![Page 1: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/1.jpg)
Motor Postcode Zoning Working Party
Duncan Anderson Roger MasseySaideh Charlton Chris SpillerDave Coughlan (Chair) Kim PapeMark Harrison James TanserStephen Jones Richhard Verrall
![Page 2: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/2.jpg)
Aims
• Understand market
• Data availability
• Possible approach
![Page 3: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/3.jpg)
Importance of zoning
• Review of postcodes
• 3rd biggest factor
• Needed to limit scope
• Theft only 10 - 15%
![Page 4: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/4.jpg)
Market Analysis
![Page 5: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/5.jpg)
Investigating market rates
• EL Systems Præmium• "Average" risk considered
for every UK post code district• 18 comprehensive quotes
obtained from 15 insurers• Some possible interactions also examined• Limited
– districts only– no direct writers– off screen discounts
![Page 6: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/6.jpg)
Post code categorisation
InsurerNumber ofcategories
123456789
101112131415161718
1011121415161617171819191920202122
125
![Page 7: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/7.jpg)
Post code categorisation
InsurerNumber ofcategories
Highest premium /lowest premium
123456789
101112131415161718
1011121415161617171819191920202122
125
2.121.972.293.302.202.182.192.672.122.162.701.932.313.172.173.132.762.26
![Page 8: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/8.jpg)
CompanyInteraction 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Age / Sex Age / vehicle group
Area / vehicle group
Area / garaged Age / occupation
Use / mileage Occupation / use Age / marital status / sex
Interactions
Age Factor
17 2.52
18 2.05
19 1.97
20 1.85
21-23 1.75
24-26 1.54
27-30 1.42
31-35 1.20
36-40 1.00
41-45 0.93
46-50 0.84
51-60 0.76
60+ 0.78
Group 1 2 3 4 5 6 7 8 9 10 11 12 13
Factor 0.54 0.65 0.73 0.85 0.92 0.96 1.00 1.08 1.19 1.26 1.36 1.43 1.56
1.00
1.00
1.17
1.00
Group > 1 2 3 4 5 6 7 8 9 10 11 12 13Age v
17 1.36 1.64 1.79 2.09 2.27 2.42 2.56 2.65 3.27 3.71 4.08 4.36 4.8418 1.12 1.31 1.47 1.76 1.84 2.00 2.11 2.19 2.43 2.97 3.29 3.55 3.9019 1.08 1.30 1.46 1.63 1.82 1.91 2.02 2.11 2.53 2.88 3.30 3.35 3.6320 0.98 1.18 1.36 1.54 1.68 1.79 1.83 1.97 2.19 2.66 3.02 3.20 3.38
21-23 0.96 1.13 1.24 1.51 1.65 1.64 1.80 1.85 2.04 2.26 2.55 2.53 2.8924-26 0.82 0.99 1.10 1.31 1.43 1.52 1.51 1.64 1.81 1.93 2.13 2.22 2.4727-30 0.78 0.90 1.07 1.19 1.32 1.39 1.41 1.51 1.65 1.77 1.91 2.01 2.2431-35 0.63 0.78 0.86 0.99 1.09 1.17 1.22 1.32 1.42 1.54 1.66 1.71 1.8836-40 0.55 0.64 0.71 0.85 0.91 0.93 0.99 1.07 1.18 1.29 1.40 1.41 1.5341-45 0.51 0.61 0.66 0.79 0.88 0.88 0.94 0.99 1.09 1.15 1.29 1.31 1.4246-50 0.46 0.55 0.61 0.70 0.76 0.81 0.84 0.92 1.02 1.07 1.12 1.18 1.3151-60 0.40 0.49 0.56 0.64 0.68 0.71 0.78 0.82 0.90 0.99 1.02 1.12 1.20
60+ 0.43 0.52 0.55 0.67 0.72 0.73 0.78 0.83 0.93 0.98 1.04 1.11 1.25
![Page 9: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/9.jpg)
CompanyInteraction 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Age / Sex Age / vehicle group
Area / vehicle group
Area / garaged Age / occupation
Use / mileage Occupation / use Age / marital status / sex
Interactions
Age Factor
17 2.52
18 2.05
19 1.97
20 1.85
21-23 1.75
24-26 1.54
27-30 1.42
31-35 1.20
36-40 1.00
41-45 0.93
46-50 0.84
51-60 0.76
60+ 0.78
Group 1 2 3 4 5 6 7 8 9 10 11 12 13
Factor 0.54 0.65 0.73 0.85 0.92 0.96 1.00 1.08 1.19 1.26 1.36 1.43 1.56
