PURE has a limit of $5M unless you go through an underwriting process that goes to some sort of underwriting board for approval, and the cost per million goes up.Not actual data, but an indication that insurance companies do not have a hard guideline either.https://riskandinsurance.com/actuaries- ... certainty/While there has always been a great deal of uncertainty when determining actuarial rates or pricing insurance, “it seems that uncertainty has switched to a higher gear,” said Anthony Cappelletti, staff fellow at the Society of Actuaries.
“There are many factors that are now contributing to this increased uncertainty. Liability uncertainty isn’t a new discipline, but topics like social inflation and supply chain issues bring the topic to the forefront, expanding what actuaries and underwriters need to be aware of and [demanding] continued collaboration between the professions.”
Noting that “both underwriters and actuaries look at historical data and prefer to have enough data to make informed decisions,” Cappelletti stressed that “great care needs to be taken when adjusting historical data to current levels — for example, severity trend, coverages being added or subtracted, and changing external forces — to ensure that it is appropriate for the current circumstances.”
The entire article concerns how difficult it is to predict the risks.
This page from PURE lists $5 million payouts under umbrella policies. It does not say how common they are, for all we know, they may have been the only $5M settlements PURE had under this coverage. But apparently they did happen. So clearly the cases do not ALL settle for $1M. One could wonder whether $1M would have been accepted if that were the policy limit. No way to prove a counterfactual.
https://www.pureinsurance.com/coverage- ... -liability
This is a paper about pricing liability coverage for municipalities, not individuals. Again, limited in data, but it illustrates the role of loss data in determining risks and hence premiums. It does not appear to use handy rules of thumb.
https://www.casact.org/sites/default/fi ... 4wf355.pdf
The cost for $5m is under $1K per year, so they probably issue a lot of these policies (incremental cost from $1M to $5M is small, and then gets large above this), and plaintiff lawyers probably know this, and it seems PURE is eager to sell this amount.
Statistics: Posted by skeptical — Sat Jul 20, 2024 6:35 am — Replies 88 — Views 9729