# Quest for Optimal Bonus-Malus in Automobile Insurance in Developing Economies: An Actuarial Perspective

Save this PDF as:

Size: px
Start display at page:

Download "Quest for Optimal Bonus-Malus in Automobile Insurance in Developing Economies: An Actuarial Perspective"

## Transcription

5 ,,,! The posterior structure function for a group of insured with claim history,,, is found as,,,, 0 Consequently, using the quadratic loss function, the estimate for the expected number of claims of an insured with claim history,,, is 1 Poisson-Gamma mixture Similarly, consider if we assume that the number of claims n is Poisson distributed with parameter λ. And hhere, λ is assumed to be distributed as gamma with parameters α and β. That is, the distribution of n is, 0,1,2,! 0 The distribution of λ is, 0, 0, 0 Γ 0 Using the Bayesian estimation, the unconditional distribution of n claims is obtained as Negative Binomial with parameters α and β, that is , 0,1,2, Consequently, using the quadratic loss function, the estimate for the expected number of claims of an insured with claim history,,, is Claim Severity distribution Regarding claims severity, researchers, especially the actuaries have come up with a number of mathematical models that would ensure that any BMS adopted by an insurance market is fair to both parties to an insurance contract. As noted earlier, a BMS is called optimal if it satisfies two conditions: first, it must be financially balanced for the insurer, that is, the total amount of bonuses is equal to the total amount of maluses, and second, it must be fair to the policyholders, that is, each policyholder pays a premium proportionate to the risk that he brings to the pool (Frangos and Vrontos, 2001). Where there is no difference in penalty between the policyholder having an accident with a small size of loss and a policyholder with a big size of loss, a BMS can be said to be unfair. Therefore, an optimal system which takes both the frequency and severity component into account must be used to set the premium an insured will pay (Mert and Saykan, 2005). We now look at the severities. Many claim (high and small) severities are observed in motor insurance. Given that c is the claim size made by each insured with unequal mean size λ inverse gamma with parameters α and β defined by 1, 0, 0, 0 Γ 0 Using the Bayesian estimation, the unconditional distribution of claim size c, is obtained as Pareto with parameters α and β (see Hogg, McKeen and Craig, 2005), and using the quadratic loss function, the estimate for the expected claim amount of an insured with claim size history,,, is 1 78 ISSN E-ISSN

