Private Passenger Basic Quota Calculation

TAIPA PRIVATE PASSENGER BASIC QUOTA CALCULATION<- Third Quarter 2004

An example of 3 companies is shown below, listing vehicles on policies in force on the first day of the quarter shown. Each quarter has a total for the listed quarter:

Vehicles on Policies in Force as of:
Company	Dec 31, 2002	March 31, 2003	June 30, 2003	Sept 30, 2003	Dec 31, 2003
A	1,000	1,200	1,400	1,600	1,800
B	1,000	1,100	1,200	1,300	1,400
C	1,000	1,200	1,400	1,200	100
Total	3,000	3,500	4,000	4,100	3,300

The same companies are shown below; however, they are listed by average vehicles on policies in force for each quarter:

Average Vehicles on Policies in Force by Quarter
Company	1st Qtr 2003	2nd Qtr 2003	3rdQtr 2003	4th Qtr 2003	TOTAL
A	1,100	1,300	1,500	1,700	5,600
B	1,050	1,150	1,250	1,350	4,800
C	1,100	1,300	1,300	650	4,350
Total	3,250	3,750	4,050	3,700	14,750

The average is determined by adding the first day of 2 consecutive quarters and dividing by 2. For Example:Company A: Dec 31, 2002 (1,000) + March 31, 2003 (1,200) ÷ 2. 1,000 + 1,200 = 2,200 ÷ 2 = 1,100 average vehicles for 1st Qtr 2003 The same calculation is shown for each company and quarter, plus the total is shown for all companies.

TERRITORIAL CREDIT DATA:
The territorial credits are shown below by company, by underserved credit amount. The computation of the averages are the same as shown on the previous page.

Vehicles on Policies in Force in 1-for-1 Credit Category as of:
Company	Dec 31, 2002	March 31, 2003	June 30, 2003	Sept 30, 2003	Dec 31, 2003
A	20	24	28	32	36
B	35	40	45	50	50
C	10	10	10	10	10
Total	65	74	83	92	96

 

Average Vehicles on Policies in Force by Quarter
Company	1st Qtr 2003	2nd Qtr 2003	3rdQtr 2003	4th Qtr 2003
A	22	26	30	34
B	38	43	48	50
C	10	10	10	10
Total	70	79	88	94

 

Vehicles on Policies in Force in 2-for-1 Credit Category as of:
Company	Dec 31, 2002	March 31, 2003	June 30, 2003	Sept 30, 2003	Dec 31, 2003
A	20	24	28	32	36
B	35	40	45	50	50
C	10	10	10	10	10
Total	65	74	83	92	96

 

Average Vehicles on Policies in Force by Quarter Times 2
Company	1st Qtr 2003	2nd Qtr 2003	3rdQtr 2003	4th Qtr 2003
A	44	52	60	68
B	75	85	95	100
C	20	20	20	20
Total	139	157	175	188

 

Vehicles on Policies in Force in 3-for-1 Credit Category as of:
Company	Dec 31, 2002	March 31, 2003	June 30, 2003	Sept 30, 2003	Dec 31, 2003
A	20	24	28	32	36
B	35	40	45	50	50
C	10	10	10	10	10
Total	65	74	83	92	96

 

Average Vehicles on Policies in Force by Quarter Times 3
Company	1st Qtr 2003	2nd Qtr 2003	3rdQtr 2003	4th Qtr 2003
A	66	78	90	102
B	113	128	143	150
C	30	30	30	30
Total	209	236	263	282

 

Vehicles on Policies in Force in 4-for-1 Credit Category as of:
Company	Dec 31, 2002	March 31, 2003	June 30, 2003	Sept 30, 2003	Dec 31, 2003
A	20	24	28	32	36
B	35	40	45	50	50
C	10	10	10	10	10
Total	65	74	83	92	96

 

Average Vehicles on Policies in Force by Quarter Times 4
Company	1st Qtr 2003	2nd Qtr 2003	3rdQtr 2003	4th Qtr 2003
A	88	104	120	136
B	150	170	190	200
C	40	40	40	40
Total	278	314	350	376

TOTAL TERRITORIAL CREDITS:
"Total Territorial Credits" for the same period, is the total of credits for each company and statewide by quarter:

Total Territorial Credits
Company	1st Qtr 2003	2nd Qtr 2003	3rdQtr 2003	4st Qtr 2003
A	220	260	300	340
B	376	426	476	500
C	100	100	100	100
Total	696	786	876	940

For example: Company A: 22 (1-for-1) + 44 (2-for-1) + 66 (3-for-1) + 88 (4-for-1) = 220

"Take-Out Credits (One Quarter Lag)" are allowed at a 2-for-1 rate for voluntary take-out:

Average Vehicles on Policies in Force by Quarter
Company	1st Qtr 2003	2nd Qtr 2003	3rdQtr 2003	4th Qtr 2003	Total
A	1,100	1,300	1,500	1,700	5,600
B	1,050	1,150	1,250	1,350	4,800
C	1,100	1,300	1,300	650	4,350
Total	3,250	3,750	4,050	3,700	14,750

"Credit Adjusted Vehicles = Each Company's Average Vehicles on Policies in Force minus Total Credits"

Credit Adjusted Vehicles
Company	1st Qtr 2003	2nd Qtr 2003	3rdQtr 2003	4th Qtr 2003	Total
A	878	1,040	1,196	1,360	4,474
B	674	724	774	850	3,022
C	990	1,188	1,190	536	3,904
Total	2,542	2,952	3,160	2,746	11,400

For example: Company A: = 1st Qtr 2003 has 1,100 average vehicles less 222 credits = 878
"Basic Quota" = Total credited adjusted vehicles for each company divided by the statewide total. Contact Gary Gola at Texas Department of Insurance for statewide totals.

Basic Quota
Company
A	0.3924562
B	0.2650877
C	0.3424561
Total	1.0000000

For example: Company A: 4,474 divided by 11,400 = .3924562

If a company generates a negative quota, set the company's basic quota to zero. Divide the remaining companies' basic quota by the sum of the remaining companies' basic quota.