PROCEEDINGS May 15, 16, 17, 18, 2005 - Casualty Actuarial Society

ARCHITECTURE FOR RESIDENTIAL PROPERTY INSURANCE RATEMAKING 515FIGURE 3Loss cost gradients for AOP and liability rating largely reflectdemographics, though meteorological and geological phenomenasignificantly impact sinkhole and lightning losses. Onthe liability side, urban areas tend to be more litigious, and onthe property side, urban areas may be more prone to theft andvandalism losses. Traditional (and ISO) territory boundaries forthe classical rating plan were derived primarily from municipalityand county lines. These lines may serve as sales territories aswell. In short, for actuarial and practical reasons, political linesmay still have a place in a modern territory rating system.