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How to do a better job with Comprehensive deductible relativities

When it comes to pricing for personal auto, there are a lot of things insurers can choose to assess. But could insurers be doing a better job with deductible relativities? Given how many kinds of losses there are in Comprehensive coverage, from fire to lightning to animal collision, perhaps it’s time for insurers to think about a more innovative approach to deductible relativities.

Actuarial Research

Across thousands of policies, applying small changes to rating factors can cause a ripple effect for insurer profitability.

Right now, each state has its own table of deductible relativities that do not include any other kinds of rating segmentation, but is one set of rating factors enough? In a study conducted as part of our actuarial research series, our team looked at the individual types of loss to confirm that the Comprehensive loss experience is different in different parts of the state. Instead of looking at these relativities by state, we assessed our territories and classified them as rural versus non-rural; areas with a big city versus areas without one; and coastal versus inland.

Our findings suggest insurers could improve their underwriting accuracy if they didn’t just give entire states the same set of factors when underwriting. For example, animal collision is more likely to happen in rural areas than urban areas, and wind and water losses tend to happen more on the coast than they do inland, while theft is more frequent in cities than it is in rural areas.

We found that higher theft risk is especially prevalent in Georgia and New York, where frequency is more than twice as high when compared against the statewide average. Given this, should someone with a car in upstate New York be underwritten as equivalent to someone with a car in New York City?

Across thousands of policies, applying small changes to rating factors can cause a ripple effect for insurer profitability. That’s why we’re always thinking about how we can help you underwrite with precision and accuracy.

How Verisk can help

We know that implementing changes to insurance programs can be expensive and time-consuming. Our actuarial research series is dedicated to exploring potential future changes, and while insurers with innovative appetites might do something with this research, our main goal is to inspire customer feedback on if you’d like this research to be incorporated into future program updates.

What would you like us to look into next? Reach out to Raul Retian at

Raul Retian

Raul Retian is senior director of ISO Personal Lines Core Products. He can be reached at

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