Category Actuarial / Analytics

Feb
17
2016

Beyond the New Normal: Could the Surplus Lines Market Be Heading for a 10% Market Share?

A few years ago, I posed the question of whether the nonadmitted market had reached a “new normal” in terms of market share, or whether it was destined to retreat to its historic norms. To date, there has been little sign of retreat. According to A.M. Best’s annual survey of the market, surplus lines market share edged up to 7.1% in 2014. With the previous hard market peak a decade past, the market’s resilience suggests that maybe, instead of fretting about retreat, we should be considering a different question: Could the surplus lines market be heading even higher? In this post, I’ll cover three ongoing trends that could propel the market beyond a 10% share: 1) declining interest rates, 2) big data, and 3) catastrophe risk.

Jun
2
2015

Predictive Analytics and Surplus Lines: Freedom of Rate but Not Free of Unfair Discrimination

Harold Weston – Similar risks should be priced similarly, and relevant distinctions based on actuarially relevant factors should be captured in the rate. Predictive analytics in insurance will allow ever more precise design of insurance products, selection of insureds and product targeting, and price for the risk exposure. However, the proliferation of “big data” that […]

Oct
14
2014

Revolutionary Times in Auto Insurance Pricing

Marty Ellingsworth – For years, auto insurers have used crude miles driven classification schemes in their premium calculations. The logic of crude schemes presumably lay in the difficulties of verification: Carriers didn’t want to spend money on audits and could not fully trust self-reports. This situation is in the process of changing drastically. Technological change […]

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