Actuarial Consulting

Time to Leave Behind Homegrown and Single-Purpose Regulatory Compliance Solutions

by Robert Cericola

As we launch this newsletter, it’s worth addressing a practical question many insurance organizations are actively considering: Should we build, buy, or rethink our current approach to regulatory compliance operations?

For many carriers, fronting companies, MGAs, and program managers, the default answer has historically been some combination of homegrown systems, state platforms like SERFF, bureau-generated materials and guidance, and single-purpose tools layered together over time. Historically, that approach worked reasonably well. But as organizations grow, expand into new states, and increase product complexity, the limitations become more apparent.

Homegrown systems, while tailored and often built with current technology, come with an ongoing burden. They require continuous internal investment, compete with other IT priorities, and depend heavily on a limited number of individuals who understand how they work. Enhancements are slow, regulatory updates require constant attention, and over time, the system becomes harder, not easier, to improve and scale.

Single-purpose tools offer a different tradeoff. They can improve a specific step in the process, but they rarely solve the broader problem. Instead, they introduce additional handoffs, often require duplicate data, and create new integration challenges. What begins as an efficiency gain in one area frequently creates inefficiency somewhere else.

Even when these approaches are combined, the result is typically the same: fragmented workflows, inconsistent data, and heavy reliance on manual coordination to fill gaps—especially around communication among stakeholders. That may be manageable at smaller scale, but it becomes a constraint on growth and a source of operational risk over time.

Licensing a platform like PK1Cloud represents a fundamentally different approach.

Rather than each organization building and maintaining its own environment, PK1Cloud centralizes that effort. Development, enhancements, bug fixes, and regulatory updates are handled once and delivered across the platform. This not only reduces cost, but ensures that the system is continuously improving and staying current with changing requirements.

At the same time, PK1Cloud is designed as an integrated operating platform, not a collection of tools. It brings together secure, centralized data, standardized workflows (which can be tailored to fit each organization’s needs), automated communication, broad integrations, and guardrailed AI within a single environment. The result is greater consistency, better visibility, less enterprise risk, and the ability to scale operations without a corresponding increase in complexity.

From a strategic standpoint, the decision is less about technology and more about focus. Organizations that choose to build and maintain their own systems are, in effect, taking on a software development business alongside their core insurance operations. Those that adopt a platform approach can redirect that time, capital, and talent toward core operational initiatives.

That is ultimately the value proposition of PK1Cloud: a more efficient, scalable, and durable way to operate in an increasingly complex environment.

Read on for a closer look at how PK1Cloud delivers these capabilities in practice.

Tim Perr, Chief Executive Officer

PK1Cloud Is Now Live.

Did you know that Perr&Knight has launched PK1Cloud, a unified operating platform designed to modernize and streamline Property & Casualty insurance operations?

PK1Cloud brings together analytics, product design, and compliance within a single, integrated environment. Built on Perr&Knight’s 30+ years of industry expertise, the platform is purpose designed to address the operational and regulatory complexity faced by insurers, program managers, and alternative risk finance organizations.

At its foundation, PK1Cloud aligns three critical dimensions of P&C operations: process, data, and communication.

From a process standpoint, PK1Cloud replaces fragmented, manual workflows with standardized, automated, AI-enabled applications. This reduces operational risk, removes single points of dependency, and improves consistency and control across the organization.

From a data perspective, PK1Cloud establishes a secure, enterprise-wide single source of truth. Built in versioning, validation, visualization, and integration capabilities ensure decisionmakers are working from accurate, trusted information—supporting transparency, scalability, and auditability.

Equally important, PK1Cloud enables more effective collaboration. Intelligent workflows and calendar-aware automation help teams manage dependencies, meet regulatory deadlines, and maintain alignment across stakeholders and functions.

Lastly, we are always adding to and improving the platform; PK1Cloud is designed for long-term evolution. The roadmap for 2026 includes an expanded forms library and the continued rollout of secure, purpose-built AI enhancing insight and decision-making while protecting client confidentiality and data integrity.

The objective is straightforward: to help organizations operate faster, with greater accuracy and confidence. PK1Cloud is a scalable foundation for continuous improvement and sustainable operational excellence in modern P&C insurance.

We invite you to explore PK1Cloud on our website to learn how we are redefining insurance operations.

Bob Cericola, Director, PK1Cloud

StateFilings.com Is Now PK1Cloud Filings.

Did you know that StateFilings.com is now PK1Cloud Filings and is now an integral part of the broader PK1Cloud software ecosystem?

PK1Cloud Filings continues to deliver the structured regulatory workflow capabilities clients rely upon, and is now aligned with Perr&Knight’s vision for coordinating regulatory work across the enterprise.

At its foundation, PK1Cloud Filings is built around a project-based structure that strengthens accountability and execution. Rather than managing filings in isolation, teams organize work into countrywide initiatives and monitor state-by-state progress from a centralized view. Defined process ownership, automated reminders, and centralized project tracking reduce regulatory risk and create more predictable execution across jurisdictions.

The platform also improves visibility across the organization. Real-time status updates, dashboards, reporting tools, and notifications allow actuarial, product, compliance, and leadership teams to track regulatory progress without relying on manual updates or disconnected tracking methods. This shared visibility improves coordination and decision making.

Looking ahead, PK1Cloud Filings will further integrate with other PK1Cloud applications, strengthening the connection between product development, actuarial work, and regulatory filings. This integration will streamline the transfer of product content such as forms, rates, and rules into the filings workflow within a fully auditable system. PK1Cloud Filings will also continue expanding secure AI capabilities designed to protect client data while improving efficiency and accuracy.

The transition to PK1Cloud Filings reflects Perr&Knight’s continued investment in modern regulatory operations, enabling organizations to move from tracking filings to managing regulatory execution at scale.

Rebecca Williams, Product Owner, PK1Cloud Software

PK1Cloud Has Product Built In.

Did you know that PK1Cloud includes an application designed to help insurers develop and manage their products? Introducing PK1Cloud Product.

Rather than relying on disconnected spreadsheets, document repositories, and manual tracking, Product brings forms, rates, rules, and regulatory intelligence together within one unified platform. The result is a more structured, collaborative, and transparent approach to product development.

PK1Cloud Product supports the entire insurance product lifecycle — from drafting and redlining to review, approval, and finalization. Teams work within a centralized, controlled workspace featuring version management, audit trails, and streamlined workflows. Regulatory insight is embedded directly into the drafting and review process, helping improve accuracy, reduce rework, and strengthen alignment across product, legal, compliance, and filings teams.

Product will continue to expand in 2026. Our roadmap includes access to state-specific checklists, transmittals, and required supporting documentation, enabling teams to prepare and manage filing materials in one place. Advanced comparison tools will allow users to evaluate differences in language, structure, and regulatory requirements across versions and jurisdictions. Secure AI-powered drafting, compliance checks, and intelligent document comparison will further enhance speed, precision, and insight.

PK1Cloud Product reflects our commitment to building a connected ecosystem designed to make insurance product development faster, more consistent, and more confident.

Bob Cericola, Director, PK1Cloud

PK1Cloud Has Reporting Built for the Real World.

