Some insurers think of red sports cars as claims waiting to happen. In some cases they turn off red sports car segments, as well as some other “risky” or “easy-to-steal” makes and models. While this approach might protect your loss ratio, it will most certainly limit your growth. With machine learning, you can confidently turn on all segments and cherry-pick rate adequate opportunities.

At-A-Glance Crash and Theft Rates

Crash rates do vary by vehicle model. There are a couple of possible explanations for this. Some vehicles may be safer than others because they feature advanced collision avoidance technologies that reduce the risk of crash. Some vehicles also attract particular types of drivers. Someone who wants a safe and reliable car for the family might choose a sensible SUV, whereas someone who wants to race down the highway might be drawn to a flashy sports car.

Looking at 4 million car insurance applications, Insurify found that the Audi S4 had the highest rate of accidents in 2023 – 11.7% of drivers of this luxury sports sedan had an at-fault accident on record, compared to a national average of 7.6% for all vehicles. The vehicle has some impressive safety features (IIHS gives it an overall safety evaluation of Good), but it also has a V6 engine and 349 horsepower.

Some vehicles also have a higher risk of theft. Once again, there’s more than one possible explanation. Some vehicles may be of higher value, making them attractive targets. Other vehicles may be easier to steal, meaning they’re low-hanging fruit.

According to the National Insurance Crime Bureau, the Hyundai Elantra was the most stolen vehicle in 2023, with 48,445 reported thefts. This was followed by the Hyundai Sonata, the Kia Optima, the Chevrolet Silverado 1500, and the Kia Soul. This surge in thefts was due, in part, to a viral set of social media posts that showed how to steal Kias and Hyundais according to CNN.

Digging Into the Details

The driver of an Audi S4 is more likely to have an at-fault accident on his record than the driver of another vehicle, but this doesn’t mean all Audi S4 drivers are reckless. In fact, Insurify’s data also shows that 88.3% of Audi S4 drivers DON’T have an at-fault accident on their record.

If an auto insurance company decides not to cover all Audi S4s due to the higher crash rates, it’s also missing out on business from the majority of Audi S4 owners who haven’t crashed.

The same goes for vehicles that are targeted for theft at higher rates. Hyundai says it sold its 3 millionth Elantra in the U.S. in 2017.  According to Good Car Bad Car, the Elantra is one of the best-selling models in the world. The fact that there are a lot of Elantras contributes to the fact that many stolen cars are Elantras. Furthermore, insurers that exclude Elantras are losing a huge segment of potential business.

The Big Picture

Vehicle model is just one part of a complex risk profile that includes dozens of characteristics that intersect in a nearly infinite number of ways. In some cases, an insurer’s filed rates may be inadequate for an Audi S4 or Hyundai Elantra. In other cases, the filed rates may be more than adequate due to other factors present that mitigate the overall risk.

The trick is to determine what kind of case you’re dealing with on a policy-level basis.

That’s exactly what Soteris enables insurers to do. Instead of turning off whole segments because your rates may be inadequate, use Soteris to score the rate adequacy of each individual risk at a policy level.

Soteris uses machine learning to evaluate dozens of risk characteristics for each application. It then compares an individual’s likelihood of a claim to the insurer’s filed rate to produce a rate adequacy score for each potential policy. If the filed rate is adequate and the score falls within the insurer’s risk threshold, the policy may qualify for straight-through processing. If the risk score indicates that the rate is inadequate, it is flagged for additional review.

This modern approach enables insurers to write all makes and models, and grow premiums with confidence, while ensuring rate adequacy. Learn more.