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Appendix Five - Quotation Instructions for Motor Insurance

Effective from 2015-04-27 - Apr 26 2015
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 INSTRUCTIONS FOR MOTOR QUOTATIONS
1This sheet contains clarifications on the quotation process required by the Underwriting Circular.
2All insurance companies must, in addition to this experience form, obtain full exposure data at the inception date of the policy in order to finalise a quotation.
3The required exposure data must be consistent with the company's underwriting manual
4Exposure Data must show all vehicles to be covered, and should show the rating factors used by the company for every vehicle.
5It is not the responsibility of any insurance company to provide exposure data to any other party unless this has been explicitly agreed between the Insurance Company and the policyholder.
6Any motor Third Party Liability (TPL) insurance quotation must be vehicle type dependent, at a minimum. It is not permitted to quote a flat fixed cost applicable to all vehicles covered
7The Insurance Company must determine Book Rates for all motor insurance quotations, unless the amount of claims experience is sufficient to be fully credible. The amount of experience needed for full credibility must be defined by the actuary and documented in the Underwriting Manual.
8The Insurance Company must determine Experience or Burning Cost Rates for all motor insurance quotations, unless the number of vehicles is below the threshold set by the actuary. The threshold must be documented in the Underwriting Manual.
9It should be noted that the Insurance Company is required to collect experience data even when the number of vehicles is below the threshold. The company's underwriters should consider whether claims on small schemes are indicative of fraudulent activity, or of issues that may merit individual underwriting.
10Where Book Rates and Experience / Burning Cost Rates have been determined, the company must determine a Blended Rate using the credibility formulae approved by the actuary. The credibility formulae must be fully documented in the Underwriting Manual.
11This Blended Rate represents the minimum rate that the company may quote it is fully acceptable to quote higher rates if the Underwriter is not comfortable with the Blended Rate.
12All loadings for expenses and profit determined by the actuary, and documented in the Underwriting Manual must be included in the Gross Premium Rates. It is only necessary to quote the Gross Premium Rates to the client.
13Lower quotations may only be prepared to the extent that these are fully defined within the company's Underwriting Authority Statement, which must be included in the Underwriting Manual, approved by SAMA.
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15During 2015, quotations may only be provided if at least two or more years' claims experience is provided.
16From 2016 onwards, quotations may only be provided if at least 3 or more years’ claims experience is provided
17If a risk is entirely new, the insurance company may only quote the book rates, that have been submitted to SAMA. The insurance company is not allowed to apply any discounts to these rates.
18For motor schemes, an insurance company may provide a quotation with a profit sharing element. These may only be quoted if the actuary has defined how profit sharing mechanisms may work in the pricing report, and any profit sharing must follow the format set out by the actuary.
19If the risk has been in existence for less than 3 years from 2016, or 2 years from 2015, then the insurance company may quote provided they receive full claims experience for the time the risk has been in existence.
20No insurance company is allowed to provide any quotation for motor business unless it has received claims experience.
21If a quotation is required for Comprehensive cover where the scheme has only been insured for Third Party cover in the past, then the existing experience should be used to determine the Third Party component of the rates. Book rates must be used to determine the Own Damage part of the premium rates.
22If a quotation is required for Third Party cover only, where the scheme has only been insured for Comprehensive cover in the past, then experience for Third Party claims only must be obtained, and used to determine the rates.
23An insurance company can provide a quotation as illustration only based on the information provided to it. However, the insurance company must amend the quotation based on full underwriting data. It may not issue a policy on quoted rates until it has full data to provide an accurate quotation. Under no circumstances may an insurance company provide actual rates, unless it has sufficient data, subdivided according to the rating factors it will adopt in its underwriting manual.