Did you know that PK1Cloud Reporting is a powerful application designed to handle the complexity of statistical reporting?

PK1Cloud Reporting delivers reliable, compliant, bureau-ready results and is built specifically to manage the messy realities of client data while transforming it into clean, regulated data extracts. The platform ingests clients’ raw source data in multiple formats and sources and then aligns it to the specific requirements of each bureau and data collection organization. Whether it’s ISO, AAIS, MACAR, or NCCI, PK1Cloud Reporting is built to support reporting across jurisdictions and organizations with confidence.

When source data changes, updates do not require a development cycle. Teams can adjust core lookup table mappings directly, keeping reporting on track without delay.

For clients who prefer automation, PK1Cloud Reporting can securely pull or push files from a client managed repository, reducing manual steps and improving consistency.

Looking ahead, the 2026 roadmap includes key initiatives designed to reduce costs, increase data accuracy, and further streamline statistical reporting operations.

You can count on PK1Cloud to stay ahead of evolving statistical reporting requirements so your team can focus less on compliance risk and more on delivering value.

Nathan Dumont, Product Owner, PK1Cloud Software

Your Subscription Includes Monthly Customer Success Check-Ins.

Did you know that monthly check-ins with the PK1Cloud Customer Success Team are more than routine status meetings, they’re a dedicated opportunity to ensure you’re getting the most value from your PK1Cloud products while staying ahead of change?

These sessions are structured around your priorities. Time is set aside to answer questions, review top-priority or high-severity Service Desk tickets and align on what matters most to your team in the moment. Rather than reacting after an issue escalates, these conversations help proactively address needs before they become obstacles.

Monthly check-ins also provide early visibility into the PK1Cloud roadmap.

Customer Success Team Reviews offer regular opportunities to provide subscribers with demonstrations of recently released features, as well as share insights into upcoming enhancements and explain how new functionalities can be applied to real-world regulatory workflows. This allows you and your team to prepare for changes, adjust processes in advance, and adopt new features with confidence.

Just as importantly, these meetings create space to review existing processes and workflows. With a broad view of how customers across the industry use PK1Cloud, Customer Success Team Reviews can help identify efficiencies, reduce manual steps, and suggest better ways to accomplish everyday tasks using tools you may already have available. Small workflow improvements (such as view customizations, alert usage, or permission adjustments) often result in meaningful time savings over time.

Customers who participate consistently tend to see faster issue resolution, stronger feature adoption, and smoother regulatory operations.

If you’re not currently taking advantage of monthly check-ins, the Customer Success Team is happy to help get them scheduled and tailored to your needs.

Dana Pagliarulo, Director, PK1Cloud Software

PK1Cloud Is Built Around a Seamless User Experience.

Did you know PK1Cloud brings multiple applications together under one platform, and the user experience is intentionally designed to feel that way? A powerful ecosystem only delivers its full value when the interface is simple, consistent, and easy to navigate. That’s why our “One Experience” philosophy is grounded in thoughtful UI and UX design.

In 2026 we are aligning layouts, navigation structures, and visual elements across every application within PK1Cloud, creating a cohesive design language. Whether you’re working in Filings, Product, or Reporting, the platform looks and feels familiar and connected. Users shouldn’t have to re-learn the system; as they move between services, transitions are designed to feel natural and seamless.

By strengthening visual consistency and simplifying workflows, we reduce cognitive load and make it easier to focus on meaningful work. Clear dashboards, predictable navigation, and standardized interactions help teams move faster and operate with greater confidence.

Every update now moves in the same direction, toward a clearer and more cohesive experience across PK1Cloud.

This workflow reflects our commitment to building a unified system — one designed not only to support your work, but to make it more efficient and enjoyable.

Suchin Son, Senior UI/UX Designer, PK1Cloud Software

Analytics, product design, and compliance. All in One Platform

PK1Cloud is Perr&Knight’s integrated platform of insurance services, built to move products from concept to market with speed and certainty.

Learn more.

The Future of Rate Filings

by Tim Perr
Listen to a podcast-style summary of this blog post

Introduction: The Coming Transformation of Rate Filings

For too long, the rate filing process has depended on people rather than systems. Every insurer has lived with some version of the same problem: a small group of analysts and actuaries who “know how it’s done,” spreadsheets scattered across shared drives, and institutional knowledge that travels with employees when they change roles or leave. The result is fragility with single-point dependency risk and a chronic lack of a single source of truth for filings data, documentation, and workflow history.

Even with the introduction of insurance state filings software like SERFF in the early 2000s and its upcoming “modernization,” this issue remains unresolved. SERFF’s mandate is deliberately narrow, designed to facilitate transmission of filings between insurers and regulators, not to manage the broader, interconnected product development and filing lifecycle. Because it primarily serves state departments of insurance, it offers little help with the internal and cross-functional workflows that dominate the filing process. And even if its new version proves more efficient for filers, it will inevitably fall behind in the fast-moving technology cycle we now inhabit.

Complicating matters, filings touch several major functions within an insurance organization. Actuarial, compliance, marketing, claims, and IT all need to know what is being filed, what the filing introduces or changes, and when those changes will take effect. During the filing process, multiple areas may also need to support regulatory activities, including preparing actuarial exhibits, drafting form changes, and responding to regulatory inquiries. Without integrated systems, these interactions are often disjointed, relying on ad hoc communication and manual tracking.

The real transformation will come from integrated, intelligent systems that combine automation, analytics, and AI. These technologies will not only eliminate manual tasks like uploading, indexing, and data entry, they will also centralize knowledge, coordinate stakeholders, assist with compliance, and preserve a continuous institutional memory from concept to approval. As insurers evolve, filings will no longer depend on a key employee’s knowledge or disconnected spreadsheets. Instead, they will flow through unified insurance state filings software platforms that are fast, highly automated, and resilient—where expertise is amplified by technology and data resides uniformly in one system rather than scattered across disparate drives (or filing cabinets).

At Perr&Knight, this vision is reflected in the development of PK1Cloud, a unified digital platform built to address precisely these challenges and lead the industry toward a smarter, more connected future.

The Inefficiency of Today’s Filing Process

Despite decades of incremental improvements, the filings process remains one of the most labor-intensive, fragmented, and risk-prone activities within the insurance industry. For many organizations, more than half of the time and effort spent on a filing has nothing to do with actuarial analysis or regulatory interpretation; it is consumed by manual mechanics such as uploading documents, indexing exhibits, entering data into SERFF, tracking correspondence, and maintaining version control. Each of these tasks creates opportunities for delay, inconsistency, or error.

Because most companies rely on a patchwork of shared folders, email threads, and spreadsheets, even simple filings can require extensive coordination to confirm which version of a document is current or whether an exhibit was approved.

This fragmentation extends beyond the filings team itself. Product managers, actuaries, compliance staff, marketing, claims, and IT all depend on accurate, timely information about what’s being filed and when. In addition, critical components of the filing process—such as reviewing state insurance codes and comparing proposed filings to competitor submissions—are still largely manual exercises. These activities are essential for compliance and competitive positioning, yet they consume significant time and are highly susceptible to human oversight. With structured data and AI, both can be automated or accelerated, allowing teams to focus on interpretation rather than repetition.

