Methodology
Analysis of 678,013 policies and 24,944 claims from the freMTPL2 actuarial benchmark dataset (Charpentier 2014). The dataset contains policy characteristics and claim experience but no priced premium, so I assumed a flat premium rate of €234/exposure-year — equal to 1.4 × portfolio pure premium €167 (a standard 40% loading for expenses, profit, and risk margin). Combined Ratio adds a flat 28% Expense Ratio, the P&C industry average.
This calibration makes the portfolio break even at the global level by construction. The interesting analysis is therefore in relative profitability — which regions, driver-vehicle segments, and bonus-malus bands deviate from the benchmark.
Regional Profitability
6 regions are loss-making (Combined Ratio > 100%), worst at R21 (199%) — claims nearly 2× premium income. These are candidates for premium re-rating or exposure reduction. The 16 profitable regions average 80% CR, suggesting the book underlying the underwriting is solid where it's been priced correctly.
Risk Segmentation
The 18–25 driver row dominates the worst cells, ranging from 115% to 836% Loss Ratio across all vehicle ages — confirming the textbook young-driver risk pattern. Profitability stabilises sharply from age 26+, with the best segment performance (34%) found in older drivers with newer vehicles. The young-driver tier is a structural pricing target, not a fixable operations issue.
BonusMalus Distribution
63% of policy-years sit at BM = 50 (the best-driver tier), pointing to a healthy retention book of claim-free veteran customers. The 1% of exposure above BM 100 (the malus tail, in amber) represents drivers with claim history — a candidate group for either premium uplift or non-renewal review.