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-   -   pay per mile program (http://www.actuarialoutpost.com/actuarial_discussion_forum/showthread.php?t=328654)

californiakrazy 12-11-2017 09:25 AM

pay per mile program
 
Does your company have a pay per mile program for personal auto? what is it like? I am new and trying to figure out questions for a director wanting to discuss this product. if this is something you carry, is it allowed at your state? why or why not?

Vorian Atreides 12-11-2017 11:45 AM

Good luck getting responses about a concept whose implementation is likely to be viewed as highly-proprietary information.

Most companies that have rating that utilizes telematics data will likely have some degree of "rating per mile" type aspect . . . but it will very likely not be as linear as a straight-forward "pay per mile" program.

You might look at industry literature on the use of telematics for some insights (the CAS has a few on the topic).

You might also consider if a strict linear relationship is going to be supported by data. For example, for lower mileage risks, the relationship might be linear (or close enough for rating); but you might get to a point where the increase in risk is diminished with an increase in mileage because the driver/policyholder has "great familiarity" with the roads and traffic patterns.

californiakrazy 12-12-2017 09:32 AM

Quote:

Originally Posted by Vorian Atreides (Post 9185905)
Good luck getting responses about a concept whose implementation is likely to be viewed as highly-proprietary information.

Most companies that have rating that utilizes telematics data will likely have some degree of "rating per mile" type aspect . . . but it will very likely not be as linear as a straight-forward "pay per mile" program.

You might look at industry literature on the use of telematics for some insights (the CAS has a few on the topic).

You might also consider if a strict linear relationship is going to be supported by data. For example, for lower mileage risks, the relationship might be linear (or close enough for rating); but you might get to a point where the increase in risk is diminished with an increase in mileage because the driver/policyholder has "great familiarity" with the roads and traffic patterns.

Thank you, this was helpful, any resources you (or anyone) can point me to is a great help.

ActSciMan 12-12-2017 11:42 PM

Look at the Exam 6 syllabus. There is a paper on usage-based insurance. If you want to learn, read it.

v10 12-14-2017 12:12 PM

Metromile is pretty close to a legit pay-per-mile program. There is a relatively small fixed premium and the rest is exactly proportional to the miles driven. I assume they have to have a rate filing out there you could learn something from.


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