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  1 NON-LIFE INSURANCE 1
  2 Table of contents 1. Introduction Analysis of business results in the non-life insurance lines... 7 A. Profitability... 7 B. Concentration in the line... 8 C. Seasonality The reform in the compulsory motor-vehicle insurance line A. General B. Rates starting from April C. Correct declarations given by insured D. Claim report E. Database F. Residual insurance G. Avner Rates in property motor-vehicle insurance A. Cancellation of minimum premium B. Review of the rate formulas The terrorist attack of September 11 th and its implications Cancellation of venue stipulation in insurance contracts Health insurance A. Introduction B. Business results in the sickness and hospitalization line C. Long-term care insurance ) Background ) Guidance on long-term care insurance (individual) D. Health insurance for foreign workers E. Proper disclosure in group health insurance F. Prohibition of selling policies for supplementary medical covers to traffic accident casualties List of tables: Table D-1: Distribution of Non-Life Insurance Gross Premiums, by Lines, in the years List of figures: Figure D-1: Distribution of gross non-life insurance premiums by lines in... 5 Figure D-2: Profitability of the Non-Life Insurance Line in the years Figure D-3: Profits in Non-Life Insurance by Main Lines in
  3 Figure D-4: Distribution of Gross Premium by Companies in the Non-Life Insurance Lines in (excluding Avner and Karnit)... 9 Figure D-5: Distribution of Gross Premium by Companies in the Motor-Vehicle Insurance Line in... 9 Figure D-6: Distribution of Gross Premium by Companies in the Homeowners Insurance Line in Figure D-7: Distribution of Gross Premium by Companies in the Property Loss Insurance Line in Figure D-8: Distribution of Insurance Premiums in the Main Lines, by Quarters in Figure D-9: Business Results in the Sickness and Hospitalization Line in Figure D-10: Distribution of Gross Insurance Premiums by Companies in the Sickness and Hospitalization Line in Appendices Appendix A: Parameters used by the insurance companies to set the compulsory motor-vehicle insurance premiums as of Appendix B: Companies that have not used the parameters for pricing a private car
  4 1. Introduction The Non-life insurance Department is responsible for setting the policy, regulation and current supervision on all the insurance lines, except for life insurance. The purpose of the department is to protect the interests of the insured and put an emphasis on creating a market with proper structure based on fair competition. The insurance lines include, among other things, property insurance, comprehensive and compulsory motor-vehicle insurance, liability insurances, financial insurances and health insurances. The health insurances include longterm care insurance, insurance for covering medical expenses, implants, individual accidents etc. During the Division dealt with the implementation of the first stage of reform in the compulsory motor-vehicle insurance line. At the beginning of April the insurance rates were updated so as to reflect the insurance risk embodied in the various vehicles, and the standard rate of insurance that was in use for many years, was cancelled, by opening a range of ten percent above and below a benchmark rate. In this range, the insurance companies can set different insurance rates for different insured. Regarding property motor-vehicle insurances, the Insurance Commissioner has issued a circular guiding the insurance companies to cancel the minimum premium they have integrated in the standard rate and resubmit the rate formulas for approval. Toward the end of the year the influence of the events of September 11 th was evident and consequently the rates in insurance lines that cover catastrophes rose. Regarding health insurances, rules were set for extending the proper disclosure toward the insured at the time of joining the insurance and during the insurance period. Moreover, new insurance policies for foreign workers have been approved according to the instructions set in the Foreign Workers order that came into force on October. This order instructs employers to insure the foreign workers employed by them at a minimum scope of cover, which is basically similar to the health basket given to Israeli citizens according to the National Health Insurance law. In addition, during this year the Insurance Commissioner published a draft of instructions for the insurance companies regarding the long-term care insurance in individual policies in order to assure a fair long-term cover and maintain the stability of the insurance business. The total of premiums 1 in the non-life insurance lines in was about NIS 14.9 billion. This amount is an increase of about 8.7% (about NIS 1.2 billion) compared with the year 2000 where about NIS 13.7 billions were collected. This is an exceptional increase in the premiums (between there was an average decline of about 0.3% a year in the collected premiums). 4