7 safety. To still further improve on the system the regulatory authorities should organize a data bank which would help each insurance company to have better access to the past record of claims at fault. References Aeron-Thomas, A. (2002). The role of the motor insurance industry in preventing and compensating road casualties, Scoping Study Final Report, Accessed January 5, Babington-Ashaye, F. (2008). Refocusing the insurance industry towards FSS BGL (2010) BGL Insurance Report 2010: Promise kept or promise deferred. accessed 28/01/2011 Brouhns, N., M. Guillen, M. Denuit, and J. Pinquet. (2003). Bonus-malus scales in segmented tariffs with stochastic migration between segments, Journal of Risk and Insurance, vol. 70 (4) pp , CEA. (2007). The European motor insurance market. CEA Statistics N 32 December 2007 Coene, G. and Doray, L.G. (1996). A financially balanced bonus-malus system. ASTIN Bulletin. Vol. 26, No.1. pp , Denuit, M. and Dhaene, J. (2000). Bonus-malus scales using exponential loss functions, Bulletin of German Society of Actuaries, 25, pp Dionne, G., R. Gagne, and C. Vanasse. (1998). Inferring technological parameters from incomplete panel data, Journal of Econometrics, vol.87, pp , Dionne, G. (2005). The (1992) bonus-malus system in Tunisia: an empirical evaluation. The Journal of Risk and Insurance, Vol. 72, No. 4, pp , doi: /j x, Dionne, G. and Dostie, B. (2007). Estimating the effect of a change in insurance pricing regime on accidents with endogenous mobility.cirpee Working Paper Frangos, N. E., and Vrontos, S. D. (2001). Design of optimal bonus-malus systems with a frequency and a severity component on an individual basis in automobile insurance. ASTIN BULLETIN, Vol. 31, No. 1, pp. 1-22, Guerreiro, G. and Mexia, J. (2002). An alternative approach to bonus malus, Harlaar, H. (2008). Introduction of the no-claim protector: research of the consequences for the Dutch car insurance market AENORM, 58 (Jan) Henwood, N., and Wang, B. (2009). Insights into comprehensive motor insurance rating. Presented to the Institute of Actuaries of Australia 2009 Biennial Convention, April Holtan, J. (1999). Optimal insurance coverage under bonus-malus contracts. Paper to be presented at the 30th International ASTIN Colloquium, Tokyo, Japan, August. Huang, R. J., Tzeng, L. Y., Wang, J. L. & Wang, K. C. (2006). Evidence for Adverse Selection in the Automobile Insurance Market. Lemaire, J. (1995). Bonus-Malus Systems in Automobile Insurance, Kluwer Academic Publishers, Massachusetts. Lemaire, J. (1998). Bonus-malus systems: the European and Asian approach to merit-rating. North American Actuarial Journal, Vol.2, No.1 (January). Madiebo, R.I. (2002). Awareness seminar on fidelity guarantee and money insurance rates for banks, presented at a seminar organized by the Nigerian Insurers Association, Lagos, Nigeria, on Friday 31, Mert, M and Saykan, Y. (2005). On a bonus malus system where the claim frequency distribution is geometric and the claim severity distribution is pareto Hacettepe Journal of Mathematics and Statistics, Vol. 34, pp Neeb, M. (2008), Bonus-malus systems in motor insurance. berlin - United States Nigerian Insurers Association (2010) Nigeria insurance digest, pp Nigerian Insurers Association (2009) Nigeria insurance digest. /2008nigeriainsurancedigest.pdf. Pinquet, J. (1998). Designing optimal bonus malus systems from different types of claims. ASTIN Bulletin, Vol. 28. No. 2, pp , doi: /ast , 80 ISSN E-ISSN

