Personal Auto Insurance: How Premiums Are Determined

Overview

 What should it cost a motorist to buy auto insurance? That may sound like a simple question but the answer is anything but simple. Insurance pricing is based on numerous factors, and insurers use a variety of rating principles. This creates healthy competition, but can also result in very different premiums for the same coverage.

This course examines the principles behind auto insurance rating, reviews the factors insurers commonly consider when pricing auto insurance for an individual or a family, and discusses the reasoning behind those factors. This course does not go into the mechanics of rate calculation or the weighting given to various rating factors; these vary by insurer and often include proprietary information or formulas.

Learning Objectives

Upon completion, students will be able to:

  • Identify reasons for the use of class rating in pricing personal auto insurance
  • Recognize factors affecting the type and number of rating classifications an insurer might use
  • Identify rating factors commonly used in rating personal auto insurance and recognize the rationale behind each factor
  • Recognize the innovative rating approaches emerging from the introduction of usage-based insurance and telematics

Designed For

Licensed P/C Insurance Producers

International Risk Management Institute, Inc. (IRMI) is the premier provider of risk and insurance continuing education and reference publications, and is considered the ultimate authority by leading insurance practitioners. Written by industry experts, IRMI courses provide the most up-to-date, practical and reliable information possible.
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