Compare your company to other companies in the industry

Armed with ICRFS-PLUS™ and the (converted) A.M. Best or NAIC Schedule P data you have access to much information, with a few mouse clicks, that cannot be obtained in any other way. Using the consolidated A.M. best's or NAIC data, you can compare your company with other groups and major industry segments.

Here is a powerful example.

Costs per claim in this line have been rising at a fairly steady rate of about 4% per annum in the industry as a whole, for the last ten years. If the number of claims is constant from year to year, premiums should be increasing by at least 4% each year, as should the overall reserves held by the industry.

Company A has a rather different picture. Costs per claim were rising at about the same rate as the industry overall from 1995 to 1999. But then they began to rise at about 18% per annum! If the company is continuing to write about the same amount of business, it will need to increase its total reserves by about 18% every year to maintain adequate cover. Premiums will need to increase at this rate too. This company needs to look hard at its business to see what happened in 1999. Whatever the cause, it needs to find out soon before it is wiped out by rising costs.

Company B, on the other hand, is in a much better position. Its costs per claim are increasing at about the industry average. It can afford to limit its increase in premiums and total reserves to 4% per year, giving it a big competitive advantage over Company A.

Company C has had costs per claim rising at about 12% per annum since at least 1995, about three times the rate of the industry total. Does this company have a niche market that is prepared to pay about the industry rate? Or is it about to be caught out by years of under-charging and under-reserving?