Personal lines motor new business premium update
Over the past few years, the insurance industry has been faced with one challenge after the
other. During this time, we’ve faced the effect of COVID-19, changing weather patterns in
general, the devastating KwaZulu Natal floods, high vehicle parts inflation, an increase in vehicle
thefts and unprecedented levels of loadshedding.
During this time, Xenturion has continued to support our brokers and policyholders as best we can.
We’ve provided premium relief and continued to see how we can keep premium increases to a
minimum, even though claims have been on the rise.
In light of these pressures, we’ve reviewed our risk pricing models to ensure that the business we write is sustainable. Our modelling approach sets the premium in relation to the risk we are covering, taking into account all relevant factors of the policyholder, regular driver and the item we are insuring.
Through this approach we aim to differentiate between risk profiles, ensuring that
we charge the correct premium for the risk we are facing whilst considering competition.
As such, our focus is to attract better risks through lower premiums, but at the same time to charge higher premiums for poorer risks.
We use numerous rating factors – all being important, but to make sure the new rates are competitive, we would like to highlight two factors:
Period of previously uninterrupted insurance cover:
a. In a previous model release we moved away from using no-claim bonus groups (NCB) –
also referred to as the claim-free group (CFG) or no-claim discount (NCD). Instead, we
use a combination of a client’s previous uninterrupted insurance cover and their claims
b. We notice that brokers sometimes still use NCB to populate this field. Please ensure that
the actual number of years of insurance cover is used – this will have a positive effect on
clients with a longer insurance history.
c. Remember that if a client is currently not comprehensively insured, then the answer to
this question is zero, even if they had insurance several months or years ago.
Insurance risk score:
a. The insurance risk score is a significant rating factor, and it is therefore important that we
get this information. This will ensure that we remain competitive and manage loss ratios.
A typical broker client has a better credit score, so capturing this data should have a
positive impact on their premium. Hence, we are currently on a drive to improve our data
when it comes to the insurance risk score consent from clients. It is not the same score as
a credit score which a lender would typically be interested in and checking the insurance
risk score will not affect a client’s credit score. We currently use TransUnion as the service
provider to perform these checks.
b. Please ensure that the consent is obtained during the quoting process and not only at
policy inception stage.
Will this affect discount mandates?
This is just a heads up to let you know that the new business rates from our rating engine will be
changing. All discount mandates remain unchanged.
When will this happen?
The Private rating engine will be updated with the new rates on 13 December 2022. The Prestige
rates will go live shortly after that. We will send you a note when the rates are in production.
Will the new rates affect existing business?
Nope. There will be no effect on existing business. However, if you use the rating engine to produce
a quote at renewal stage, these new rates will apply. We strongly advise that you consider the
new rates when a client’s policy is renewing.