  5 Figure D-1: Distribution of gross non-life insurance premiums by lines in (Percent) aircraft and marine vessels 0.2% cargo in transit 0.7% engineering insurance 2.1% credit insurance 0.8% other risks 3.7% property loss & homeowners 9% sickness & hospitalization 8.1% Individual accidents 1.4% homeowners 7% other liability lines 7% compulsory motor-vehicle 26% employer liability 1.9% property motor-vehicle 31.8% Source: annual report data of the insurance companies and processing of the Capital Market, Insurance and Savings Division (Based on individual Companies reports (Solo)). According to table D-1, this increase is the result of an increase of about NIS 304 million in premiums in the business property loss and comprehensive line (about 27.4%), an increase of about NIS 299 million in the property motor-vehicle line (about 6.7%) and an increase of about NIS 185 million in the sickness and hospitalization line (about 18.2%). 5
  6 Table D-1: Distribution of Non-Life Insurance Gross Premiums, by Lines, in the years (NIS thousands, December 31 prices) Insurance type Change in premiums between Rate of premium change in Business property loss and comprehensive 1,231,438 1,115,887 1,108,390 1,412, , Homeowners 985, ,226 1,006,453 1,044,091 37, Compulsory motor-vehicle 3,823,991 3,749,955 3,812,232 3,874,569 62, Property motor-vehicle 4,744,693 4,607,550 4,441,974 4,740, , Employer liability 261, , , ,478 29, Other liability lines 854, , ,671 1,040, , Individual accidents 224, , , , Sickness and hospitalization 802, ,638 1,019,284 1,204, , Aircraft and marine vessels 27,476 27,418 26,581 30,283 3, Cargo in transit 135, , , ,495-1, Engineering insurance 254, , , ,248 27, Credit insurance 99, ,249 69, ,508 49, Other risks 361, , , ,698 64, Businesses originating abroad 1,206 1, , Total 13,808,478 13,771,210 13,731,015 14,925,589 1,194, Source: annual report data of the insurance companies and processing of the Capital Market, Insurance and Savings Division (Based on individual Companies reports (Solo)). 6
  7 2. Analysis of business results in the non-life insurance lines A. Profitability The profit in all the non-life insurance lines aggregated in some NIS 812 million compared with NIS 430 million in This is an increase of about 89% in profitability. As seen in figure D-2, the profitability in the non-life insurance lines is fluctuational. Figure D-2: Profitability of the Non-Life Insurance Line in the years (NIS million) 1, Line profits (including Avner) Avner profits Source: data from the annual reports of the insurance companies and processing of the Capital Market, Insurance and Savings Division (Based on individual Companies reports (Solo)). Figure D-3 1 shows a profit in the main insurance lines in It is evident that the compulsory motor-vehicle insurance line (including Avner) is the most profitable line in all the reviewed years 2. In addition, one can see the fluctuational nature that characterizes the property motor-vehicle insurance line (see detailing in the Commissioners report for 2000). In the profitability in these two lines was about 66% of the profitability in the non-life insurance line (about 43% in 2000). The profitability in the homeowners line is relatively stable, and ranging between about NIS 88 million and about NIS 103 million a year. In it was about 11% of the total profit in the line whereas the rate of premium in the homeowners line was about 7% of the total of premiums in the non-life insurance line. 1 The profit of the compulsory insurance line includes Avner s profits as follows: in 1998 NIS 571 million, in 1999 NIS 408 million, in 2000 NIS 85 million and in NIS 157 million. 7
  8 Figure D-3: Profits in Non-Life Insurance by Main Lines in (NIS million) (100) (200) (300) sickness & hospitalization property loss other liabilities (employer and other) compulsory motor-vehicle property motor-vehicle homeowners Source: data from the annual reports of the insurance companies and processing of the Capital Market, Insurance and Savings Division (Based on individual Companies reports (Solo)). B. Concentration in the line The insurance premiums collected by the Clal group (the group with the largest market share) in the non-life insurance lines in are about 2.5% of the total insurance premiums collected in the line. The part of the Clal group is about 1/3 of the total of insurance premiums collected in the property loss and homeowners lines (about 36.3% and 31.5% correspondingly) and about 1/4 of the total of insurance premiums collected in the property motor-vehicle insurance line (about 23.1%). According to the figures below, it appears that the four large insurance groups 3 have a considerable market share in the property insurance lines. Their share in the property loss line is about 79.6%, their share in the homeowners line is about 72.6% and in the property motor-vehicle insurance line about 62.9%. The differences in concentration in the various insurance lines may indicate the degree of competition in the various lines. 2 Figures D-2 and D-3 include the profitability of the Avner Company. This company recognizes a profit after five years, unlike most of the insurance companies that recognize a profit after three years. If Avner s reporting method in were like other companies, the profit would have increased in about NIS 900, List of insurance groups: The Phoenix group: Phoenix, Hadar Harel group: Shiloach, Sahar-Zion, Dikla Clal group: Clal, Aryeh, Ilit Migdal group: Migdal, Hamagen 8
