Private Passenger Automobile Insurance Price Changes - An LP Model

This paper develops a linear programming method for calculating voluntary private passenger BI liability rates. Such a method offers prospects of balancing and controlling explicitly desired characteristics of the rates: 'goodness of fit' of the rates to loaded trended loss data for all manual territories and classification; 'smoothness' to minimize or eliminate undesirable anomalies between and among manual rates; meeting prior knowledge or (if desired) preconceptions; meeting political realities such as maximum permitted deviations from prior rates.