Casualty Actuarial Society 2000 Seminar on Ratemaking

1. Casualty Actuarial Society 2000 Seminar on Ratemaking San Diego, CA  March 9-10, 2000 Kim L. Hazelbaker Senior Vice President

4. New Yorker — March 9, 1998

5. Light Truck Sales By Model YearPercent of New Vehicle Sales 48.4%

6. Percent of Passenger Vehicle Registrations By Vehicle Type, Weight, and Model Year Vehicle type Weight(lb.) 1975 1985 1995 1996 1997 1998 Cars <2,500 12 28 15 13 12 11 2,500- 27 37 39 40 37 39 3,500+ 41 8 9 7 8 6 Passenger vans 0 2 8 8 6 9 Total 81 76 71 69 64 65 Pickups <3,500 1 12 4 5 4 5 3,500- 9 2 5 3 3 3 4,000+ 3 2 6 8 12 9Total13 16 16 16 19 17 Utility <3,500 1 4 2 2 3 3vehicles 3,500- 1 0 5 5 5 6 4,000+ 1 1 5 6 8 8 Total 2 5 11 13 15 17

7. curb weight Escort 2,585 lbs Explorer 4,325 lbs Expedition 5,290 lbs 1998 Model Ford Passenger Vehicles

8. curb weight Metro 2,065 lbs Blazer 4,225 lbs Suburban 5,640 lbs 1998 Model GM Passenger Vehicles

9. 1997 Ford Escort 1997 Ford Expedition

10. 1997 Ford Expedition 1997 Ford Escort

11. 1997 Ford Escort 1997 Ford Expedition

12. Ford Excursion - 2000 Model Year

13. Ford Super Concept Truck

15. Occupant Death Rates 1990-95 Passenger VehiclesDeaths per Million Vehicles per Year vehicle weight (lb)

16. Occupant Death Rates in Single-Vehicle Crashes 1990-95 Passenger VehiclesDeaths per Million Vehicles per Year vehicle weight (lb)

17. Occupant Death Rates in Two-Vehicle Crashes 1990-95 Passenger VehiclesDeaths per Million Vehicles per Year vehicle weight (lb)

18. Occupant Death Rates in Other Vehicles inTwo-Vehicle Crashes, 1990-95 Passenger Vehicles Deaths per Million Vehicles per Year vehicle weight (lb)

19. Mix of Other Vehicles in Two-Vehicle Fatal Crashes 1990-95 Passenger Vehicles deaths in utility vehicles 100 80 60 40 20 100 80 60 40 20 100 80 60 40 20 deaths in cars deaths in pickups OTHER OTHER OTHER MEDIUM/HEAVYTRUCK MEDIUM/HEAVYTRUCK MEDIUM/HEAVYTRUCK UTILITIES UTILITIES UTILITIES PICKUPS PICKUPS PICKUPS CARS3500- CARS3500- CARS3500- CARS2500- CARS2500- CARS2500- CARS <2500 CARS <2500 CARS <2500 vehicle weight (lb)

20. Characteristics That Influence Compatibility/Aggressivity in Crashes Between Two Passenger Vehicles • Weight Differences decrease risk in the heavier vehicles and increase risk in the lighter vehicles • Structural Mismatches contribute to override/underride • Stiffness Differences can decrease the risk if the heavier vehicles are less stiffthan the lighter vehicles

21. Crash compatibility

22. Companies that Supply Data to HLDI • Allstate • American Family • Auto Club of Michigan • Farmers • GEICO • The Hartford • Kemper • Liberty Mutual • Mass. AIB • Motors • Nationwide • Progressive • Prudential • SAFECO • State Farm • Travelers • USAA

23. VINDICATORInformation Decoded from Vehicle Identification Numbers VIN Positions 1 2 3 4 5 6 7 8 9 10 11 12-17 World ManufacturerIdentification Vehicle Attributes:Car LineSeriesBody TypeEngineRestraints Check Digit Model Year Plant Code SequentialNumber also: antilock brakes, antitheft devices, daytime running lights

24. Size of HLDI DatabaseNumber of Vehicles in Files, September 1999 Model year Number of vehicles 1992 13,786,733 1993 15,000,756 1994 15,277,049 1995 15,851,987 1996 12,739,163 1997 12,152,279 1998 10,011,306 1999 8,027,454 2000 2,500,000 Total 105,346,727

25. Collision Losses vs. Property Damage Losses1995-97 Models passenger cars, and passenger vans pickups, utility vehicle, and large vans Claim Frequency (claims per 100insured vehicle years) Average Loss Payment Per InsuredVehicle Year Average LossPayment Per Claim 9.0 6.0 3.0 $3,000 $2,000 $1,000 $270 $180 $90 collision propertydamage collision propertydamage collision propertydamage

26. Collision and Property Damage Liability LossesBy Vehicle Type and Size Class, 1995-97 ModelsAverage Loss Payment per Insured Vehicle Year PropertyDamage Liability Collision $ relative $ relative Cars small $268 120 $79 98 midsize $250 112 $73 90 large $206 92 $62 77 Passenger Vans $165 74 $64 79 Pickups small $200 89 $101 125 standard $168 75 $95 117 Utility small $211 94 $94 116Vehicles midsize $212 95 $98 121 large $135 60 $107 132 All passenger vehicles $224 100 $81 100

27. 2-dr and 4-dr cars, station wagons, & passenger vans sports and luxury cars pickups, utility vehiclesand large vans all vehicle average Collision vs. Property Damage LiabilityAverage Loss Payment Per Insured Vehicle Year, 1995-97 Models collision High CollisionLow Property Damage High CollisionHigh Property Damage smallsports mdsizeluxury mdsizesports mini4-dr small2-dr mini 2-dr very lg luxury minisports small4-dr mdsize2-dr large luxury mdsizesw mdsize4-dr large2-dr smallutility midsizeutility smallpickup large4-dr very lg sw very lg 4-dr passvans stdpickup largevan Low CollisionLow Property Damage Low CollisionHigh Property Damage largeutility property damage liability

28. Miami Herald — February 14, 1998

29. Road & Track — October 1999

30. 2000 Nissan Frontier SE

31. Ford Explorer SportTrac - 2001 Model Year

32. Lincoln Blackwood - 2001 Model Year

33. 2001 Toyota Sequoia

34. 2001 Ford Escape

35. 2001 Montero Limited

36. Acura MD-X concept vehicle

37. Chevrolet Avalanche concept vehicle

38. Chevrolet Avalanche concept vehicle

39. Ford Equator concept vehicle

40. Ford Equator concept vehicle

41. Suzuki XL6 concept vehicle

42. Volkswagen concept vehicle

43. Chevrolet SSR concept vehicle

44. Chevrolet SSR concept vehicle

45. Honda Spocket concept vehicle

46. Honda Spocket concept vehicle

47. Ford Rollover Protection System

48. Ford Rollover Protection System

49. Ford Rollover Protection System - side airbags