1.00
1.00
1.17
1.00
Group > 1 2 3 4 5 6 7 8 9 10 11 12 13Age v
17 1.36 1.64 1.79 2.09 2.27 2.42 2.56 2.65 3.27 3.71 4.08 4.36 4.8418 1.12 1.31 1.47 1.76 1.84 2.00 2.11 2.19 2.43 2.97 3.29 3.55 3.9019 1.08 1.30 1.46 1.63 1.82 1.91 2.02 2.11 2.53 2.88 3.30 3.35 3.6320 0.98 1.18 1.36 1.54 1.68 1.79 1.83 1.97 2.19 2.66 3.02 3.20 3.38
21-23 0.96 1.13 1.24 1.51 1.65 1.64 1.80 1.85 2.04 2.26 2.55 2.53 2.8924-26 0.82 0.99 1.10 1.31 1.43 1.52 1.51 1.64 1.81 1.93 2.13 2.22 2.4727-30 0.78 0.90 1.07 1.19 1.32 1.39 1.41 1.51 1.65 1.77 1.91 2.01 2.2431-35 0.63 0.78 0.86 0.99 1.09 1.17 1.22 1.32 1.42 1.54 1.66 1.71 1.8836-40 0.55 0.64 0.71 0.85 0.91 0.93 0.99 1.07 1.18 1.29 1.40 1.41 1.5341-45 0.51 0.61 0.66 0.79 0.88 0.88 0.94 0.99 1.09 1.15 1.29 1.31 1.4246-50 0.46 0.55 0.61 0.70 0.76 0.81 0.84 0.92 1.02 1.07 1.12 1.18 1.3151-60 0.40 0.49 0.56 0.64 0.68 0.71 0.78 0.82 0.90 0.99 1.02 1.12 1.20
60+ 0.43 0.52 0.55 0.67 0.72 0.73 0.78 0.83 0.93 0.98 1.04 1.11 1.25
![Page 10: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/10.jpg)
Low
High
1.00
1.01
1.02
1.03
1.04
1.05
1.06
Vehicle Group
Area
High
Low
Example interaction
![Page 11: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/11.jpg)
Loadings by postcode
• For each company, "average loading" for a district defined as premium for district divided by unweighted average of premiums across all districts
• Districts ordered by average"average loading"
• Average loading plotted against district
![Page 12: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/12.jpg)
60%
80%
100%
120%
140%
160%
180%
District
Loadings by postcode
![Page 13: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/13.jpg)
60%
80%
100%
120%
140%
160%
180%
District
Average Minimum Maximum
Loadings by postcode
![Page 14: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/14.jpg)
Comparison of categorisations
244
274
307
343
385
432
484
543
609
685
770
299316334352369387404422440457475495518542632
0
20
40
60
80
100
120
140
Num
ber
of d
istr
icts
Company F
Company I
![Page 15: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/15.jpg)
244
274
307
343
385
432
484
543
609
685
770
299316334352369387404422440457475495518542632
0
20
40
60
80
100
120
140
Num
ber
of d
istr
icts
Company F
Company I
Comparison of categorisations
![Page 16: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/16.jpg)
275
311
325
352
396
439
525
606
318340
366385
426447
467521
555590
683734
0
50
100
150
200
Num
ber
of d
istr
icts
Company A
Company G
2/8
Comparison of categorisations
![Page 17: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/17.jpg)
318
340
366
385
426
447
467
521
555
590
683
734
299330
357372
399426
442477
507549
591
0
50
100
150
200
Num
ber
of d
istr
icts
Company G
Company N
3/8
Comparison of categorisations
![Page 18: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/18.jpg)
265
352
374
402
423
453
503
563
638
713
293302308314319326332343353361369382393405428442458475508633
0
50
100
150
200
250
Num
ber
of d
istr
icts
Company B
Company M
4/8
Comparison of categorisations
![Page 19: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/19.jpg)
0
397
434
478
517
563
617
687
768
182208234284292299307315328342376409439471484495513530554579
0
20
40
60
80
100
120
140
160
Num
ber
of d
istr
icts
Company D
Company K
5/8
Comparison of categorisations
![Page 20: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/20.jpg)
275
311
325
352
396
439
525
606
244259274290307324343363385407432457484513543575609647685726770
020
40
60
80