The inefficiency is compounded during regulator interaction. Preparing responses to inquiries or objections frequently requires recreating or re-collecting the same data, exhibits, and rationale because the supporting material isn’t centralized. This often includes the same time-consuming steps of verifying code requirements or researching competitor filings to justify a company’s position. Institutional knowledge about past filings, including why decisions were made, what worked, and what didn’t, often disappears when employees move on, i.e., traveling knowledge risk.

Today’s process is workable, but it’s fragile. It relies on human continuity rather than system continuity, and on institutional memory rather than data intelligence. Until that balance shifts, insurers will remain constrained by legacy workflows that limit speed, accuracy, and adaptability.

From Automation to Integration: The Next Leap

Technology, including AI, will dramatically reduce the time and effort required to create, submit, and support rate, rule, and form filings. Much of today’s filing workload can be fully automated through integrated systems and insurance state filings software.

What once required days of effort will be completed in hours, freeing actuaries, product experts, and compliance professionals to focus on higher-value work such as pricing strategies and product innovation. Intelligent systems can generate exhibits, align documentation, and produce outputs in the exact structure required by regulators, improving accuracy and consistency while reducing rework.

Fully integrated filing environments take this a step further by connecting every stage of the process—preparation, review, submission, and regulatory response—within a single system. The process becomes visible, traceable, and consistent, transforming what has historically been a fragmented, manual function into one that operates with manufacturing-like discipline and data-driven accountability.

From Silos to Systems: Coordinating Stakeholders

Every filing touches multiple teams, and each has a distinct interest in what’s being filed and when. Marketing teams need to know what is being filed and when it will go live so they can prepare producer communications and policyholder notices. Claims needs visibility into coverage changes that could affect claim-handling procedures. The IT department must know which rate tables, rules, and forms are being revised so that the rating and issuance systems can be properly programmed and tested.

In the current environment, this coordination often depends on meetings, emails, and personal follow-up, which can be a slow and error-prone process. Modern, integrated filing systems, by contrast, allow for automated notifications, integrated calendars, and dependency tracking. Each department can see precisely what stage the filing is in, what it changes, and when implementation is expected. This ensures synchronization across the organization, reduces operational risk, and shortens the cycle from regulatory approval to market launch.

By connecting stakeholders through shared data and automated communication, the organization gains operational alignment where everyone is working from the same playbook, at the same pace, toward the same deadlines.

Archival and Institutional Memory

A modern state filings system doesn’t just manage filings; it remembers them. Unlike SERFF’s static, PDF-based recordkeeping, an integrated insurance state filings software platform can archive the entire workflow: correspondence, analyses, internal notes, version histories, decision rationales, and even bureau adoptions. This is far more valuable than a simple record of what was filed. It is a dynamic record of how it was done.

Such a system creates true institutional memory, enabling teams to retrieve not just the final product but the reasoning behind it. Future filings can draw upon this archive to anticipate regulatory questions, reuse templates, and ensure consistency across states and product lines. It transforms recordkeeping into knowledge management.

Building Resilience: Eliminating Single-Point Dependency

Modern filings platforms also strengthen organizational resilience. By systematizing the process, they remove single-point dependency risk: the exposure that arises when institutional knowledge resides in a single individual or small team. Insurance state filings software replaces this vulnerability with a single source of truth that is always accessible, always current, and always auditable.

The benefits extend beyond risk mitigation. When data, exhibits, and correspondence are centrally stored and version-controlled, employees can transition between roles without disrupting operations. Knowledge no longer travels with individuals; it stays with the organization. This continuity enhances both efficiency and governance, ensuring that expertise compounds over time.

The Human Factor: Evolving Roles

As automation handles the mechanics, the human role in filings will shift toward interpretation, judgment, and oversight. Actuaries will focus less on producing exhibits and more on validating assumptions and communicating analytical insights. Compliance experts will spend less time chasing documents and more time shaping strategy. Product teams will gain more bandwidth for innovation because their filing support will be faster and more reliable.

In this model, technology doesn’t replace expertise; it amplifies it. The professionals who understand the regulatory and actuarial nuances will remain indispensable, but they will operate in an environment that enables their insights to scale.

Conclusion: The Reimagined Filing Ecosystem

The next decade will redefine how rate filings are done. The combination of automation, integration, and AI will transform the process from a collection of disconnected manual tasks into a unified, intelligent workflow. Insurers that embrace this transformation will see faster cycle times, fewer errors, greater compliance, and ultimately a sustainable competitive advantage.

For regulators, modern insurer compliance systems will yield a clearer, more data-driven view of the filings they review, enabling faster approvals and more consistent oversight. For insurers, it will mean a world where filings are not just faster—they’re smarter. Compliance will be embedded, not appended, and systems (not solely people) will safeguard important knowledge.

At Perr&Knight, this vision is already coming to life through PK1Cloud, our unified platform designed to simplify complexity across the entire product and filing lifecycle. PK1Cloud centralizes data, automates key workflows, communicates key milestones to all stakeholders, and integrates AI-driven analytics to enhance accuracy, speed, and compliance. It also connects with trusted third-party data sources for insurance code validation and competitor rate and form filings, enabling real-time benchmarking and compliance verification.

The filings process has long been viewed as a necessary administrative burden. While regulation will always remain a fundamental part of the insurance landscape, the burden it imposes can be reduced. With solutions like PK1Cloud, that reduction is not theoretical—it’s already underway. Intelligent, integrated systems are transforming filings from a back-office necessity into an efficient capability that strengthens compliance, accelerates innovation, and connects insurers and regulators in a continuous cycle of improvement.

Contact us today to learn more about how Perr&Knight’s proprietary insurance state filings software, PK1Cloud, can help your organization get a head start on the future of filings.

Best Practices When Addressing Tough DOI Rate Interrogatories

by Barbara Glasbrenner

By: Barbara Glasbrenner & John Mooney

Benjamin Franklin once stated, “An ounce of prevention is worth a pound of cure.” This is certainly the case when submitting an insurance filing to a State Department of Insurance (“DOI”). Preparing a meticulous and comprehensive submission can help mitigate issues, but it doesn’t necessarily eliminate the possibility of objections from the DOI.

Objections arise for various reasons, including but not limited to regulatory changes, interpretation differences, and jurisdictional nuances. When the dreaded form or rate interrogatory is received, here are some best practices from our experienced insurance filing support teams.

Don’t panic

Despite your best efforts to submit a complete, comprehensive filing, it is always possible that you will receive objections from one or more DOIs. The more lines of business you write and the more jurisdictions you operate in, the more likely you are to receive an interrogatory. Each DOI has specific filing and supporting documentation requirements – some with commonalities. Accepting objection letters and responding promptly are simply processes that enable you to move quickly, adjust the filing, and move closer to approval.