  9 Figure D-4: Distribution of Gross Premium by Companies in the Non-Life Insurance Lines in (excluding Avner and Karnit) Eliahu 5.3% Ayalon 6.4% Other 9.4% Clal 24.4% Direct Insurance 3.3% Menorah 6.7% Migdal 11.1% Harel (Sahar-Zion) 18.4% Phoenix 15.1% Source: data from the annual reports of the insurance companies and processing of the Capital Market, Insurance and Savings Division. Figure D-5: Distribution of Gross Premium by Companies in the Motor-Vehicle Insurance Line in Eliahu 7.8% ILD 3.4% Other 5.4% Clal 23.1% Ayalon 8% Direct Insurance 5.5% Migdal 8.3% Menorah 6.9% Harel (Sahar-Zion) 15.6% Phoenix 15.9% Source: data from the annual reports of the insurance companies and processing of the Capital Market, Insurance and Savings Division. Detailing of the insurance groups in the group 'Other' in figure D-5: AIG 2.4%, Agricultural insurance 1.5%, Shomera 0.3% and Shirbit 1.2%. 9
  10 Figure D-6: Distribution of Gross Premium by Companies in the Homeowners Insurance Line in Direct Insurance 3.2% Ayalon 5.4% Eliahu 3.1% Other 6.1% Clal 31.5% Menorah 9.6% Harel (Sahar-Zion) 12.6% Phoenix 14.7% Migdal 13.8% Source: data from the annual reports of the insurance companies and processing of the Capital Market, Insurance and Savings Division. Detailing of the insurance groups in the group 'Other' in figure D-6: AIG 1.9%, Hachsharat Hayeshuv (ILD) 2.4%, Shomera 0.7% and Shirbit 1.1%. Figure D-7: Distribution of Gross Premium by Companies in the Property Loss Insurance Line in Ayalon 6.5% Agriculture Insurance 6.5% Phoenix 6.1% Eliahu 4% Menorah 2.5% ILD 0.9% Clal 36.3% Migdal 12.8% Harel (Sahar-Zion) 15.6% Source: data from the annual reports of the insurance companies and processing of the Capital Market, Insurance and Savings Division. 10
  11 In order to examine the concentration in the various lines in, we use the following indices: 1. The Herfindahl-Hirschman Index (HHI) calculated by the sum of squares of the insurance company s market share out of the total of premiums collected in that line. 2. The CR3 index that sums up the market share of the 3 large insurance groups out of the total of premiums collected in that line. The results of the concentration indices are specified below: Indices/ Lines Herfindahl Hirschman Index Compulsory motor-vehicle (excluding Avner and Karnit) Property motor-vehicle Homeowners Sickness & hospitalization Property loss Employer liability CR3 (In percentage) As the indices grow bigger, the concentration in the line also increases. C. Seasonality Figure D-8: Distribution of Insurance Premiums in the Main Lines, by Quarters in (Percent) quarter 1 35 quarter quarter 3 quarter compulsory property motor-vehicle motor-vehicle homeowners sickness & hospitalization property loss liabilities (employer and other) Source: data from the annual reports of the insurance companies and processing of the Capital Market, Insurance and Savings Division. 11
  12 Figure D-8 shows the distribution of insurance premiums over the quarters in the non-life insurance lines for. The figure shows that in the motor vehicle lines the main part of insurance premium payments was done in the 1 st quarter of the year compared with the other quarters where the distribution is similar (the reason for this is probably the fact that collectives, that are an important factor in the property motor-vehicle insurance market, tend to arrange motor-vehicle insurances for their workers at the beginning of the year). In the property loss line and in the liability (employers and other) lines, the trend is similar. On the other hand, in the homeowners line and sickness and hospitalization lines the distribution of insurance premiums is similar among all quarters. 12
  13 3. The reform in the compulsory motor-vehicle insurance line A. General In July 1997, the Motor Vehicle Insurance Law (insurance under Conditions of Managed Competition and Transitional Arrangements and Directives regarding Avner) 1997 (hereinafter: "Managed Competition Law)" opened the compulsory motor-vehicle insurance industry to competition. The main goals of the reform were as follows: 1. To arrange a competitive structure for the line in order to financially streamline it and reduce the price of all insurance premiums in the line. 2. To encourage careful driving by using parameters that reflect the insurance risk for the purpose of setting the insurance premium, and preventing the subsidization so that each insured will pay his risk premium. As one can recall 4, in consequence of signing the memorandum of understanding between the Insurance Commissioner and the insurance companies and the legislation that followed, the reform implementation is carried out in two main stages. The first, starting from 1.4. until , the validity of Erlich s letter expired, and the insurance companies are the ones setting the insurance rate in the range of 10% above and below a benchmark rate with no compensation mechanism on past losses. At the same time, the rate of liability of insurance companies in coinsurance was raised to 70% in and to 80% in 2002 and Avner s share declined correspondingly. At the second stage, starting from , Avner will not deal, in a direct or indirect manner, with any business not related to the settlement of claims 5. B. Rates starting from April Starting from April, with the implementation of the first stage of the reform in the compulsory motor-vehicle insurance line, the standard rate that was common in the compulsory motor-vehicle insurance line was cancelled and the insurance companies were allowed to set by themselves the insurance rates in a range of 10% above and below a benchmark rate set by the Minister of Finance, based on the recommendations of the database operator. The regulations 6 stipulate that within this range, the insurance companies can set the insurance rates and use at their discretion seven risk parameters, set by the Insurance Commissioner according to the recommendations of the database operator and with the Insurance 4 For further details on the reform and memorandum of understating, see chapter D for the annual report of the Capital Market, Insurance and Savings Commissioner for Managed Competition Law, section 10B (B). 13
