Getting more Profit out of your rating plan!

How can I get more rate?” This is a question we hear over and over again from auto insurance executives. As the competitive pressures continue to increase most carriers are struggling with the same question.

Our analysis on a multitude of policies has revealed many interesting statistics. For instance……

Starting with some Policy and Primary Named Insured statistics:

  • 9%+ of Policy / Primary Named Insured’s have material deficiencies that effect the rating of the policy.
    • 6% of policies have policy address irregularities that result in the under rating of policies.
      • 2% of policies have invalid / un-mail able addresses.
      • An additional 3.7% of policies have zip codes that either do not map to the address provided or are zip codes that have no population statistics (generally reserved for large businesses and / or other institutions).
      • 4% of policies have a commercial address.
    • 0.31% of Social Security numbers are of deceased persons.
    • 0.62% of Social Security numbers are invalid (non-issued ranges and / or “packed” with single digits or consecutive digits to overcome policy admin system edits.
    • 5% or primary named insured’s date of birth (age) blank or outside of reasonable parameters (under 16 or over 100)
    • 5% of telephone numbers are invalid or do not have valid area code / exchange combinations.
    • 5% of policies have a blank or invalid marital status and / or gender designation.
  • 8% of driver’s have material defects that materially affect the rating of a policy.
    • 6% of driver’s have blank or invalid driver’s licenses.  This includes the misuse of international driver’s license designations.
    • 1% of driver’s have blank or invalid dates of birth.
    • 1% of driver’s have blank or invalid gender designations.
  • 10%+ of vehicles have material defects that materially affect the accurate rating of a policy.
    • 1% of insured vehicles are unregistered or have lapsed registrations.
    • 2% of insured vehicles have commercial registrations.
    • 5% of insured vehicles have branded titles (excluding beyond mechanical limits).
    • 4% of insured vehicles are registered in states OTHER than the policy / risk state.

You think you know your business, but in many cases in reality you really don’t.

Knowing how to analyze a policy book correctly to identify profit opportunities requires studying thousands of policies from all types of auto writers. Whether the carrier is a standard / preferred or non-standard, and their distribution channel is captive / career agents, independent agents, direct to consumer or comparative rater they all provide insight and strategies for increasing profit at the policy, driver and vehicle level. Opportunities can be found at quote, bind, claim and renewal! Knowing the questions to ask and the 3ard party data to use to enable your quest for more profit also requires extensive experience. Before you say, “that could never happen with our system”, don’t kid yourself. It can and it does!

The acquisition landscape has become so competitive that carrier’s write policies KNOWING that they may not have all of the necessary information to adequately rate the policy. Their intent is to follow up to capture the missing data, but they never get to it.

The positive news is there is a cost effective pain free way for a carrier to identify where the leaks in the dam are and provide the understanding and a roadmap to capitalize on improving profit.

Knowledge is a powerful enabler!

Most of you know of the watermelon salesman who was selling his watermelons for $.30 less than it cost him to grow and deliver them. Sales were so good he decided “I need a bigger truck”.

Taking a step back from the hectic pace companies are faced with and developing a solid approach to profitable operations is vital for increasing competitiveness. Top tier, mid-tier, super regional, or small carriers all are faced with the pressure of increasing their policy book. The solution is not a bigger truck. It is a smarter operator!

“A word to the wise is sufficient”.

Solving this problem together.

While we believe our analysis has proven to show direct ways to improve profitability we are most interested in your thoughts and comments and experiences with your company. Our success in helping carriers come from efficient collaboration. Your opinion on this topic matters and we want you to help us develop an industry conversation that may help everyone.  Let us hear from you!

PALLC possesses comprehensive and proven analytical capabilities to assess the data quality and accuracy in a carrier’s PIF book to identify profit improvement opportunities. From such analytical results model solutions may be offered for operational and profitability improvement. For more information or to set up and introductory call contact us at or Tom Edwards at

Predictive Analytics, LLC (PALLC) is dedicated to the study and modeling of consumer behavior directly related to improving P&C carrier’s profitability. Derived from more than sixty carrier interviews PALLC will provide, in a series called “What we’ve heard”, important concerns of the industry. Since there are significant difference between Standard Preferred and Non-Standard, whenever possible, we will provide detail as to the type, size, regional or national, direct/independent channel, exclusive agent channel or highly used comparative rater channel.