Read carefully and respond thoroughly

If an objection is not answered correctly, it will delay the filing’s approval. Thoroughly read each objection and only answer the question asked. Each objection should be responded to professionally, clearly, and concisely. The response should be complete and provide adequate supporting documentation, but without providing extraneous answers that may not be relevant to the respective objection. Submit your response for peer review or return to it with fresh eyes to confirm all the above have been addressed.

Make it easy for the reviewer

Provide necessary documentation in a manner that is easy for the regulator to address each interrogatory sufficiently. Logically rename file attachments and reference file names within the responses, where applicable.

If you revised a form, rating, or other piece of supporting documentation based on an objection, make a clear note in your response (e.g., “XYZ document has been revised and is attached [see FILE NAME] and replaces the first version of the same document.”)

In short, make it straightforward for the reviewer to follow the changes from the initial submission to the objection to the revision.

Reach out

Statute interpretations vary by jurisdiction, so a lack of understanding of why you did not fulfill a regulatory requirement does not necessarily indicate a shortcoming on your part. Not only are some statutes interpreted differently across regions, but the wording is sometimes vague.

If your objection letter contains an item you don’t understand, do not be afraid to contact the DOI directly, either through email, phone, or video call. Discussing the objection via video call has benefits, especially if you have received the same objection multiple times. Putting a face to a name and connecting personally with a person at the DOI can help you quickly clarify what you need to correct so the approval process doesn’t stall.

Track dates meticulously

Responding to the objection(s) by the date provided by the regulator is important. Response(s) not received by the due date could result in additional delays in the filing (e.g., disapproval). However, if you believe you will require more time than the state allows, submit an extension request as early as possible to give the reviewer time to assess and issue a revised due date. Note that some states have limitations on when extensions must be requested and how many extensions may be allowed.

Keep files and correspondence organized

Before submitting the responses and supporting documentation, ensure all documents are organized and correctly attached. Always double-check responses for accuracy and completeness, making sure you have read all pages of the objection letter (a common mistake is failing to see and respond to questions on subsequent pages). It is also important to submit the information as requested by the regulator (e.g., as part of the response, SERFF Supporting Documentation).

Leverage technology to stay organized. Tracking software like StateFilings.com was explicitly developed to align with the insurance state filings process, enabling users to store and track submissions, due dates, correspondence, and supporting documents in a central, secure repository. Two-way integration with SERFF allows users to post filings to each state, receive communications directly from DOIs, and track due dates – all in one place.

Stay professional

Responding to objections might cause frustration, but always reply to interrogatories with a cooperative attitude. Don’t take the objection personally. At the end of the day, the regulator is just doing their job. In any communication, written or verbal, treat the regulator with respect. Remember, regulators share your objective of arriving at an approved submission. Using a kind tone demonstrates professionalism, which opens the door for further communication.

Research

It can help to review previously approved filings and search for responses to similar objections. If you use an example of a previously approved filing, be prepared, as the filing may have been approved in error. While a level playing field among companies is important, each filing must be looked at on a case-by-case basis. If the previously approved filing language is a clear-cut violation of a statute, administrative rule, or commissioner’s order, the DOI may respond that it will ask the approved company to file and correct the approval error.

Rely on experts

Managing multiple filings across all jurisdictions is a logistical challenge for insurance companies at every scale. Partnering with actuarial consulting and insurance filing support teams like the experts at Perr&Knight can save time, clear up questions, and accelerate speed-to-market. Our industry veterans possess decades of experience submitting filings in all 51 U.S. jurisdictions across all lines of business. Leveraging this expertise can help streamline your filings. We can provide guidance at any stage of the state filings process, including support for objections to filings we did not initially submit. We’re here to help at any point in the process – even under tight deadlines.

It’s crucial to anticipate potential areas of concern and address them proactively to minimize delays and ensure a smooth approval process. When responding to the DOI’s objections, especially the “tough” interrogatories, it is essential to be thorough, clear, and prompt. By following these strategies, you can effectively respond to filing interrogatories and enhance the likelihood of a favorable outcome.

Contact Perr&Knight today to speak with our insurance filing support team.

Navigating AI Adoption in Insurance

by Rob Berg

by Rob Berg, Director, Applied AI, Perr&Knight

Artificial intelligence holds tremendous potential for insurance companies, promising gains in efficiency, decision-making accuracy, customer experience, and competitive positioning.

For many insurers, however, the path to realizing these benefits remains unclear. Common roadblocks include uncertainty about where exactly to start, how to prioritize initiatives, and how to manage the technical, operational, and regulatory challenges that accompany AI initiatives.

To address these challenges, Perr&Knight has published its AI Adoption Framework for Insurance Companies, a comprehensive guide developed by the experts at our actuarial consulting firm, designed specifically to support insurers through every phase of AI adoption.

This resource helps to demystify artificial intelligence enablement by providing the structure needed to pursue initiatives for AI use in insurance with confidence and clarity.

A Structured Approach to Realizing AI Value

The Framework is built on an eight-phase methodology:

Phase 0: Strategy Alignment In this initial phase, we establish clear objectives and strategic fit to ensure AI initiatives contribute meaningfully to your mission and vision.

Phase 1: Process Inventory A process inventory identifies and categorizes core, supporting, and management processes to determine where AI-driven process improvements can deliver the most value.

Phase 2: Workflow Modeling Models that detail process endpoints, activity sequences, and decision points provide a visual guide that helps us to zero in on high-impact AI use cases.

Phase 3: Solution Design By documenting functional and technical requirements, we can assess organizational readiness by identifying gaps between current and envisioned process outcomes. Simulation analyses that compare current and future state workflows help validate that the designed solutions are practical and scalable.

Phase 4: Risk & Governance Conducting a thorough examination of ethical, regulatory compliance, and AI governance considerations is a critical feature of our framework that helps to proactively manage risks surrounding the use of AI in insurance.

Phase 5: Implementation The implementation phase involves detailed planning, resource allocation, vendor coordination, and risk mitigation to support the successful execution of AI solutions and improve the likelihood of beneficial outcomes from those solutions.

Phase 6: Deployment & Change Management A too-often overlooked aspect of transformation efforts, solution deployments must involve communication, stakeholder engagement, training, and support functions to promote widespread adoption of the AI-based solutions.

Phase: 7 Monitoring & Continuous Learning Continuous monitoring of performance measures (including cost, productivity, morale, and ROI resulting from AI-enabled improvements) combined with user feedback, ensures that AI solutions are frequently reevaluated to meet your organization’s changing needs.

A Practical Approach Backed by Actuarial Consulting Experts

The Framework is not a theoretical model–it offers a practical, actionable approach to AI adoption that extends familiar business process management techniques with artificial intelligence to improve an insurer’s operations across multiple dimensions: internally among employees, and externally to benefit customers. By following this structured methodology for applying AI in insurance, companies will:

  • Ensure efforts are focused on high-impact opportunities that align with business goals
  • Avoid costly missteps and re-work by starting with a holistic picture and addressing risks early
  • Ensure AI initiatives are ethical, compliant, and well-governed
  • Build internal support and capabilities for widespread adoption that “sticks”

Whether you’re simply contemplating the benefits of AI in insurance or seeking to scale early successes, Perr&Knight’s AI Adoption Framework offers a roadmap that’s familiar, easy to implement, and highly effective at supporting beneficial outcomes because it is backed by an experienced team of actuarial consulting and business process experts.

