Rate Adequacy Presentation Recap
At the WRC 2021 All Manager Meeting, General Manager of Laclede Mutual Scott Kelley and WRC Vice President of Mutual Assistance Greg Gonnering presented on rate reviews and adequacy, and examined various rate studies managers could consider for their mutuals.
Scott and Greg reviewed the reasons to consider a rate study, including more severe weather patterns, increased costs in construction and higher expectations of your policyholders. Along with these factors, the cost of running your mutual has greatly increased, with higher expenses in almost all areas, especially software and claims costs.
Scott reviewed how he conducts yearly rate studies. He uses three to five years of financial data to see what an average year looks like. Then, he begins by entering premiums minus various expenses to determine underwriting gain/losses. This is followed by factoring in investments and other service fees to find the net income/loss. Then he breaks everything down by line of business. This process helps him determine which lines of business are profitable and which need further review.
Scott wrapped up his presentation by providing information on other areas mutuals could look at to improve to include deductible shifts, policy and claim surcharges, along with reviews on claims and loss control.
The rate studies shown during the presentation is available by logging into the WRC website and then going to Documents > Operation Assistance > All Manager Meeting Materials > 2021 All Manager Meeting. If you would like to discuss additional rate studies or have any questions on how to complete one, please feel free contact Greg.