CARFAX, a leading provider of vehicle history reports, has joined forces with Pinnacle Actuarial Resources to introduce a new metric designed to revolutionize how insurance companies assess vehicle value and risk.
This collaboration has resulted in the creation of the CARFAX Vehicle Build Score, which aims to “modernize and replace traditional vehicle symbols.” The score utilizes the complete 17-digit Vehicle Identification Number (VIN) to provide insurers with a more detailed understanding of a vehicle’s value and specific attributes.
“For insurers, the Vehicle Build Score is an evolution toward a more advanced and refined approach to symbols and the rating process,” said Roosevelt Mosley, managing principal at Pinnacle. “Our partnership with CARFAX allows us to translate detailed vehicle data into actionable risk assessments via a simple score, giving insurers a critical edge in underwriting and pricing.”
The Vehicle Build Score incorporates a proprietary vehicle valuation model that CARFAX says prevents overpricing and underpricing by providing accurate current market values. This model analyzes a vehicle’s loss experience at the component level, reducing the need for frequent updates to existing methodologies.
Don Hendriks, director of insurance analytics at CARFAX, highlighted the limitations of current practices. “The existing practice of using symbols does not reflect an understanding of a specific vehicle’s bumper-to-bumper configuration,” he said. “The CARFAX Vehicle Build Score leverages CARFAX’s database of more than 36 billion records to provide insights into a specific vehicle’s factory- and post-factory-installed features, helping insurers better understand risk and price policies appropriately.”
The CARFAX Vehicle Build Score is designed for both the personal and commercial auto insurance sectors. The company stated that the score is designed to fit seamlessly into existing rating models and is currently undergoing filing and approval by state regulators throughout the United States.