Explore the Full Guide

For insurance leaders seeking to navigate the often-confusing AI landscape with clarity and confidence, this guide is an essential resource.

Download the eBook to learn how Perr&Knight can help your organization turn AI potential into measurable business results.

Provider Considerations for Value-Based Care Contracting

by Alexander Brill

The shift from fee-for-service (“FFS”) models to value-based care (“VBC”) represents a transformative trend in healthcare delivery. VBC contracting aims to improve patient outcomes while controlling costs by linking payments to performance and quality metrics. However, as the popularity of this paradigm grows, providers must carefully navigate the complexities involved to ensure financial sustainability and operational success.

Based on our experience as a trusted actuarial consulting firm assisting provider organizations in structuring these agreements, below are six critical considerations:

1. Shared Savings versus Shared Risk Contracts

VBC contracting typically falls into two categories: shared savings and shared risk. Shared savings models reward providers for reducing healthcare costs while maintaining or improving quality. Conversely, shared risk contracts require providers to share financial losses if costs exceed agreed-upon benchmarks.

Before committing to either arrangement, providers should assess their organization’s financial resilience, care management capabilities, and readiness to assume risk. Shared savings models may be a good starting point for a provider group’s first contract, while shared risk contracts suit more experienced providers with robust infrastructures and data capabilities.

2. Re-Setting Target Medical Loss Ratios for Future Years

Medical Loss Ratios (“MLRs”) are critical benchmarks that represent the proportion of premium revenue spent on medical claims and healthcare quality improvement. Providers need to monitor the performance of MLRs closely and anticipate adjustments for future contract years.

Re-setting target MLRs requires careful analysis of historical performance, anticipated cost trends, and changes in patient population health. Partnering with experts at an established actuarial consulting firm can help providers set realistic targets and ensure financial sustainability under evolving contract terms.

3. Quality Measures

VBC contracts often include incentives such as quality measures. The most common measures are the Healthcare Effectiveness Data and Information Set (“HEDIS”), used to assess care quality. Providers should prioritize initiatives that improve scores in key HEDIS domains, such as preventive care, chronic disease management, and patient satisfaction.

By aligning care delivery processes with HEDIS requirements, providers can enhance outcomes, secure performance-based incentives, and strengthen payer relationships. Leveraging technology and analytics tools can streamline the tracking and reporting of HEDIS measures.

4. Managing Significant Healthcare Costs

A small percentage of patients often account for a significant portion of healthcare costs. Effective management of this patient base is essential to the success of any provider organization. Strategies include proactive care coordination, utilization management, and patient engagement programs. The inclusion of stop-loss insurance, particularly for shared risk arrangements, is also common.

Actuarial analysts can help providers identify patients with the potential for significant healthcare costs early, enabling them to implement personalized care plans and focus on reducing avoidable hospitalizations. Providers can also partner with a seasoned actuarial consulting firm to consider stop-loss insurance options as a way to mitigate risk.

5. Alignment of Goals Across Stakeholders

Contracts often require collaboration between multiple stakeholders, including payers, providers, community organizations, and government agencies. Misaligned goals can lead to inefficiencies and undermine contract success.

It is essential to establish clear objectives around quality metrics, cost savings, and patient satisfaction early in the negotiation process. Defining shared goals ensures that all parties work cohesively toward achieving value-based outcomes.

6. Data Integration and Analytics

At the core of any VBC arrangement is a robust infrastructure to monitor performance, track outcomes, and identify cost-saving opportunities. Providers must be able to effectively track and analyze the claims data for the affected population, perform incurred but not reported (“IBNR”) calculations, develop utilization analyses, calculate the medical loss ratio, and develop financial performance calculations. Providers may also consider partnering with third-party firms specializing in predictive analytics to drive informed decision-making.

Partnering for Success in Value-Based Care

VBC contracting presents an exciting opportunity for providers to drive better outcomes for patients and the healthcare system as a whole. By focusing on shared savings versus risk, re-setting MLRs, prioritizing quality measures, managing high-cost claimants, fostering alignment across stakeholders, and effectively tracking performance, providers can thrive in this evolving landscape.

Working with an experienced consulting partner can mitigate the challenges. Perr&Knight’s team of experienced actuaries provides expert guidance in risk assessment, contract structuring, and performance optimization to help providers achieve their goals on the journey toward value-based success.

Contact the team at Perr&Knight today to learn more about Value-Based Care provider contracting.

How Are Insurance Companies Responding to the 2025 Tariffs?

by Dee Dee Mays

As U.S. policymakers ramp up tariffs on imported vehicles, auto parts, and construction materials in 2025, insurers are increasingly feeling the downstream impact on claims costs and profitability. While the consumer-facing effects are gradually unfolding, insurers are already moving behind the scenes — adjusting rate filings, underwriting practices, and reserves to manage the ripple effects of these trade measures.

In this post, the experts at our actuarial consulting firm provide a snapshot of carrier responses and market implications.

The Economic Backdrop

The 2025 tariffs — covering vehicles, auto components, and certain building materials —  are expected to amplify inflationary pressures in property and auto repair costs. According to an analysis by the Swiss Re Institute[1] prepared prior to tariff changes announced in early May 2025, the direct cost to U.S. personal auto insurers could reach $31–$61 billion annually. Prior announced tariffs shifted the rate filing landscape: Filings for lower auto insurance rates dropped from 482 in March to just 95 in April 2025 as carriers halted or reversed reductions. Carriers are also preparing for multi-year pricing adjustments as the full impact unfolds. In short, carriers are bracing for change.

Impacts Across All Lines of Business

The actuarial consulting experts at our firm are keeping close watch on the language in filings to assess how carriers are responding to these landscape changes. Here are some of the noteworthy items we have seen in recent rate filings.

Auto Insurance

  • Progressive (Q1 2025 filing)[2]

“Tariffs and other retaliatory actions will likely result in higher loss costs, which could result in a reduction in profitability and higher than currently anticipated rate increases throughout 2025 and 2026.”

  • Allstate (Q1 2025 The Allstate Corporation Earnings Conference Call)[3]

“So, we’re going to manage through whatever the impacts of tariffs are, just as we did the inflation that came through the pandemic…And if we need to raise prices, we’ll raise prices…”

  • Accuity Insurance Company (rate filings, Oregon & Virginia)[4]
  • +5.5% one-time prospective loss change on property damage coverage
  • +11.3% one-time prospective loss change on comprehensive & collision coverages

These adjustments reflect forward-looking pricing, not just historical loss trends — a key shift in how actuaries and product managers are modeling risk.

Property / Homeowners Insurance

While less explicitly tied to tariffs, homeowners insurers are reacting to related cost pressures by reassessing replacement cost models, tightening underwriting guidelines (especially in catastrophe-exposed regions), and increasing deductibles or capping coverage on high-value items.

Market Implications

For insurance professionals, the tariff environment raises critical questions:

  • How can pricing and reserving models capture prospective, rather than trailing, loss costs?
  • Are underwriting strategies sufficiently agile in the face of shifting repair and rebuild expenses?
  • How will state regulators respond to tariff-justified rate filings?