  14 Commissioners approval. An insurance company is obligated to use all the parameters approved to it by the commissioner. The purpose of these parameters is to evaluate the insured s quality of driving in order to adjust the insurance premium to the insured risk. In addition, the insurance companies are entitled to give discounts on the permissible loadings allowed to them up to 14.23% of the insurance premium (the loadings are designated to finance the operational expenses of the companies, including profit and agents commissions). The parameters allowed for use in compulsory insurance Parameter Engine volume Driver gender Driver age Driver experience (years licensed) History of road accidents Deprivation of driver s license Trend The rate decreases as the cc increases Lower rate for women drivers The rate decreases as the age increases The rate decreases as the experience increases The rate increases with the number of car accidents The rate increases with the number of license deprivations As of , a major part of the companies used a differential rate. Appendix A specifies the insurance companies and the various parameters they used as of this day. Half of the companies that deal with compulsory insurance have used parameters to set the premium: six companies used the drivers age parameter, four used the driver s experience parameter and one company used six parameters. Eight companies used no parameter for pricing the insurance premium. The usage the insurance companies do with various parameters results in a situation where insured have different rates in different companies. Selecting an insurance policy is influenced by three central elements: the insurance cover given in the policy, the identity of the insurance company and the amount of premium. In a compulsory insurance the insurance cover is dictated by virtue of the law therefore the insured must consider mainly the identity of the insurance company, the experience he has with it and the cost of insurance. The practical meaning for the public of insured is that when buying compulsory insurance for a car one should consider, among other things, the insurance premium charged by the insurance company. Since starting from April this premium is not uniform among all the companies, it is recommended for insured to compare between the various companies and rates. C. Correct declarations given by insured According to the law, compulsory insurance is made for the car rather than for a specific driver. As long as the insurance premiums were set based on the car characteristics only 6 Regulations of supervision on insurance businesses (the insurance premiums an insurer is entitled to charge from insured in motor vehicle insurance), temporary provision. 14
  15 (engine type and size), it was easier for the insurance companies to check the reliability of data given by the insured on the car. With the reform implementation, more emphasis will be put on the driver s characteristics, which are the main factors that influence the insurance risk, therefore the insurance companies will have to check various characteristics of the drivers using the car, like the age of potential drivers, their history of accidents, the purposes of using the car and the like. An insurance company can ask the insured questions related to parameters that influence the insurance risk, yet it is possible that the insurance company could not condition the insurance cover on the correctness of the obtained declarations (for example, the driver age). This situation may result in a state where certain insured will have an incentive to give incorrect declarations in order to pay a reduced premium, knowing that an incorrect declaration will not influence the payment of insurance compensations. This situation may result in the following consequences: A. Rates that do not reflect their insurance risk will be given to insured who give faulty data, therefore the insurance company will not collect sufficient premiums. B. The cost of risk will be rolled over to other insured due to faulty data given by insured. C. Faulty information will be entered to the database so that the reliability of the database s products will be damaged. During a report of a professional committee appointed by the Insurance Commissioner for examining alternatives for coping with incorrect declarations of insured was published. According to one of the alternative offered by the committee, a limited fine will be laid on insured who gave incorrect declarations due to which they received