General Insurance - company expanding to commercial lines

This is not an exam related question rather a real-life scenario which i was hoping to get peoples feedback on.

Consider a general insurer specialising in van and private car insurance in the UK. The company is a multinational insurer and would like to break into the commercial sector of the market and write commercial fleet insurance. The company has no historic data with which to model the claims experience of fleets but is eager to write business in this area as there is a gap in the market.

The company is hiring a commercial pricing actuary to oversee the pricing of the new commercial fleet product.

How would the actuary go about rating this product without any claims data?

I know for the larger fleets a credibility approach would be used taking into account the experience of the fleet and the experience of the book. But without any book rates this is not possible.

 

Well, you already have data (presumably) for commercial cover and can rate it by factors that would be measurable on a fleet level. My suspicion is that ratings will predict a fleet's experience relatively well.

In my experience (on the buying end, not the insurer end!) most large fleet covers operate almost like surplus covers as they have very high excesses in comparison to individual covers. I worked in a hire department for two years and in that time we had two claims that actually paid anything (though many more that the insurer managed), both total writeoffs.

On data, how is business placed? If it goes through brokers, they would probably help you out with data. You could also approach larger fleets directly.

 

Find who's already offering these insurances and figure out by using their online quote forms what they're charging and maybe infer how they do it