How an Actuarial Consulting Firm Like Perr&Knight Can Help

Navigating this new “tariff terrain” requires specialized expertise. Our actuarial and product design consulting services can help your organization in the following ways:

Advanced Actuarial Modeling: We project the impact of tariffs on expected future losses and expenses, considering externally available data and broader economic trends.

Innovative Product Design: We collaborate with your team to design and refine insurance products that address the evolving needs of your customers in this dynamic environment.

Strategic Pricing Solutions: We help you develop data-driven pricing strategies that balance the need for rate adequacy with market competitiveness.

Robust Reserving Methodologies: Our actuarial experts can assist you in establishing sound reserving practices that account for the uncertainties introduced by tariffs.

Regulatory Compliance Support: We provide comprehensive actuarial analysis and documentation to support your rate filings and ensure effective communication with regulatory authorities.

Partner with an Experienced Actuarial Consulting Firm

Don’t let the complexities of tariffs and their impact on the insurance industry leave you behind. Our team of experienced actuarial and product design consultants is ready to partner with insurance organizations of all sizes to develop proactive strategies for pricing and product development.

Collaborating with experienced actuaries and insurance product design experts can help you stay ahead of a shifting landscape and ensure your organization’s continued success in this evolving market.

Contact Perr&Knight today for a consultation and discover how our expertise can help you turn tariff-related challenges into strategic advantages.

[1] Car Insurance Rates Were Ready to Drop. Then Tariffs Came Along. – WSJ
[2] Progressive Corporation Quarterly Report for Quarter Ending March 31, 2025 (Form 10-Q)
[3] Q1 2025 The Allstate Corporation Earnings Conference Call | The Allstate Corporation
[4] SERFF Tracking #s: ACUT-134506391 and ACUT-134506395

How to Attract a Capacity Partner: Best Practices for Success

by Michael Covert

Securing a capacity partner is one of the most critical steps in launching or expanding an insurance program. Whether you’re a managing general agent (“MGA”), insurtech, or startup, Capacity Partners (“Partners”) need to see a well-researched, financially sound, and scalable operation before committing their support. Partners are not just looking for premium volume, they want strong underwriting discipline, effective risk management, a clear path to profitability, and efficient operational systems.

In this guide, we’ll walk through the best practices to position your program for success, from market research and actuarial feasibility to distribution strategies and technology infrastructure. By applying these best practices from our actuarial consulting experts you can build a compelling case that attracts the right Partner and foster long-term stability of your program(s).

Market Research & Competitive Analysis

Before approaching a Partner, it is crucial to conduct thorough market research and competitive analysis. Understanding industry trends, target market demands, and the competitive landscape allows you to position your program strategically. Partners want to see that you have identified a profitable niche or can differentiate your offering from existing solutions. Detailed competitor benchmarking, regulatory insights, and market demand assessments will help demonstrate that your program is viable and well researched.

Pitch Deck

A compelling pitch deck is your first impression with potential Partners, so it needs to be clear, data-driven, and persuasive. It should present your program’s value proposition, target market, competitive advantage, and financial projections. Strong visuals, concise messaging, and an emphasis on risk management and profitability will help capture the Partner’s attention. Tailoring your presentation to address the specific concerns and priorities of Partners will increase your chances of securing support.

Actuarial Feasibility Study / Loss Ratio & Profitability Expectations

Partners are typically risk-conscious and will be looking for a well thought out actuarial feasibility study performed by an experienced actuarial consulting team. This analysis should include the projected loss ratio (or the “loss pick”), expected profitability, along with supporting exhibits detailing the analysis. Actuarial soundness is critical—Partners want to see that your pricing strategy aligns with claims expectations and that you have accounted for potential underwriting volatility. Providing robust actuarial support, including historical data analysis, can strengthen your case.

Rating Plan Design

Your rating manual should be carefully designed to balance competitiveness with profitability. Partners will expect a rating manual that reflects sound actuarial principles. Ensuring transparency as well as maximizing price flexibility in your design will make your program more attractive to Partners and enhance profitability potential.

Underwriting Guidelines

Comprehensive underwriting guidelines demonstrate discipline in risk selection and portfolio management, which are critical for securing capacity. Partners want assurance that risks will be evaluated consistently and that underwriting decisions align with profitability targets. Clear guidelines should define risk appetite, eligibility criteria, pricing adjustments, and approval authority. Strengthening your underwriting framework with technology and data-driven decision-making can further enhance Partner confidence.

Risk Management

Partners expect more than just strong underwriting—they expect a holistic approach to managing risk throughout the program’s lifecycle. A well-developed risk management framework signals that you’re proactively identifying, assessing, and mitigating exposures. This includes setting clear risk tolerances, establishing protocols for emerging risk detection (e.g., Loss Control programs), and building feedback loops between claims, underwriting, and actuarial teams. Partners will also look for evidence of strong governance practices, including internal audits, compliance, quality control, and ongoing portfolio monitoring. Integrating risk management into your operational and strategic decisions helps ensure long-term profitability and signals to Partners that your program is built for resilience, not just rapid growth.

Proforma Financials

A detailed financial projection gives Partners confidence in your program’s sustainability and scalability. Proforma financials should outline expected premium volume, claims development, expense ratios, and return on investment generally over a three-to-five-year period. Clearly defining minimum premium thresholds and demonstrating a realistic path to profitability will help you gain Partner buy-in. Additionally, a well-thought-out scalability plan—accounting for expansion strategies and capital requirements—will show Partners that your program has long-term potential.

Distribution / Growth

Partners will assess your distribution strategy to ensure you have a reliable path to premium growth. Whether through retail agents, MGAs, direct-to-consumer channels, or partnerships, a well-defined distribution plan is key. Partners want to see that you have a robust network, a proven sales strategy, and an understanding of customer acquisition costs. Ensuring your growth projections are realistic and supported by market data will help build Partner confidence in your program.

Systems (Policy Administration, Claims Processing, Data Analytics)

A strong technology infrastructure is essential for efficiency, compliance, and profitability. Partners prefer programs with modern policy administration, claims processing, and data analytics capabilities. Automation and data-driven insights can improve underwriting accuracy, reduce fraud, and enhance customer experience. Demonstrating that your systems are scalable, integrated, and aligned with industry best practices will strengthen your appeal to Partners.

In summary, to successfully attract a Partner, you need a well-structured plan that encompasses most if not all of the above described best practices. Navigating this process can be complex, but you don’t have to do it alone. Perr&Knight has the expertise to guide you through every step—from market research and actuarial feasibility to financial modeling, policy form development, compliance and identifying a strong technology infrastructure. Our actuarial consulting team can also support you in crafting a compelling pitch and participating in presentations to potential Partners. With our deep industry knowledge and hands-on approach, we can help ensure your program is positioned for success. Contact us to learn more.

30 Years of Perr&Knight: What’s Next?

by Tim Perr

Perr&Knight recently celebrated its 30-year anniversary, and my partner and co-founder, Scott Knight, wrote an excellent blog reflecting on our journey and achievements over the first three decades. In this piece, I’d like to focus on what’s next for Perr&Knight.

