Description: The personal auto insurance industry is constantly changing. There are small and steady changes over time (e.g., inflation affecting the cost of repairs or general progress in the safety of vehicles) and sharp spikes (e.g., disasters and legislation). That change has never been more apparent with the Covid-19 pandemic, civil unrest, and driverless cars all presently having a significant impact on personal auto insurance.

Description: Reserving and ratemaking calculations are vital to how insurance companies perform financially. Current-day practices for predicting future loss ratio or pure premiums for reserving and ratemaking rates are not based on low prediction errors—mean squared error (MSE) criterion. This report provides mathematically optimal weights that lead to minimum MSE prediction errors, and the formulas are validated using retro-testing with real-world datasets. In this report, two main theorems are discussed, each addressing prediction of future loss ratio or pure premium and improving upon current practices for how rates and reserves are calculated.

Description: Bodily injury coverage pays for injuries and lost work time caused to another person while the insured person is operating a vehicle whether or not the injured person(s) are in a vehicle

Description: Property damage (PD) liability coverage in most states pays to repair damage caused to another driver’s vehicle or property in the case of an accident where the insured is at fault.