8 Pinquet, J. (2000). Experience rating through heterogeneous models, in: G. Dionne, ed., Handbook of Insurance. Amsterdam. Kluwer Academic Publishers, Pitrebois, S, Denuit, M., and Walhin, J. (2006). An actuarial analysis of the French bonus-malus system, Scandinavian Actuarial Journal, Vol. 5, pp , Pitrebois, S, Denuit, M., and Walhin, J. (2003). Marketing and bonus-malus Systems. ASTIN (August 24-27), Berlin. Pitrebois, S, Denuit, M. and Walhin, J. (2005). Multi-event bonus-malus scales. Renshaw, A. E., (1994). Modelling the claim process in the presence of covariates, ASTIN Bulletin, 24: , Schmitt, K. E. (2000). European auto insurance pricing considerations. Casualty Actuarial Society Forum, Winter, pp Taylor, G. (1997). Setting a bonus-malus scale in the presence of other rating factors. Astin Bulletin, Vol. 27, pp , Tremblay, L. (1992). Using the Poisson inverse Gaussian in bonus-malus systems, Astin Bulletin Vol.22, pp , Venter, G.G. (1991). A comparative analysis of most European and Japanese bonus malus systems: extensions. The Journal of Risk and Insurance. Code=ari. Verico, P. (2002). Bonus malus systems: lack of transparency and adequate measure. ASTIN Bulleting Vol. 32, No. 2, pp ,, (2009) Nigeria insurance digest. Versi, A. (2008). Nigeria insurance s gold lined future, African Business, May 2008, http//findarticles.com/p/articles/mi_qa5327/is Table1. Loss Ratio of Non Life Insurance in Nigeria ( ) in Nigerian Naira ( 000) CLASS FIRE Prem=3,412,106 Claim=1,178,695 Loss ratio 34.54% Prem=3,789,913 Claim=1,073,203 Loss ratio 28.32% Prem=5,947,749 Claim=1,353,264 Loss ratio 22.75% Prem=6,017,961 Claim=2,185,763 Loss ratio 36.32% Prem=7,242,021 Claim=1,255,621 Loss ratio 17.34% MOTOR Prem=11,188,882 Claim=2,668,506 Loss ratio 23.85% Prem=12,821,427 Claim=3,187,384 Loss ratio 24.86% Prem=14,752,419 Claim=3,582,545 Loss ratio 24.28% Prem=14,204,694 Claim=3,481,840 Loss ratio 24.51% Prem=22,194,413 Claim=5,968,138 Loss ratio 26.89% GEN. ACCID. Prem=4,646,470 Claim=2,121,426 Loss ratio 45.66% Prem=6,817,844 Claim=1,842,906 Loss ratio 27.03% Prem=8,852,889 Claim=2,346,753 Loss ratio 26.51% Prem=10,381,031 Claim=2,593,799 Loss ratio 24.99% Prem=12,992,490 Claim=2,994,047 Loss ratio 23.04% MARINE Prem=4,342,058 Claim=1,164,297 Loss ratio 26.81% Prem=7,389,501 Claim=1,034,305 Loss ratio 14.00% Prem=7,403,364 Claim=1,537,448 Loss ratio 20.77% Prem=4,944,376 Claim=839,045 Loss ratio 16.97% Prem=8,988,165 Claim=1,139,407 Loss ratio 12.63% WKM. COMP Prem= 882,449 Claim= 357,492 Loss ratio 40.51% Prem=507,133 Claim=120,547 Loss ratio 23.77% Prem=774,732 Claim=244,878 Loss ratio 31.61% Prem=535,887 Claim=132,997 Loss ratio 24.82% Prem=780,645 Claim=178,600 Loss ratio 22.88% OIL/GAS Prem=1,815,662 Claim=210,240 Loss ratio 11.58% Prem=2,714,899 Claim=588,867 Loss ratio 21.69% MISC Prem=1,626,553 Claim= 418,142 Loss ratio 25.71% Prem=2,155,740 Claim=748,787 Loss ratio 34.73% Prem=3,278,690 Claim=1,098,975 Loss ratio 33.52% Prem=3,498,421 Claim=1,453,286 Loss ratio 41.54% Prem=6,153,839 Claim=1,819,644 Loss ratio 22.83% TOTAL Prem=26,098,518 Claim=7,908,558 Prem=33,481,558 Claim=8,007,132 Prem=41,009,853 Claim=10,163,863 Prem=41,398,032 Claim=10,686,730 Prem=61,066,481 Claim=13,944,324 Source: 2008 Nigeria Insurance Digest Published by Canadian Center of Science and Education 81

9 Table 2. Private Motor Car Tariff NCD class C0 C1 C2 C3 C4 C5 % discount ⅓ % pure premium / Table 3. Commercial Vehicles Tariff (Sch.1-5) NCD class C0 C1 % discount 0 15 % pure premium Table 4. Commercial vehicles (Sch. 6) NCD class C0 C1 % discount 0 10 % pure premium Risk Premium Tables Appendix I: Poisson - exponential number of claims Premium = 100,000 beta = 0.8 year Appendix II: Gamma - exponential number of claims Premium = 100,000 beta = 0.8 alfa = 5 year ISSN E-ISSN

10 Risk Premium Tables allowing for depreciation Appendix III: Poisson - exponential number of claims Premium = 100,000 beta = 0.8 year Appendix IV: Gamma - exponential number of claims Premium = 100,000 beta = 0.8 alpha = 5 year Published by Canadian Center of Science and Education 83

### Bonus-Malus System in Iran: An Empirical Evaluation

Journal of Data Science 11(2013), 29-41 Bonus-Malus System in Iran: An Empirical Evaluation Rahim Mahmoudvand 1, Alireza Edalati 2 and Farhad Shokoohi 1 1 Shahid Beheshti University and 2 Institut für

### An Extension Model of Financially-balanced Bonus-Malus System

An Extension Model of Financially-balanced Bonus-Malus System Other : Ratemaking, Experience Rating XIAO, Yugu Center for Applied Statistics, Renmin University of China, Beijing, 00872, P.R. China Phone:

### ROMANIAN COMPULSORY MOTOR THIRD PARTY LIABILITY INSURANCE IN 2010 AND THE PREDICTABLE FUTURE

ROMANIAN COMPULSORY MOTOR THIRD PARTY LIABILITY INSURANCE IN 2010 AND THE PREDICTABLE FUTURE Marius Dan Gavriletea 1 Aura Carmen Moga 2 ABSTRACT: Insurance coverage is mandatory for the motor s owners.