Driven by Continuous Improvement

Looking ahead, the next chapter for Perr&Knight will continue to emphasize continuous improvement and innovation in our core technical services, including actuarial consulting, analytics, regulatory compliance, product design, and statistical reporting. We will also scale up efforts in our risk strategies services, where we assist clients with holistic and multi-disciplined approaches tailored to their unique challenges and opportunities. We will continue to introduce new services centered around information technology and artificial intelligence. And finally, we will roll out PK1Cloud—Perr&Knight’s cloud-based ecosystem that unifies all our SaaS solutions within one secure and integrated platform.

Our Greatest Asset: Still Our People

To achieve our ambitious vision, first and foremost, we’re prioritizing investments in staff development and recruitment. Recognizing that our people are our greatest asset, we remain committed to fostering talent through ongoing training, professional development programs, incentive-based compensation, and leadership opportunities. By recruiting highly qualified individuals and supporting professional growth throughout Perr&Knight, we ensure our team is well-equipped to meet evolving client needs and industry demands in a rapidly changing technological environment.

Guided by Experience & Feedback

We remain acutely dedicated to incremental improvements in our existing services. Leveraging our team’s extensive industry experience and invaluable client feedback, we are continually refining our offerings to enhance accuracy, efficiency, and value. These incremental enhancements, which compound exponentially over time, ensure we remain at the forefront of industry best practices and consistently deliver reliable and innovative solutions.

New Areas of Expertise

We are excited to introduce new areas of expertise, notably our AI consulting practice. Recognizing the transformative potential of artificial intelligence, we aim to assist our clients in leveraging practical AI technologies to drive operational efficiency, improve compliance, and secure competitive advantages. Our AI consulting services will guide clients through strategy development, technology integration, and ongoing AI-driven enhancements.

Introducing PK1Cloud

Our most ambitious endeavor ever is the introduction of PK1Cloud: our scalable, secure, and integrated cloud-based platform. PK1Cloud incorporates a proprietary central data model along with data validation and editing tools, robust analytics, natural language AI-enabled automation and reporting, and seamless integration with our regulatory and commercial insurance system partners.

Imagine the productivity gains achieved by using a highly automated state filings solution with AI-powered actuarial and product design modules. These modules will access state insurance codes to ensure compliance and other industry data, integrate with the NAIC’s SERFF system, and link with our clients’ policy and rating systems to enable no-touch or minimal-touch rate table and policy form updates upon regulatory approval.

This feature is just one part of what we are presently building as part of Perr&Knight’s PK1Cloud initiative. Other applications include statistical reporting, actuarial reserving, and advanced actuarial ratemaking—all accessible within a single, integrated ecosystem.

Reinforcing Our Unshakable Foundation

Alongside all our improvements and innovations, we remain deeply committed to reinforcing our corporate cultural foundation, which is the bedrock upon which Perr&Knight is built. This includes ensuring all engagements align with our core values, maintaining a balanced approach to work-life integration, and most of all, adhering to the integrity that our employees and clients have come to expect from Perr&Knight.

The vision for Perr&Knight’s future is bold, innovative and guided by the foundational principles that have brought us this far in 30 years. Together with the Perr&Knight team, I am confident that we will continue to develop exceptional talent, innovate, and set new benchmarks for excellence in the insurance consulting industry, extending Perr&Knight’s success well into the future.

Contact the actuarial consulting and insurance product development experts at Perr&Knight today.

Now That California FAIR Plan Assessments Are Real – Urgent Action May Be Required

by Mitchell Paden

As mentioned in the Potential Impacts of the LA Fires on California’s Property Insurance Marketplace blog, the possibility for assessments from the California FAIR Plan loomed large. That fear has become a reality, as the FAIR Plan, on February 11, 2025, levied its first assessment to member companies since 1994. The assessment totaled $1 billion and will be assigned based on the market share of the member companies. For the largest insurers in the state like State Farm, these assessments add many millions of dollars to the already significant bills they owe in the aftermath of the fires. Now that assessments have been made, what does it mean for the state’s property insurers beyond just the large bill?

$1 Billion Today, More in the Future?

Though the total assessment of $1 billion is significant, it does not necessarily mean that it is sufficient to cover all of the FAIR Plan’s costs. It is possible that the $1 billion amount was chosen specifically to coincide with the Commissioner’s September 3, 2024 Bulletin that laid out the rules for companies to recoup a portion of those assessments. That bulletin allows insurers to submit rule filings to the California Department of Insurance (“the CDI”) for approval to enable insurance companies to recoup up to 50% of those assessments in the form of a “temporary supplemental fee” that would be charged to policyholders over a period of 24 months. The FAIR Plan has said that roughly 97% of the claims submitted so far have been residential, which means the personal lines assessment is already close to that first billion. The FAIR Plan’s estimated exposure in the Palisades alone is $5 billion, so the potential threat of future assessments down the road is still very real. Once the assessments go beyond $1 billion in one calendar year, the bulletin allows that recoupment percentage to increase to 100%. Insurers may file to recoup as much as possible, so future assessments could add significant cost to the residential property premiums that are already straining consumers.

The CDI and the FAIR Plan are aware of the risk of future assessments and what it could mean for California residents, so the state has already begun enacting measures to try and make sure that doesn’t happen. For starters, Assembly Bill 226 (“the Bill”) was introduced by the state in January. The “FAIR Plan Stabilization Act” would allow the state to issue bonds to support the FAIR Plan to help it recover from large-scale disasters and increase its ability to pay claims. The bonds could help pay policyholders to begin rebuilding their lives, which is something that is sorely needed. The earlier the reconstruction efforts start, the better.  It is unclear, however, how much the FAIR Plan might need in bonds, and it would not save insurance companies from the risks of future assessments. The Bill requires the FAIR Plan; if supported by bonds, lines of credit, or any other payment mechanism; to assess insurance companies “in the amounts and at the times necessary to timely pay in full all obligations.” So, while the BIll could help prevent further assessments in the short term, companies may still be exposed to more assessments in the long-term, and this time, it could come with interest.

Will Consumer Groups Stop Recoupments?

As mentioned, FAIR Plan assessment recoupments require a rule filing in order to implement the temporary supplemental fees and recoup their FAIR Plan assessments. Despite the very unique nature of these filings, they would still be subject to the public review period required by Proposition 103. The public review period allows an interested party, such as a consumer group, the opportunity to intervene on these filings. One consumer group that seems to have plans for review of these recoupment filings is Consumer Watchdog. In a public statement, Consumer Watchdog argues that insurance companies charging policyholders for FAIR Plan assessments is “contrary to the law” because the statute enacting the FAIR Plan requires insurers, not consumers to “participate proportionally in the “writings, expenses, profits, and losses” of the Fair Plan.” There is also a question about the legality of insurer’s abilities to implement the temporary fees if their reinsurance providers cover the FAIR Plan assessments as companies like Mercury General Corporation have indicated publically. The executive director of Consumer Watchdog is on record saying that they will “be exploring every legal option to protect (consumers) from those surcharges” (https://calmatters.org/economy/2025/02/homeowners-insurance-costs-rising-in-california-fair-plan/). 
It seems like a safe bet that the FAIR Plan assessment filings will be challenged by the consumer groups, but how successful they will be in limiting or even stopping these FAIR Plan recoupments remains to be seen. 

