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Old 04-05-2018, 03:15 PM
Hubert Cumberdale Hubert Cumberdale is offline
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Default California Homeowners Territorial Ratemaking

Does anyone know if the CA DOI allows companies to create rating territories smaller than zip codes? I've looked at all the biggest companies in CA and don't see anything more granular than zip code.
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Old 04-05-2018, 04:27 PM
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Why not ask the CA DOI directly?

I'm guessing that if any of the large carriers do rate "smaller than ZIP code," it'll likely be fairly proprietary and won't have much info in the public view.
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Old 04-06-2018, 01:46 PM
Hubert Cumberdale Hubert Cumberdale is offline
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Sounds crazy enough to work!

Honestly I don't have to deal with filings or regulators usually, so I didn't even know that was an option.
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Old 04-10-2018, 03:22 PM
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Zip codes themselves are fairly arbitrary, as they are just based on what's convenient for a postal carrier to cover in terms of deliveries. they have nothing to do with topography and also get changed occasionally. So, I'd agree with asking the DOI. I'd think as long as you can clearly state the territories and then justify what differentiates those territories that isn't related to something they would consider discrimination, you'd probably be okay.
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Old 04-10-2018, 03:44 PM
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How would you calculate territories? By zip+4? If by street and house number you'd have to have very detailed databases, right? And your agents will probably have to enter complete information to accurately rate.

You could have incorrect rating bc an agent entered "Main street" instead of "Main road" or "Main Avenue". Also many places restart numbers on the same street when you cross town lines.

E.g. "main street" can be a continuous road for miles, but numbering could restart at each town line (at least it does here in some places on Long Island).
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Old 04-10-2018, 04:16 PM
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I've seen census blocks show up before. That wasn't CA though. So probably not helpful info.
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Old 04-10-2018, 04:34 PM
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Quote:
Originally Posted by llcooljabe View Post
How would you calculate territories? By zip+4? If by street and house number you'd have to have very detailed databases, right? And your agents will probably have to enter complete information to accurately rate.

You could have incorrect rating bc an agent entered "Main street" instead of "Main road" or "Main Avenue". Also many places restart numbers on the same street when you cross town lines.

E.g. "main street" can be a continuous road for miles, but numbering could restart at each town line (at least it does here in some places on Long Island).
my answer to that would be geospatial coordinates. I'd think someone wanting to get more sophisticated would do it by the actual coordinates, not just street address and then make sure on a map their "geospatial territories" are defined by something clear and don't cut through houses (so that you couldn't plot one corner of a property in one territory and another corner in another terr). I could see using geospatial along with a topographical map and a bunch of data recognition software to help with this. I'm pretty sure that's how some companies are creating "fire" scores for homes. I know our company has looked at purchasing software where you can find the "center of the house" as opposed to just the location on the street a house resides.

you'd still have issues with in accurate information, but I'd think a someone looking to do that would figure out a way to minimize that.
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Old 04-20-2018, 02:35 PM
Hubert Cumberdale Hubert Cumberdale is offline
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Quote:
Originally Posted by llcooljabe View Post
How would you calculate territories? By zip+4? If by street and house number you'd have to have very detailed databases, right? And your agents will probably have to enter complete information to accurately rate.

You could have incorrect rating bc an agent entered "Main street" instead of "Main road" or "Main Avenue". Also many places restart numbers on the same street when you cross town lines.

E.g. "main street" can be a continuous road for miles, but numbering could restart at each town line (at least it does here in some places on Long Island).
If I were to do this analysis, without regulatory restrictions, I would probably use census block group (CBG). A lot of companies are using CBGs in other states since they are much smaller than zips and don't change as frequently. A customer gives their address, and the policy system can determine coordinates and then map it to a territory (using an internal GIS I suppose). I think a vendor is needed to convert addresses to coordinates, which obviously adds cost and complexity.

It's true the agent could fat-finger the address and produce an inaccurate premium. The same is true for VINs right? A lot of web apps these days will lookup your address on the spot and correct you if it doesn't find a match, so I would hope ins companies can do something similar.

Modeling CBGs is surprisingly easy these days with help from software like Emblem/Classifier. You would need to acquire & model geo-demographic data from a vendor and then perform residual analysis using Classifier (or an internally built geo-spatial smoothing program). It's not cheap, but nearly all the large companies are using a similar process. And many small/medium sized companies are buying territory models from vendors like Verisk.

This is why I feel like there must be some regulatory restriction in CA preventing rating territories from being more granular.
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