### An Extension Model of Financially-Balanced Bonus-Malus System

An Extension Model of Financially-Balanced Bonus-Malus System Xiao Yugu 1), Meng Shengwang 1), Robert Conger 2) 1. School of Statistics, Renmin University of China 2. Towers Perrin, Chicago Contents Introduction

### Experience Rating Mechanisms in Auto Insurance: Implications for High Risk, Low Risk and Novice Drivers

Experience Rating Mechanisms in Auto Insurance: Implications for High Risk, Low Risk and Novice Drivers Introduction Sustainable insurance pricing requires that the total amount of premiums collected in

### ESTIMATION OF CLAIM NUMBERS IN AUTOMOBILE INSURANCE

Annales Univ. Sci. Budapest., Sect. Comp. 42 (2014) 19 35 ESTIMATION OF CLAIM NUMBERS IN AUTOMOBILE INSURANCE Miklós Arató (Budapest, Hungary) László Martinek (Budapest, Hungary) Dedicated to András Benczúr

### Analysis of Chinese Motor Insurance

Analysis of Chinese Motor Insurance Comparative Study of Third Party Liability Insurance systems Topic: others Yao Ray Renmin University of China Room 629, Pinyuan 5 Building, No.59, Zhongguancun Street,

### A Multilevel Analysis of Intercompany Claim Counts

A Multilevel Analysis of Intercompany Claim Counts Katrien Antonio Edward W. Frees Emiliano A. Valdez May 15, 2008 Abstract For the construction of a fair tariff structure in automobile insurance, insurers

### Chapter 9 Experience rating

0 INTRODUCTION 1 Chapter 9 Experience rating 0 Introduction The rating process is the process of deciding on an appropriate level of premium for a particular class of insurance business. The contents of

### THE BONUS-MALUS SYSTEM MODELLING USING THE TRANSITION MATRIX

1502 Challenges of the Knowledge Society Economics THE BONUS-MALUS SYSTEM MODELLING USING THE TRANSITION MATRIX SANDRA TEODORESCU * Abstract The motor insurance is an important branch of non-life insurance

### MERIT RATING IN PRIVATE PASSENGER AUTOMOBILE LIABILITY INSURANCE AND THE CALIFORNIA DRIVER RECORD STUDY

MERIT RATING IN PRIVATE PASSENGER AUTOMOBILE LIABILITY INSURANCE AND THE CALIFORNIA DRIVER RECORD STUDY BY 189 FRANK HARWAYNE For a great many years individual automobile risk merit rating has existed

### Jean Lemaire, Sojung Park,Kili Wang. IAJ, 7 June 2013

Jean Lemaire, Sojung Park,Kili Wang IAJ, 7 June 2013 1. Mileage Rating in one US company 2. Statistical Studies 3. Pros and Cons of Mileage Rating 4. Data from Taiwan 5. Regression results 6. Impact on

### Hierarchical Insurance Claims Modeling

Hierarchical Insurance Claims Modeling Edward W. (Jed) Frees, University of Wisconsin - Madison Emiliano A. Valdez, University of Connecticut 2009 Joint Statistical Meetings Session 587 - Thu 8/6/09-10:30

### Price Optimization and Regulation Las Vegas Ratemaking & Product Management Seminar March 2009

Price Optimization and Regulation Las Vegas Ratemaking & Product Management Seminar March 2009 Arthur J. Schwartz, MAAA, FCAS Associate P&C Actuary North Carolina Department of Insurance Raleigh, NC What

### Presented to the. Board of Commissioners of Public Utilities MELOCHE MONNEX COMMENTS ON

MELOCHE MONNEX COMMENTS ON THE REVIEW OF AUTOMOBILE INSURANCE IN NEWFOUNDLAND AND LABRADOR Presented to the Board of Commissioners of Public Utilities February 2005 TABLE OF CONTENT PREAMBLE... 3 INTRODUCTION...