a reduced premium in their compulsory motor-vehicle insurance policy. According to the above alternative, an insured who gives incorrect details when buying the policy like the age of driver who will drive the car, his experience in driving, the number of license deprivations etc. will be fined. The fine will be limited and will be collected by self participation when the insurance case happens only from the compensation component for the pain and suffering caused to the traffic casualty 7, yet not from the payment for medical expenses or for the work disability. The amount of fine will be set, among other things, according to the influence of the incorrect details on the premium paid by the insured, like the mechanism set in section 7 to the Insurance Contract law. Setting the fines requires, of course, a legislative change. D. Claim report During a circular concerning Claim Report in compulsory motor-vehicle insurance was published, stipulating the obligation to report in writing in a uniform format on compulsory insurance claims for policies that end starting from For policies that end starting from 15
  16 , the reporting will be extended and will also include a specification of variables that influence the insurance premiums according to the definitions of the database operator, even if the insurer has not used them when calculating the insurance premiums. Moreover, the report will include the details of the driver involved in each accident. The purpose of circular is to facilitate the underwriting process in compulsory insurance, like in property motor-vehicle insurance, by the delivery of a claim report for each insured, a report that specifies the claims for bodily injury for each policy. The specification of the driver s details and the variables by which the policy was issued will enable the insurance company to better evaluate the risk of each insured and to allow fair and correct pricing of the insurance policy. E. Database As stated, the basis for correct fair competition and pricing of the insurance rates is statistical information. One of the most important components in the reform in compulsory motorvehicle insurance is the database, which goal is to recommend to the Insurance Commissioner and the insurance companies on risk rates. Based on deliberations with the insurance companies, a statistical plan was published in July that defines the way of collecting data and reporting on them to the database. At the request of the insurance companies, the beginning of data collection was delayed until From this date on, information will be collected according to the statistical plan from each insured. F. Residual insurance During, Motor Vehicle Insurance regulations were set (a residual insurance arrangement and a mechanism for setting rates), (hereinafter: "the regulations"). The regulations were designated, among other things, to streamline and improve the residual insurance array by establishing an arrangement administration, which is a corporation, and by arranging a mechanism for setting rates. In August, the insurance companies established the Managing Corporation of the Compulsory Motor Vehicle Insurance Pool (the pool) Ltd according to the regulations. Moreover a CEO and board of directors were appointed to the company, workers were recruited and an information system was established. The residual insurance is basically in loss. The financing of its losses is imposed on all insured in compulsory insurance. A private car and motorcycles under private ownership that are insured by residual insurance pay an addition of 25% whereas any other vehicle pays an addition of 35% to the market rates as set in the regulations. In order to finance the losses 7 The payment for pain and suffering is set in the regulations of compensations to traffic accident casualties (the calculation of compensation for damage other than in property) 1976 and may reach up to NIS 133,000 per casualty, depending on the degrees of disability set for him or the duration of hospitalization. At the absence of disability or hospitalization days, the maximum amount is up to 10% of the above amount. 16
  17 of the residual insurance, as expected due to the motorcycle insurance 8, in a rate lower than their risk rates, 4.3% were added to the risk premium of all vehicles, meaning a total of NIS 116 million a year. G. Avner The Motor Vehicle Insurance Law (insurance under conditions of managed competition, transitional arrangements and directives regarding Avner), 1997 stipulates that starting from 2003, Avner will no longer serve as a common insurer in the compulsory motor-vehicle insurance line. From now on Avner will only deal with matters related to the settlement of past claims of traffic accident casualties. According to the memorandum of understanding 9, in December a new board of directors was appointed for Avner which role is, among other things, to assure correct and orderly transfer of Avner to management by a special manager in The population insured in the pool other than motorcycles and that is not under a short-term insurance cover is very small. 9 For the memorandum of understating refer to Chapter D of the Commissioner s report on the Capital Market, Insurance and Savings
