EMB Introduces New Approach for Developing Vehicle Symbols

EMB, a global property and casualty (P&C) consulting firm, has developed a new technique for insurers to build proprietary vehicle symbol definitions based on their own loss experience from personal automobile policies.

Vehicle symbols are an aggregate categorization of vehicle, policy and operator characteristics - a commonly used tool that helps insurers determine personal automobile insurance rates. Traditionally, most insurers have relied on third-party vendors to provide vehicle symbol assignments.

The new, cutting-edge EMB innovation allows insurers to build their own vehicle symbol definitions by combining loss experience history and external vehicle data with a sophisticated dimensional "smoothing" routine to estimate the expected loss costs for each make and model. By using the technique, insurers can now group vehicles into a more predictive and refined set of vehicle symbols.

"EMB's methodology develops highly credible and segmented symbol definitions. This method produces a significant reduction in subsidization and cost to the insurer, and adds a reliable layer of predictability for loss exposures," said Serhat Guven, senior consultant for EMB in North America.

The new technique has been tested in the U.S. and Canada, and research has shown a significantly higher level of predictability insurers used the EMB approach versus commonly used symbols developed by a third-party vendor. "It's all about producing accurate rates. In one particular case, when an insurer implemented the EMB technique, it was able to reduce its average subsidy by nearly 50 percent," Guven added.

An EMB University WebEx session on the new vehicle symbol innovation can be heard at: https://embamerica.webex.com/embamerica/lsr.php?AT=pb&SP=TC&rID=40988077&act=pb&rKey=0c1b9f18de16946b Additionally, a white paper on the topic can be accessed at: http://www.emb.com/us/pricing/vehicle-symbols.php About EMB EMB (www.emb.com) is a leading international consulting firm specializing in property and casualty (P&C) insurance. Its services cover personal insurance, commercial insurance, and reinsurance. EMB offers C-Counsel Business Consulting, Actuarial Consulting, Professional Development, and Marketing Sciences.

Additionally, EMB pioneered the development and use of high-performance actuarial software, which allows businesses to perform tasks that would otherwise be impossible, impractical or hugely time-consuming.

EMB employs more than 300 people around the globe covering North and South America, Asia-Pacific, Europe, the Middle East, and Africa. Our clients include 28 of the top 30 P&C companies in the world.