### PUBLIC UTILITIES BOARD AUTOMOBILE INSURANCE REVIEW BACKGROUNDER

PUBLIC UTILITIES BOARD AUTOMOBILE INSURANCE REVIEW BACKGROUNDER PUBLIC UTILITIES BOARD WHO WE ARE AND WHAT WE DO The Public Utilities Board is an independent, quasi-judicial regulatory agency. The Board

### BONUS-MALUS SYSTEMS IN AUTOMOBILE INSURANCE

BONUS-MALUS SYSTEMS IN AUTOMOBILE INSURANCE Huebner International Series on Risk, Insurance, and Economic Security J. David Cummins, Editor The Wharton School University of Pennsylvania Philadelphia, Pennsylvania,

### Underwriting risk control in non-life insurance via generalized linear models and stochastic programming

Underwriting risk control in non-life insurance via generalized linear models and stochastic programming 1 Introduction Martin Branda 1 Abstract. We focus on rating of non-life insurance contracts. We

### CHAPTER 2 THE RELATIONSHIP BETWEEN NO-FAULT INSURANCE AND DRIVER BEHAVIOR

-5- CHAPTER 2 THE RELATIONSHIP BETWEEN NO-FAULT INSURANCE AND DRIVER BEHAVIOR Under a traditional tort system, at-fault drivers are liable for the economic and noneconomic damages they inflict on third

### No Claim Bonus? by John D. Hey*

The Geneva Papers on Risk and Insurance, 10 (No 36, July 1985), 209-228 No Claim Bonus? by John D. Hey* 1. Introduction No claim bonus schemes are a prominent feature of some insurance contracts, most

### Probabilistic concepts of risk classification in insurance

Probabilistic concepts of risk classification in insurance Emiliano A. Valdez Michigan State University East Lansing, Michigan, USA joint work with Katrien Antonio* * K.U. Leuven 7th International Workshop

### A GENERALIZATION OF AUTOMOBILE INSURANCE RATING MODELS: THE NEGATIVE BINOMIAL DISTRIBUTION WITH A REGRESSION COMPONENT

WORKSHOP A GENERALIZATION OF AUTOMOBILE INSURANCE RATING MODELS: THE NEGATIVE BINOMIAL DISTRIBUTION WITH A REGRESSION COMPONENT BY GEORGES DIONNE and CHARLES VANASSE Universit~ de MontrEal, Canada * ABSTRACT

### Fitting the Belgian Bonus-Malus System

Fitting the Belgian Bonus-Malus System S. Pitrebois 1, M. Denuit 2 and J.F. Walhin 3 Abstract. We show in this paper how to obtain the relativities of the Belgian Bonus-Malus System, including the special

### SETTING A BONUS-MALUS SCALE IN THE PRESENCE OF OTHER RATING FACTORS GREG TAYLOR

SETTING A BONUS-MALUS SCALE IN THE PRESENCE OF OTHER RATING FACTORS GREG TAYLOR Consultant, Tillinghast-Towers Perrin, GPO Box 3279, Sydney NSW 2001, AUSTRALIA and Professorial Associate, Centre for Actuarial

### PROPERTY AND CASUALTY REVIEW STANDARDS CHECKLIST

PROPERTY AND CASUALTY REVIEW STANDARDS CHECKLIST General Filing Instructions Homeowners Other Personal Lines Workers Compensation Medical Professional Liability Insurance Service Contracts Private Passenger

