Date of Publication

12-13-2019

Document Type

Master's Thesis

Degree Name

Master in Risk and Insurance Management

Subject Categories

Finance and Financial Management

College

Ramon V. Del Rosario College of Business

Department/Unit

Financial Management

Thesis Adviser

Niño Datu

Defense Panel Chair

Ricarte Pinlac

Defense Panel Member

Rene Cuartero
Soleil Baria

Abstract/Summary

Reference to the terms and conditions of the Motor Car Insurance policy jacket approved by the Insurance Commission, natural catastrophic perils simply known as Acts of Nature or “AON” are indeed excluded in types of perils covered in the insurance policy. Since it is not part of the original perils covered from Sections I-IV of the policy wordings, Insurance Companies writing motor car became creative in terms of how AON can be covered without violating the context of the insurance policy as a legal contract. With reference to additional premium payment, a special clause is added to the insurance contract wordings deleting the natural catastrophic perils exclusion. In this context, AON is now a valid peril covered by the insurance contract. This can procedure can also be called as “Acts of Nature Endorsement” or “Acts of Nature Buyback”. This has been the remedy that insurance companies took from the beginning since there was no concrete regulation yet as to how Acts of Nature shall be covered in the policy and how it should be priced. (IC CIRCULAR ON ACTS OF NATURE, 2010) The landscape of AON peril coverage however changed when Typhoon Ondoy hit the Metro in September of 2009 and highlighted the unpreparedness of the public and the insurance industry in terms of handling natural catastrophic perils. As a solution by the Insurance Commission, they issued Circular Letter 30-2010 which set the strict implementation of premium rating for Acts of Nature. An industry-wide approach was taken-up by the Insurance Commission as the premium rating for AON perils were the same for all classes of Motor Car. A prescribed premium rate for all classes eliminates the flexibility of underwriters to implement varying premium rates considering the differences in the utilization, classification, and performance indicators such as loss ratio, retention ratio and others. It was understood however that a quick-fix is needed at the time in order to address the varied AON peril approaches being used by the industry. With the following premises, the study aims to answer the following questions:

1. What are the Optimized Premium Rates for AON per sub-classification?
2. What are the Motor Car insurance factors that affect the pricing of AON peril? 3. How do these Motor Car insurance factors affect the pricing of AON

Abstract Format

html

Language

English

Format

Electronic

Accession Number

CDTG007388

Keywords

Automobile insurance—Rates; Automobile insurance premiums

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Embargo Period

9-12-2022

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