggested Method for Developing Automobile Rates

The majority of the rates in the automobile casualty manual in effect today were determined by the rate making system which is described in Mr. H. P. Stellwagen's paper on "Automobile Rate Making" in Volume XI of the Proceedings. This method has been used with minor variations for the last four years and has produced rates which have proved to be satisfactory as a general rule. Recently there has been evident a growing restiveness as regards automobile manual rates. Several supervisory officials have rejected proposed rates for their states, presumably because they were not convinced of the propriety of the recommended change in manual rates. More recently there has appeared among the carriers a tendency for individual companies to act independently in the matter of introducing various modifications of the rates for individual risks. A brief consideration of the situation hints at a rather general lack of complete confidence on the part of the carriers in the published rates, for otherwise it would be impossible for a few independents to lead the field into a state of rating disorder such as has threatened in the past month or so.