### Risk Classification and Claim Prediction: An Empirical Analysis from Vehicle Damage Insurance in Taiwan

Risk Classification and Claim Prediction: An Empirical Analysis from Vehicle Damage Insurance in Taiwan Chu-Shiu Li Department of Risk Management and Insurance National Kaohsiung First University of Science

### EMPIRICAL ANALYSIS OF ASYMMETRIC INFORMATION PROBLEMS IN SWEDISH VEHICLE INSURANCE

EMPIRICAL ANALYSIS OF ASYMMETRIC INFORMATION PROBLEMS IN SWEDISH VEHICLE INSURANCE SHERZOD YARMUKHAMEDOV The Swedish National Road and Transport Research Institute (VTI), Örebro University Draft, 2013-07-14

### Technical Notes for Automobile Insurance Rate and Risk Classification Filings

Technical Notes for Automobile Insurance Rate and Risk Classification Filings Issued with Bulletin No. A-12/01 Property & Casualty - Auto Rate and Risk Classification Filings A. Introduction All insurers

### Development Period 1 2 3 4 5 6 7 8 9 Observed Payments

Pricing and reserving in the general insurance industry Solutions developed in The SAS System John Hansen & Christian Larsen, Larsen & Partners Ltd 1. Introduction The two business solutions presented

### Exam Introduction Mathematical Finance and Insurance

Exam Introduction Mathematical Finance and Insurance Date: January 8, 2013. Duration: 3 hours. This is a closed-book exam. The exam does not use scrap cards. Simple calculators are allowed. The questions

### ADVERSE SELECTION AND MORAL HAZARD IN INSURANCE: CAN DYNAMIC DATA HELP TO DISTINGUISH?

ADVERSE SELECTION AND MORAL HAZARD IN INSURANCE: CAN DYNAMIC DATA HELP TO DISTINGUISH? Jaap H. Abbring Free University James J. Heckman University of Chicago Pierre-André Chiappori University of Chicago

### DECISION 2016 NSUARB 96 M07375 NOVA SCOTIA UTILITY AND REVIEW BOARD IN THE MATTER OF THE INSURANCE ACT. - and - CO-OPERATORS GENERAL INSURANCE COMPANY

DECISION 2016 NSUARB 96 M07375 NOVA SCOTIA UTILITY AND REVIEW BOARD IN THE MATTER OF THE INSURANCE ACT - and - IN THE MATTER OF AN APPLICATION by CO-OPERATORS GENERAL INSURANCE COMPANY for approval to

### CONSUMER S GUIDE TO AUTO INSURANCE

CONSUMER S GUIDE TO AUTO INSURANCE The Colorado Division of Insurance prepares this booklet to assist you in shopping for auto insurance and to help you understand your Personal Auto Policy. When shopping

### The Treatment of Property-Casualty Insurance in the Canadian Consumer Price Index

The Treatment of Property-Casualty Insurance in the Canadian Consumer Price Index Ottawa Group meeting, Helsinki August 2004 George Beelen Statistics Canada This paper reflects the views of the author

### TABLE OF CONTENTS. GENERAL AND HISTORICAL PREFACE iii SIXTH EDITION PREFACE v PART ONE: REVIEW AND BACKGROUND MATERIAL

TABLE OF CONTENTS GENERAL AND HISTORICAL PREFACE iii SIXTH EDITION PREFACE v PART ONE: REVIEW AND BACKGROUND MATERIAL CHAPTER ONE: REVIEW OF INTEREST THEORY 3 1.1 Interest Measures 3 1.2 Level Annuity

### A credibility method for profitable cross-selling of insurance products

Submitted to Annals of Actuarial Science manuscript 2 A credibility method for profitable cross-selling of insurance products Fredrik Thuring Faculty of Actuarial Science and Insurance, Cass Business School,

### A Deeper Look Inside Generalized Linear Models

A Deeper Look Inside Generalized Linear Models University of Minnesota February 3 rd, 2012 Nathan Hubbell, FCAS Agenda Property & Casualty (P&C Insurance) in one slide The Actuarial Profession Travelers

