In 2010, rating error reduced private passenger auto insurance industry premium revenue by $15.4 billion. The reduced revenue was essentially a multi-billion-dollar industry donation handed directly to policyholders — although no charitable tax deduction accompanied the effort.

The estimate is based on nationwide auto policy audits conducted by Quality Planning, a Verisk Analytics company that specializes in the validation of policyholder information. Premium rating error represents 9.36 percent of a total $164.10 billion in personal auto premium written. Without action, insurers will continue to lose billions more over the coming years — all due to premium leakage that could be stemmed if appropriate action were taken.

In this report, Quality Planning has aggregated and summarized audit results of roughly 5 million policies from multiple carriers. The data includes substandard to preferred books of business, all distribution channels, and national and regional carriers. State-level data is then weighted to reflect the total national private passenger auto line.

When odometer readings are used to estimate annual mileage and establish private passenger auto premiums, a key assumption is that future use of a vehicle will be similar to the vehicle’s usage in the last one or two years. Our analysis of odometer-based methodology to estimate annual miles indicates that using this process causes significant errors.

Americans lead a fast-paced, dynamic lifestyle. Stop for a moment and consider your life. How many times have you moved? How many cars have you owned? How many jobs have you had? You're not alone. The time has long passed when a person landed a job right after school and stayed with the same company throughout his or her career.

Garaging location is a critical rating variable in determining premiums for private passenger automobile insurance. The area where an insured lives affects not just claims for theft, vandalism, and damage from weather (hail, flood, etc.), but it also influences driving behavior.

In 2008, the private passenger auto insurance industry missed $15.9 billion in premiums because of rating errors. This estimate is based on nationwide premium audits conducted by Quality Planning, a Verisk Analytics company that specializes in the validation of policyholder information. Premium rating error represented 9.8% of the total $161.7 billion in personal auto premium written. Without action, insurers will continue to miss billions more over the coming years - a worrisome thought in today's uncertain economic times.

Many insurance companies are focusing on retention as a major tool to combat reductions in revenue. When policyholder retention is in the limelight, there is danger that risk management takes a back seat, resulting in deterioration in long-term financial performance.

In 2007, the private passenger auto insurance industry lost $16.1 billion because of premium rating error. This estimate is based on nationwide premium audits conducted by Quality Planning, an ISO company that specializes in the validation of policyholder information. Premium rating error represents 9.95% of the total $162 billion in personal auto premium written. Without action, insurers will continue to lose billions more over the coming years - a worrisome thought in today's uncertain economic times.

Quality Planning conducted phone interviews with drivers nationwide to determine how the sharp rise in gas prices might impact driver behavior, vehicle usage, vehicle preferences and vehicle mix at policyholder households. Based on these surveys, the firm concludes that a majority will drive less in the coming year, with the biggest planned cutback occurring in 'pleasure use'.

In 2006, the private passenger auto insurance industry lost $16.6 billion because of premium rating error. This represented 10 percent of the total $166 billion in personal auto premium written for the year. QPC predicts that similar percentage losses will manifest themselves in 2008 - and beyond.

In 2006, the Private Passenger Auto Insurance industry lost $16.6 billion due to premium rating error. This estimate is based on nationwide premium audits conducted by Quality Planning Corporation. Premium rating error represents 10% of a total $166 billion in personal auto premium written. Without action, insurers will continue to lose billions more over the coming years - all due to premium leakage that could be stemmed if appropriate action were taken.

Increasingly, insurance companies are losing contact with their policyholders. The use of the Internet and mass mailing has replaced the direct contact needed to build healthy customer relationships. From high turnover rates to adversarial relationships, there are hidden costs to this ever-increasing depersonalization. Quality Planning Corporation (QPC) understands the need for regular direct contact with policyholders to maintain a healthy relationship and assure the information on the policy is current. This direct contact has several benefits, from calculating the correct premium, to creating a trusting relationship, to increasing sales, and fostering safer driving habits.

By Daniel Finnegan, Ph.D. In 2005, the private passenger auto insurance industry lost $16.2 billion because of premium rating error. This estimate is based on nationwide premium audits conducted by Quality Planning Corporation during 2005. Premium rating error represents 9.9 percent of a total $163 billion in personal auto written premium.

By Daniel Finnegan, Ph.D. The U.S. insurance industry lost more than $16 billion in 2004 due to premium rating error. For the first time, vehicle rating factors surpassed driver factors as the biggest offenders.

By Daniel Finnegan, PhD., Quality Planning and Christopher Sirota, CPCU. Vehicle data recorders and telematics are not a future possibility, but currently available technologies. As costs decrease, many industries, including insurance, are taking a second look at utilizing these devices to improve services, and to develop innovative solutions. Auto insurers need to be aware of what is possible now and in the near future. This paper presents a brief overview of available devices, and their potential future in insurance.

by Daniel Finnegan,Ph.D., Quality Planning, 2002. This report presents the results of premium audit reviews of over 12 million private passenger auto policies from 10 carriers. We estimate that the industry is losing $13 billion in premium annually due to rating error. The report summarizes audit methods, breaks down loss estimates by rating factors and examines available solutions

by Daniel Finnegan, Ph.D., and Sean Moffat, Quality Planning, 2000. A complete copy of the controversial study which was prominently featured in National Underwriter, Best's Week and other industry publications. Finnegan and Moffat find that the Internet has the potential to produce mass adverse selection in the auto insurance market.

by Daniel Finnegan, Ph.D., and Sean Moffat, Quality Planning, 2000. Follow-up report to Auto Insurance Pricing Crisis takes a closer look at consumer shopping behavior and the web in auto insurance.

by Daniel Finnegan, Ph.D., Quality Planning 2000. A complete version of a report published in Underwriting Trends, January 2000.

by Daniel Finnegan, Ph.D., and Joan Marsh, Quality Planning 1997. Survey of fraud control technologies reported in Claims, April 1998 as "Link Analysis: From Blackboard to Mother Board."

by Daniel Finnegan, Ph.D., with Gail Simpson, Quality Planning 1992. Originally published as "Winning the Fraud Game" in Best's Review, April and May 1992, this report has been widely reprinted and used for adjuster training by over 50 insurance companies.