Oct. 21 UPDATE: As of this update, the updated AAIS by-peril loss costs have been filed and approved in all but two states.
Updated loss costs are now being filed in most states for the AAIS Homeowners By-Peril Rating Plan (HOBP)
. To date, approvals have been received from five jurisdictions, and the loss costs are available for use in two more states where approval is not required. Additional approvals are pending.
Introduced in 2010, the HOBP was the first bureau plan available to insurers in most states for rating homeowners policies on the basis of individual perils.
Among other things, the plan provides loss costs for rating zones defined for each peril. Rating relativity factors for construction, protection, and numerous other variables are applied to loss costs for the appropriate peril, rather than to a composite loss cost.
The latest filing updates loss costs for the plan's five non-catastrophe perils--fire, non-cat wind, non-cat hail, liability and medical payments, and "other" (e.g., theft)--on the basis of pure premium analysis of data collected by AAIS for 2009 through 2013. (Due to the customary lag in statistical reporting, calendar-accident data for 2014 was not available when the revised loss costs were developed.)
Loss costs for the HOBP's five catastrophe perils--fire following earthquake, hurricane wind, tornado-hail, cat winter storm-wind, and cat winter storm-non-wind--were developed with the use of catastrophe models licensed from CoreLogic/EQECAT and RMS, two leading providers of catastrophe modelling applications.
In jurisdictions that do not allow the use of catastrophe modelling in residential property rating, a catastrophe load is added to loss costs developed from reported industry data.
The latest HOBP loss cost filings have a proposed effective date of Dec. 1, 2015.
For information on affiliating with AAIS for use of the HOBP, contact Rick Maka, director of marketing and strategic alliances, by email or by calling 630-457-3222.
AAIS Advisory notices are posted periodically to announce AAIS product developments, and to provide news items that are relevant to our program users. Advisory notices are news summaries that paraphrase documents which should be consulted directly for complete, authoritative information.