My guess is that lower gas prices along with an improved economy are increasing exposure without corresponding pricing adjustments. Auto insurers benefited from the recession followed by higher oil prices a few years ago. The challenge with some modeling algorithms is that they may not have enough specific data to go back 10 to 15 years to account for changes in economic cycles.
Smart phones have been around for years now. The problem is more cars on the road, so people who have always text and driven now have less response time, which is leading to more accidents. It’s a combination of both, not just one or the other.
The young man texting and driving in Texas killing 13 senior citizens in a van was weaving all over the road prior to the accident. He obviously couldn’t handle it. He did apologize, but it was a bit too late.
Eddie, I totally agree-if Credit Scoring was to bring on such improvement why is the LR and rates to equal profitable. Because the technology in cars is very expensive and if a uni body the car can not be fixed – automatically totaled. So we really need to revamp the algorithms and look at everything to keep up with the costs-bad credit means you fell on bad times and can’t afford the horrible high price for insurance – doesn’t tell me that a claim will be put in more often. Besides there are no more small claim payments
State Farm modelers didn’t get their algorithms right and had a $7 Billion loss on Personal Auto.
We live in Phoenix and our policy increased 20%, it’s a joke. We are switching immediately to another provider.
My guess is that lower gas prices along with an improved economy are increasing exposure without corresponding pricing adjustments. Auto insurers benefited from the recession followed by higher oil prices a few years ago. The challenge with some modeling algorithms is that they may not have enough specific data to go back 10 to 15 years to account for changes in economic cycles.
The agorithms also don’t account for cell addicted drivers who talk and text at the same time.
Smart phones have been around for years now. The problem is more cars on the road, so people who have always text and driven now have less response time, which is leading to more accidents. It’s a combination of both, not just one or the other.
The young man texting and driving in Texas killing 13 senior citizens in a van was weaving all over the road prior to the accident. He obviously couldn’t handle it. He did apologize, but it was a bit too late.
I don’t understand. Credit scoring is supposed to be an accurate predictor of who will have a claim and who won’t.
Eddie, I totally agree-if Credit Scoring was to bring on such improvement why is the LR and rates to equal profitable. Because the technology in cars is very expensive and if a uni body the car can not be fixed – automatically totaled. So we really need to revamp the algorithms and look at everything to keep up with the costs-bad credit means you fell on bad times and can’t afford the horrible high price for insurance – doesn’t tell me that a claim will be put in more often. Besides there are no more small claim payments