100
120
140
160
Num
ber
of d
istr
icts
Company A
Company F
6/8
Comparison of categorisations
![Page 21: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/21.jpg)
275
311
325
352
396
439
525
606
265341352363374387402413423441453473503528563598638675713
0
20
40
60
80
100
120
140
160
Num
ber
of d
istr
icts
Company A
Company B
7/8
Comparison of categorisations
![Page 22: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/22.jpg)
265
352
374
402
423
453
503
563
638
713
312353373386401425443460483501525550580614651685
0
20
40
60
80
100
120
140
160
Num
ber
of d
istr
icts
Company B
Company P
8/8
Comparison of categorisations
![Page 23: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/23.jpg)
Data, Method and Results
![Page 24: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/24.jpg)
Information available
• Complex
• Appropriate
• Up to date
• Higher level view
![Page 25: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/25.jpg)
Data
• Internal data
• External
• Combined/Grouped
![Page 26: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/26.jpg)
Interesting views
• Drive around and look
• Social deprivation index
• Subjective views
![Page 27: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/27.jpg)
Methods
• Size of exercise
• Consider residual risk
• Three main types of approach- Smoothing- Credibility- Market related
![Page 28: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/28.jpg)
Smoothing
“Based on underlying assumption thatareas “close” each other have similar risk”
Adjacency?
![Page 29: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/29.jpg)
Credibility
“The risk associated with a postcode is a mixture of its own experience and some other estimate of expected”
Appropriate?
![Page 30: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/30.jpg)
Market Related
“everybody doing it, so I should too”
Realistic?
![Page 31: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/31.jpg)
Approach
• Smoothing - “weighted distance”
- “Spatial models”
• Credibility - “Credibility Method”
• Market - “Average Market”
- “External provider”
• Other - “Modern Heuristic”
![Page 32: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/32.jpg)
Approach
• Split data 70/30
• Standardise data
• Use residual risk to zone
squares as test statistic
![Page 33: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/33.jpg)
Simple results
• All proved better than null model
• Little to choose between results
• Combination of “credibility and
weighted distance” is the best
![Page 34: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/34.jpg)
Comparison of methods
![Page 35: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/35.jpg)
Implementation
• Solid risk cost
• Improved
understanding
![Page 36: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/36.jpg)
Implementation - issues
• Competitive position
• Existing customers
• Systems
![Page 37: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/37.jpg)
Conclusion
• Market is not uniform in
approach
• Suggest approach as
mixture of
methods
![Page 38: Motor Postcode Zoning Working Party Duncan AndersonRoger Massey Saideh CharltonChris Spiller Dave Coughlan (Chair)Kim Pape Mark HarrisonJames Tanser Stephen](https://reader033.vdocuments.net/reader033/viewer/2022061614/5697bfe31a28abf838cb4f16/html5/thumbnails/38.jpg)
Motor Postcode Zoning Working Party
Duncan Anderson Roger MasseySaideh Charlton Chris SpillerDave Coughlan (Chair) Kim PapeMark Harrison James TanserStephen Jones Richhard Verrall