Novelties in Swedish Automobile Insurance Rating

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On March 10th, 1961, the majority of the Swedish Automobile Insurance Companies introduced a remarkable novelty in automobile insurance rating, a rating plan for private passenger cars partly based on a recent statistical investigation of the variation of risk with some characteristics of the driver and the vehicle. These characteristics had not until then been used for classification purposes, nor had they been studied in our current experience.For a long time the Swedish rating plan has classified private passenger cars by geographical district (3), merit class or „bonus class” (7) and (for Auto Physical Damage only) horsepowers (8). Teetotallers enjoy a special discount of 20%.In spite of this rather far-going subdivision, founded on an elaborate statistical experience it was quite obvious that some important element was missing, as different companies operating in the same market showed significantly deviating underwriting experience. The tariff association „Svenska Bilförsäkringsföreningen” (SBF) and some other independent companies agreed to make a special investigation to find the cause of this adversity. A small committee was appointed to handle the question. From the start it was clear that some kind of inquiry had to be made among the policy holders of the participating companies. The information we needed was if and how different attributes such as sex, age, marital status, occupation, use of the car, annual mileage etc. influenced the risk. To inquire all of our private passenger carowners would have been too costly so we had to choose between a random sample and some other kind of limitation.