Misinformation Leads to Auto Premium Leakage of $29B Per Year
Claims Journal, March 2017
Verisk Analytics estimates that personal lines automobile insurers face at least a $29 billion annual problem from premium leakage—omitted or misstated underwriting information that leads to inaccurate rates.
According to the Verisk report, sources of personal auto premium leakage in 2016 include:
unrecognized drivers – $10.3B
underestimated mileage – $5.4B
violations/accidents – $3.4B
garaging – $2.9B
identity exceptions – $2.8B
other – $4.1B
The data analytics company estimates this type leakage amounts to 14 percent of premium.
At the same time, insurers are contending with tightening margins on the one hand and competitive pressure to grow market share and boost retention on the other.