  18 4. Rates in property motor-vehicle insurance A. Cancellation of minimum premium According to the provisions of the law, an insurance company that is interested in introducing an insurance plan into the property motor-vehicle line (self and third party) must first obtain the approval of the Insurance Commissioner. In order to obtain approval for the insurance premium, the insurance company is required to provide certain data to the Commissioner, like the full rate formula and a list of the parameters and their values. Most of the insurance companies, in the framework of the rate formula, used to combine a parameter of Minimum Premium, which is the minimum amount an insurance company intends to charge from different insured as insurance premiums. Minimum premium means that although the risk data of a specific insured indicate that he should pay a certain amount, in fact he will be required to pay a higher amount. These are two examples for the minimum premiums used by the various insurance companies during 2000: Company A private car NIS 2,582 commercial car - NIS 3,095 Company B private car NIS 2,016 commercial car NIS 2,419 After reviewing the matter of minimum premium and due to the desire to reduce cross subsidizations between different insured and establish actuary rates by which each insured pays according to his insurance risk, the Commissioner of Insurance published in August an insurance circular that instructs the insurance companies to submit for approval rate formulas that do not include minimum premiums. According to the circular instructions, the companies have submitted new rate formulas for the property motor-vehicle insurance line. B. Review of the rate formulas The rate formula consists of a risk premium and loadings. The risk premium is in fact the expected cost incurred by the insurance company due to paying claims and settling claims: the payment due to the damage caused to the insured, including any expenses the insurance company may have incurred for settling the claim, like lawyers and investigators. The loadings include the expected cost due to the issue of policy, like marketing expenses and agents commission and the profit component. Setting the risk premium is done while considering three main components: 1. The cost of risk due to an accident that causes damage to the insured s car. 2. The cost of risk due to an accident that causes damage to the car of a third party The payment of the insurance company for this component is usually limited by an upper limit. 18
  19 3. The cost of risk due to theft or an attempt to steal the insured s car. In order to set a differential risk premium that considers the specific risk characteristics of each insured, the insurance company will set the cost of the various components indicated above. It should be noted that in the property motor-vehicle insurance line, the insurance companies use many diversified parameters for evaluating the risk. The cost of risk due to an accident is directly related to the characteristics of the car drivers. Usually as the driver s age grows higher and as his experience increases, the cost of risk due to an accident decreases. Moreover, in certain ages the driver s gender and marital status are also influential (single or married). At certain ages the cost of risk due to an accident for women is lower than for men, and the cost of risk of married people is lower than the cost of risk for singles. The reasons for this are diversified: it is possible that women are more careful than men, yet it is also possible that women drive less than men. This is also true for marital status. It is possible that married people drive more carefully yet there may be other reasons as well. Additional characteristics of a driver that are relevant to the cost of risk due to an accident are as follows: 1. Number of drivers authorized to drive the car (as the number of authorized drivers increases, the cost of risk also increases, because the car is used for longer periods of time or since certain drivers are more dangerous). 2. The insurance history of the driver. If an insured has not filed any property motorvehicle claims against the insurance company in the last years, this may indicate of the driver s nature. The cost of risk due to an accident is also influenced by the car s characteristics, like the car s manufacturer, its weight and whether this is a private or commercial car, is the car being used as the main car or as a secondary car etc. It should be noted that to the matter of calculating the cost of risk due to damage to a third party, there is a substantial difference between the insurance companies regarding the way they calculate the cost of risk. Some of the companies use a differential rate according to the driver s characteristics, yet some insurance companies collect a fixed amount for a third party cover though these are different drivers. The cost of risk due to a theft is very much influenced by the value of the car. As the value of the car increases, the consequences of theft lay higher cost on the insurance company. Another important component of the cost of risk is the probability of stealing various cars. There are different types of vehicles with a high probability of theft and there are other vehicles which probability of theft is lower. All the probabilities may change within a short time (for example 19