PUB Automobile Insurance Order A.I. 31 (2000-2001)

A.I. 31 (2000-2001)

IN THE MATTER OF THE AUTOMOBILE

INSURANCE ACT, CHAPTER A - 22,

R.S.N. 1990

AND

IN THE MATTER OF AN APPLICATION BY

PriceWaterhouseCoopers

on behalf of

The Coseco Insurance Company

TO IMPLEMENT REVISED RATES FOR ITS

PRIVATE PASSENGER CLASS OF BUSINESS.

WHEREAS, by application dated November 2000 and received December 4, 2000, PricewaterhouseCoopers on behalf of The Coseco Insurance Company applied to the Board for approval to implement a revised rating program for its Private Passenger class of business, and

WHEREAS, upon preliminary review, it was determined that a number of the proposed or adjusted proposed base rates did not conform with the 2001 benchmark rate ranges of acceptable rates, and

WHEREAS, the application was forwarded to the Board’s Actuarial Consultants for review and report as to the adequacy of those rates not in accordance with the 2001 benchmark rate ranges, and

WHEREAS, on February 8, 2001, the Board’s Actuarial Consultants issued their report with respect to the adequacy of the rates as submitted in the filing, and

WHEREAS, the report of the Actuarial Consultants highlight the following as issues:

1. The appropriateness of utilizing a -20.5% underwriting profit margin for third party liability.

2. The appropriateness of utilizing an 8.24% return on investment.

3. The appropriateness of utilizing a 5.0% return on equity,

and

WHEREAS the Actuarial Consultants conclude that the filing is reasonably supported by the actuarial analysis, provided the Board finds the assumptions made in relation to underwriting profit margin, return on investment, and return on income to be reasonable, and

WHEREAS a review by the Board’s Actuarial Consultants of similar assumptions made by other companies making similar filings indicated the assumptions made by The Coseco Insurance Company not to be reasonably supported, and

WHEREAS, the Board has reviewed all information before it.

IT IS THEREFORE ORDERED THAT:

1. The application of The Coseco Insurance Company for a revised private-passenger automobile insurance rating program to be effective April 1, 2001 for new business and June 1, 2001 for renewals be and it is hereby denied.

2. The Coseco Insurance Company shall continue to utilize the automobile insurance rating program approved for use by this Board Order in A.I. 34 (1998-99) issued by the Board on October 29, 1998 until June 1, 2001 for new business and July 1, 2001 for renewals.

3. Effective for new business written on and after June 1, 2001 and renewals written on and after July 1, 2001, The Coseco Insurance Company shall implement a revised private passenger rating program utilizing the following base rates:

	Territory 1	Territory 2	Territory 3
Third Party Liability	$ 852	$ 512	$ 371
Collision	250	305	310
Comprehensive	152	122	145
Specified Perils	49	29	26
Accident Benefits	85	71	71
Uninsured Motorist	19	10	7

The Coseco Insurance Company shall use the differentials as submitted with their November 2000 rate filing with the above base rates to develop their June 1, 2001/July 1, 2001 rate pages.

4. The following discounts are approved for use in accordance with the eligibility criteria set out in the company’s underwriting manual:

i.	multi vehicle	10%	third party liability classes 01, 02, 03 and 07
ii.	anti-starter/anti-theft	15%	comprehensive and specified perils
iii.	claims-free	15%	third party liability, collision, comprehensive and specified perils classes 01, 02, 03, 07, 12, 13, and 19
iv.	age	10%	third party liability, collision, comprehensive and specified perils, and accident benefits
v.	package	10%	third party liability, collision, comprehensive and specified perils, and accident benefits classes 01, 02, 03 and 07 driving records 5, 6, 7, 8