### FAIR TRADE IN INSURANCE INDUSTRY: PREMIUM DETERMINATION OF TAIWAN AUTOMOBILE INSURANCE. Emilio Venezian Venezian Associate, Taiwan

FAIR TRADE IN INSURANCE INDUSTRY: PREMIUM DETERMINATION OF TAIWAN AUTOMOBILE INSURANCE Emilio Venezian Venezian Associate, Taiwan Chu-Shiu Li Department of Economics, Feng Chia University, Taiwan 100 Wen

### Automobile Insurance Guide

Automobile Insurance Guide Page 1 Simply stated, automobile insurance is a contract between you and your insurance company that protects you against financial loss if you are in an accident. Auto policies

### Taxation of Life Insurance Companies

Taxation of Life Insurance Companies Taxation of Life Insurance Companies R. Ramakrishnan Consultant Actuary ramvijay@satyam.net.in Section 1 : Basis of Assessment 1.1) The total salary earned during a

### How to File a Protest of an Auto Insurance Cancellation or Surcharge

How to File a Protest of an Auto Insurance Cancellation or Surcharge A protest is a formal objection to a change that your insurance company has made on your personal automobile policy. Protests cannot

Automobile Insurance: The Road Ahead An Executive Summary of the Attorney General on the Status of Insurance Deregulation Commonwealth of Massachusetts Office of Attorney General Martha Coakley December

### EDUCATION AND EXAMINATION COMMITTEE SOCIETY OF ACTUARIES RISK AND INSURANCE. Copyright 2005 by the Society of Actuaries

EDUCATION AND EXAMINATION COMMITTEE OF THE SOCIET OF ACTUARIES RISK AND INSURANCE by Judy Feldman Anderson, FSA and Robert L. Brown, FSA Copyright 25 by the Society of Actuaries The Education and Examination

### Deregulation, Pricing Strategies, and Claim behavior in Taiwan Automobile Insurance Market

Deregulation, Pricing Strategies, and Claim behavior in Taiwan Automobile Insurance Market Abstract For a long time, the automobile insurance market in Taiwan lacked a competitive system because of rate

### CEIOPS-DOC-22/09. (former CP27) October 2009. CEIOPS e.v. Westhafenplatz 1-60327 Frankfurt Germany Tel. + 49 69-951119-20

CEIOPS-DOC-22/09 CEIOPS Advice for Level 2 Implementing Measures on Solvency II: Technical Provisions - Lines of business on the basis of which (re)insurance obligations are to be segmented (former CP27)

### INSURANCE IN THE UK: THE BENEFITS OF PRICING RISK. January 2008

INSURANCE IN THE UK: THE BENEFITS OF PRICING RISK January 2008 1 INSURANCE IN THE UK: THE BENEFITS OF PRICING RISK How insurance deals with risk Insurance protects people and businesses against the risks

### WORKERS COMPENSATION GLOSSARY

WORKERS COMPENSATION GLOSSARY ACCIDENT An unplanned and unexpected event which occurs suddenly and at a definite place resulting in injury and/or damage. ACCIDENT FREQUENCY The rate of the occurrence of

### Direct Marketing of Insurance. Integration of Marketing, Pricing and Underwriting

Direct Marketing of Insurance Integration of Marketing, Pricing and Underwriting As insurers move to direct distribution and database marketing, new approaches to the business, integrating the marketing,

### THE EFFECT OF NO-FAULT ON FATAL ACCIDENT RATES

-xiii- SUMMARY Thirteen states currently either mandate no-fault auto insurance or allow drivers to choose between no-fault and tort insurance. No-fault auto insurance requires individuals to carry personal

### SYLLABUS FOR IMF EXAMINATION [As per IRDAI (Registration of Insurance Marketing Firms) Regulations, 2015] SECTION I

NATIONAL INSURANCE ACADEMY, PUNE SYLLABUS FOR IMF EXAMINATION [As per IRDAI (Registration of Insurance Marketing Firms) Regulations, 2015] SECTION I 1. INSURANCE MARKETING FIRM S REGULATIONS 2. PRINCIPLES

