Do you have the right tools to assess the non-standard auto market?

January 4, 2023 / 2 min read

In the insurance world, many underwriters will focus on the so-called “nonstandard auto” market. What that means depends on who you ask, but no matter what characteristics an insurer uses to distinguish these nonstandard risks, this segment of the overall auto market often exhibits underwriting results that do not closely track with other books of business. Drivers who select the minimum coverage limits or who have coverage lapses or no prior coverage might fall into this category, and they can get auto insurance from major insurance companies or from more specialized companies that focus on these kinds of risks.

But for insurers that focus on this specific market segment, which represents 40% of the industry's new business and 20% of existing premiums for personal auto insurance, sometimes the standard data on auto insurance just doesn’t paint a full picture of what’s going on.^{1 2} Insurers rely on understanding how exposure and loss are behaving so they can make good underwriting and rating decisions, and without precise, accurate data, it’s hard for them to fully pinpoint what is happening in this specialized market.

Nonstandard auto article

For insurers that focus on this specific market segment, which represents 40% of the industry's new business, sometimes the standard data on auto insurance just doesn’t paint a full picture of what’s going on.

That means there’s a serious need for actuarial insights focused specifically on this highly competitive specialty market. For example, a recent Verisk analysis of our data in this area indicated increases in liability frequency for nonstandard auto in excess of 70%, which translated into pure premium increases of about 20%. ³

How Verisk can help with your nonstandard auto needs

To help meet insurer needs, Verisk created a quarterly circular focused on the unique challenges of the nonstandard auto market, using data from one of the most extensive databases of driver data in the industry.⁴ Whether that’s a 17-year-old who just got his license, someone driving a car with a salvage title, or a driver without their own car who might need a nonowner’s insurance policy, our analysis includes nonstandard auto policies of all kinds.

In addition to the hundreds of circulars annually created by Verisk’s Actuarial and Data Insights team, this new quarterly circular will help insurers home in on what is going on in this segment of the market. This new tool is designed to help insurers identify the various risks presented by the drivers they’re insuring—as well as more closely examine their frequency, severity or pure premium.

Make the most of Verisk’s auto market data by accessing this circular, available January 2023.

For more information about this new product, reach out to Menachem Eisner at menachem.eisner@verisk.com.

Verisk, “Verisk Specialty Auto Solutions" < https://www.verisk.com/insurance/capabilities/underwriting/personal-auto/nonstandard-auto/ >, accessed on December 23, 2022.
John Egan, Amy Danise, “What Is Nonstandard Auto Insurance?” Forbes, January 25, 2022, < https://www.forbes.com/advisor/car-insurance/nonstandard-auto-insurance/ >, accessed on December 23, 2022.
John Egan, Amy Danise, “What Is Nonstandard Auto Insurance?” Forbes, January 25, 2022, < https://www.forbes.com/advisor/car-insurance/nonstandard-auto-insurance/ >, accessed on December 23, 2022.
Verisk, “Actuarial and Strategic Insights" < https://www.verisk.com/insurance/capabilities/underwriting/personal-auto/nonstandard-auto/actuarial-and-strategic-insights/ >, accessed on December 23, 2022.

Do you have the right tools to assess the nonstandard auto market?

For insurers that focus on this specific market segment, which represents 40% of the industry's new business, sometimes the standard data on auto insurance just doesn’t paint a full picture of what’s going on.

How Verisk can help with your nonstandard auto needs