I consider it as the number of vehicles at risk in terms of years for the cohort. I could have partial years for example half a vehicle year from one policy if it's at risk for half of that year and I'd sum up all of these over the portfolio I have. This gives me an idea of the total amount of risk I have in my portfolio in total.
Thanks! I can see how this is a suitable measure of exposure for motor fleet policy (as it covers many vehicles). But is it appropriate to be an exposure measure for individual motor insurance (in this case, vehicle year is mostly always 1?)?
Yes it is also used for private motor insurance as well. See page 12 of chapter 3. As you say for most policies it will be 1, but then you add up the exposure measures across all of the policies in your portfolio to get a measure of your total amount of risk. Policies that are less / more than annual in duration will contribute different amounts other than 1 to this total.
