Study:Car Owner Rates Subsidize SUVs

NU Online News Service, Sept. 17, 11:57 a.m. EDT? Vehicle insurers are requiring car owners to pay premiums inflated by losses caused by light trucks and utility vehicles, a study has found.

Conning Research and Consulting Inc. in New York said insurers are rating trucks and SUVs for premium calculation purposes the same as cars--despite data showing such vehicles present greater bodily injury and property damage liability risks than private passenger autos.

"For years, car owners have been subsidizing the light truck owners' premiums, and the personal automobile insurance indus-try has been slow to respond," said Michael Weinstein, director of re-search at Conning.

"Given the highly competitive nature of the personal lines insurance industry and the challenge of producing profits, one has to ask--why have most underwriters not yet differentiated broadly between light trucks/SUVs and passenger cars?"

The Conning Research study, "Light Truck/SUV Underwriting: The Differences Matter," explains the many physical differences that cause trucks to inflict more severe injuries and greater damage than cars.

In addition, the study delves into federal injury and property damage data to present the significant differences in liability exposure between the vehicle types. The study also explores differential underwriting and the process needed to prepare and implement new pricing.

"A few of the larger insurers have recognized that the problem exists and are beginning to respond," said Mr. Weinstein. "However, as the light truck cate-gory continues to expand, it is clear that the success of every per-sonal auto company is contingent on differential pricing. Those that delay face adverse selection."

The "Light Truck/SUV Un-derwriting: The Differences Mat-ter" study can be purchased from Conning by calling (888) 707-1177 or by visiting the company's Web site at www.conningresearch.com.