This research explores premium disparities which are customary in the pricing of automobile insurance coverages. The process of pricing individual coverages to a given driver class is examined using data from the State of Florida and the Insurance Services Organization. / Pure premiums (losses per exposure unit) are used to compute relativity factors (pure premiums of each driver class relative to the pure premium of a base class of drivers) which indicate the actual premium needed for that coverage to produce a sufficient premium volume to cover its losses. Relativity factors are derived for various driver classes on individual automobile coverages to determine whether rate equity is achieved when applying a common relativity to all of the coverages which a driver purchases. / Significant differences are found to exist between average relativity factors across coverages for most drive classes, especially youthful drivers and drivers over age 65. Therefore, the application of a common relativity factor to each of the coverages that these and other drivers purchase will result in under- or over-pricing of individual coverages. This practice is particularly inequitable when drivers do not buy the entire package of coverages but only purchase selective coverages. / Simulation procedures are used on sample base rates to show the differences in premiums which result when a common relativity factor is applied across coverages rather than exact (coverage-specific) relativity factors. When all coverages are purchased, the total package is adequately priced and sufficient premium is generated to cover losses. When only specific coverages are purchased, some drivers such as youthful males may be overcharged for PIP and comprehensive, and under-charged for liability and collision coverages. Techniques are explained for alleviating these pricing inequities while simultaneously generating adequate premium volume. / Source: Dissertation Abstracts International, Volume: 54-02, Section: A, page: 0579. / Major Professor: Richard Corbett. / Thesis (Ph.D.)--The Florida State University, 1993.
| Identifer | oai:union.ndltd.org:fsu.edu/oai:fsu.digital.flvc.org:fsu_76858 |
| Contributors | Norman, Emily J., Florida State University |
| Source Sets | Florida State University |
| Language | English |
| Detected Language | English |
| Type | Text |
| Format | 173 p. |
| Rights | On campus use only. |
| Relation | Dissertation Abstracts International |
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