White Paper

How Advanced Vehicle Scoring Models Are Transforming Commercial Auto Insurance Pricing

With commercial auto losses still mounting, actuaries are tapping big datasets and refined scoring to enhance risk assessment and pricing.
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White Paper Summary

The commercial auto insurance market has faced persistent challenges in recent years, with rising claim costs and evolving vehicle technology creating pricing uncertainty. According to industry data, commercial auto combined ratios have exceeded 100 percent for multiple consecutive years, highlighting the need for more sophisticated risk assessment tools. Now, actuaries are evolving advanced vehicle scoring models that analyze hundreds of data points to help insurers better understand and price the specific risks associated with individual vehicles.

“The vehicle symbol is a summary variable that tells you about the vehicle characteristics. It represents what we know about a car based solely on how it’s built,” said Gary Wang, Senior Consulting Actuary at Pinnacle Actuarial Resources. “It indicates how risky this car is when it’s out on the road.”

“VBS stands for vehicle build score, which can be thought of as a model for vehicle characteristics,” Wang explained. “This tool’s greatest values are completeness and accuracy. It allows insurers to better understand the specific characteristics of the vehicles they are insuring.”

 

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