Do Commercial Carriers Understand Their Bill?

It is well known that the assessments are billed to insurers based on market share, but insurers should be mindful of how that market share is determined. This is especially true for commercial insurers who may have received a much larger bill than expected after seeing the commercial side received just 3% of the total assessment. The participation rates for the residential assessments can include allied lines premiums when calculating the participation rates, even though many carriers have premiums in that annual statement line that are exclusively commercial. This has led to situations where an insurer who only writes commercial business receives a much larger-than-expected bill because they are receiving a portion of the residential bill. Companies can send corrections to the FAIR Plan to get their participation rates adjusted, but they are only given 30 days to do so which means as of now, it is likely too late to correct for this most recent bill. Commercial carriers should be sure to make any necessary corrections to participation rates now to prevent overstated bills moving forward.

How Quickly Will Companies be Able to Implement the Temporary Fees?

While debates about the validity of the supplemental fees go on in the background, they will not deter companies from making FAIR Plan assessment filings. For the first billion in assessments, many commercial carriers may have assessment bills so small that it may not warrant the cost of implementing the supplemental fee. We expect that the vast majority of personal lines insurers in the state, however, will make filings to add the supplemental fees to their programs given the heavy weighting of assessments to residential the residential side.  

The current rules laid out by the CDI allow supplemental fees to be filed as a pass-through to reinsurers, so even companies with coverage for the assessments will likely make a filing to get as much back as possible for their reinsurance partners. This means that the CDI could be receiving a lot more filings than normal in a relatively short amount of time, with the potential to impact department review times, not only for these filings but for pending filings and/or subsequent filings unrelated to the FAIR Plan. The hope is that the clear filing requirements laid out by the CDI will make the filings easy to review and allow these filings to be reviewed quickly, but until the full scope of the filings is known, that remains only a hope. It is unclear what role public intervention on these filings will play, as well. With all these uncertainties, it is of the utmost importance that any filings submitted for these temporary supplemental fees be clear and complete to help facilitate the quickest possible review. The actuarial consultants at Perr&Knight have already been contacted by multiple companies about doing just that, and is well equipped to get companies on the road to offset the costs of the recent FAIR Plan assessments.

Contact the state filings experts at Perr&Knight today.

Opportunities in the Growing Collector Auto Movement

by Michael Goldman

By: Michael Goldman and Natasha Paz

Classic cars are unique properties for which coverage under a standard auto policy might be insufficient. For insurance companies, pricing these products isn’t as straightforward as traditional auto policies. Whereas traditional auto policies are built around a vehicle’s depreciation over time, collectible car policies consider that the asset’s value potentially appreciates with age.

While classic car ownership was once a specialized market, today’s owner demographics are shifting. Many car collectors are still of the boomer generation, but more and more younger drivers are investing in collector cars as hobbies or as stylish rides around town. This shift is fueled by younger drivers with more disposable income, a heightened interest in classic car restoration, and a rising appreciation for vintage vehicles.

The definition of a “classic car” is changing, too. “Classic” no longer refers solely to chrome-heavy sedans from the 50s and 60s. Now, certain cars from the 1970s – and even the 80s and 90s – are categorized as “modern” classics. As the U.S. vehicle fleet ages and more consumers shift to hybrid or electric, a niche market for classic combustion engine vehicles is emerging, and supplies will continue to shrink over time.

Per Credence Research, the vintage car market is expanding rapidly, expected to double in size1 over the next decade. Though classic cars still often obtain coverage from standard auto insurance carriers, specialty insurance policies offer benefits to both policyholders and insurance companies. This all adds up to an opportunity for insurance companies to develop products that are appropriately priced to take advantage of this growing market sector.

Here are some insurance product development insights from the actuarial consulting experts at Perr&Knight to keep in mind when writing new classic car programs or re-evaluating your existing programs.

Value of the Vehicle

Unlike standard automobiles, where the value of the vehicle is expected to decrease with usage, the value of collector cars usually rises over time. Establishing the value of a classic car isn’t as straightforward as with a modern vehicle. One of the main challenges is that there is no standard, agreed-upon industry definition of a “classic” or “collectible” car.

Autos that often fall into this category do share some features, such as:

  • Most (but not all) are at least 25 years old
  • Exotic cars (e.g. Lotus, Maclaren, Maserati)
  • Cars with historical value (e.g. Model-T, hot rod)

From there, insurance companies work with policyholders to establish a predetermined “agreed value” of the vehicle. This value can be established based on appraisal data, interviews with the insured, and research on the value of similar vehicles. The agreed value becomes the amount paid in the case of total loss or theft and is used to determine if the vehicle will be repaired or considered a total loss. The “agreed value” also protects the policyholder against vehicle depreciation in the event of a claim.

Discounted Rates

Though drivers of classic cars tend to have many years (potentially decades) of safe driving behavior under their belts, the shift towards a younger demographic means that many collector car drivers have shorter driving histories. That said, collectors of any age tend to be extra careful with these vehicles – both on the road and in storage.

Classic vehicles are usually not driven as often or with the same risk tolerance as a modern daily ride, so these behaviors can play a factor in insurance product development when establishing rates.   

Because of this careful driving and increased attention to maintenance, collector vehicles are generally involved in fewer accidents than their modern counterparts. This factor can result in pricing differences when compared with traditional policies and potentially lower rates for classic vehicle owners.

Pricing Classic Car Policies

One of the most useful ways to gain intelligence on pricing is to review competitor filings and look at the kinds of variables used in successful programs. Not all states make filing information public, but for those that do, reviewing market share, checking financial statements for profitability, and looking at the pricing variables in their programs are all solid indicators of how a competing program might function in the same jurisdiction. For states without public records, information from available sources creates a solid foundation, which can then be adjusted based on other known variables for the region.

Actuarial consulting experts like the team at Perr&Knight have extensive experience evaluating multiple factors – some obvious, some less common – to develop profitable pricing strategies for classic car programs.

State-Specific Nuances

As with all insurance product development, regulation varies by state. Our actuarial consulting and product development departments have decades of experience navigating the ins and outs required by individual states. Therefore, consulting with experts throughout product development and filing can save time and increase speed to market by spotting and correcting issues that might be questioned by regulators.

Today, many opportunities exist to augment business with new classic car policies or update existing coverage. The challenges related to pricing these policies also offer opportunities to create unique products. Differences in the definition of “classic” – along with all the expected complexity of developing any insurance policy – mean that classic car product development could benefit from a seasoned actuarial consulting team. Keeping the above in mind will help you steer clear of obstacles when developing or updating your classic/collectible auto program.

Contact Perr&Knight today to chat with our actuarial consulting team or for insurance product development support.

  1. https://www.credenceresearch.com/report/north-america-classic-cars-market ↩︎