### GENERALIZED LINEAR MODELS IN VEHICLE INSURANCE

ACTA UNIVERSITATIS AGRICULTURAE ET SILVICULTURAE MENDELIANAE BRUNENSIS Volume 62 41 Number 2, 2014 http://dx.doi.org/10.11118/actaun201462020383 GENERALIZED LINEAR MODELS IN VEHICLE INSURANCE Silvie Kafková

### A Pricing Model for Underinsured Motorist Coverage

A Pricing Model for Underinsured Motorist Coverage by Matthew Buchalter ABSTRACT Underinsured Motorist (UIM) coverage, also known as Family Protection coverage, is a component of most Canadian personal

### REPORT EXTRACTS RELATING TO THE RECOMMENDATION FOR INSURANCE PREMIUM TAX RELIEF ON TELEMATICS MOTOR INSURANCE FOR YOUNG DRIVERS

REPORT EXTRACTS RELATING TO THE RECOMMENDATION FOR INSURANCE PREMIUM TAX RELIEF ON TELEMATICS MOTOR INSURANCE FOR YOUNG DRIVERS In order to meet Treasury s consultation timetable for budget proposals,

### Stochastic programming approaches to pricing in non-life insurance

Stochastic programming approaches to pricing in non-life insurance Martin Branda Charles University in Prague Department of Probability and Mathematical Statistics 11th International Conference on COMPUTATIONAL

### Linear credibility models based on time series for claim counts

Linear credibility models based on time series for claim counts Oana Purcaru 1 and Montserrat Guillén 2 and Michel Denuit 3 Abstract. In this paper, several models for longitudinal analysis of claim frequencies

### Feature !"#\$%&'()*+, !"#\$%&'()*+,-!"#\$%& '()*+!"#\$%&'()*+,- 2.!"#\$%&'()#*+,!"#\$!"#\$!"#\$%&'(' 2%!"#\$%&'()!"#\$%&'()*+,-!"#!"#\$%&!"#\$%&'()*)+,!

!!"#\$%&'()*+,!"#\$%&'()*+ 2.!"#\$%&'()#*+,!"#\$!"#\$!"#\$%&'(' 2%!"#\$%&'()!"#!"#\$%&!"#\$%&'()*)+,! 3.!"#\$%&'()*+,!"#\$%&'()*!!"#\$%&'!()*+!!"#\$%&'()*+,!"#\$%&'()*+,!"#\$%&'()*"+,!"#\$%&'(!"#\$%&'\$()*+,-.!"#\$%&'()*+,

### Adverse Selection and Moral Hazard in Insurance: Can Dynamic Data Help to Distinguish?

Adverse Selection and Moral Hazard in Insurance: Can Dynamic Data Help to Distinguish? Jaap H. Abbring Pierre-André Chiappori James J. Heckman Jean Pinquet Keywords: insurance, moral hazard, selection,

### Towards the strengthening and moderinsation of insurance and surety regulation

Non-Life Insurance Technical Provisions i Towards the strengthening and moderinsation of insurance and surety regulation XXI International Seminar on Insurance and Surety, November 2010, Mexico City Olaf

### KRUPA S. VISWANATHAN AND JEAN LEMAIRE ABSTRACT

BONUS-MALUS SYSTEMS IN A DEREGULATED ENVIRONMENT: FORECASTING MARKET SHARES USING DIFFUSION MODELS BY KRUPA S. VISWANATHAN AND JEAN LEMAIRE ABSTRACT In a deregulated insurance market, insurance carriers

### Session 25 L, Introduction to General Insurance Ratemaking & Reserving: An Integrated Look. Moderator: W. Scott Lennox, FSA, FCAS, FCIA

Session 25 L, Introduction to General Insurance Ratemaking & Reserving: An Integrated Look Moderator: W. Scott Lennox, FSA, FCAS, FCIA Presenter: Houston Cheng, FCAS, FCIA Society of Actuaries 2013 Annual

### Life Insurance Contracts

Compiled AASB Standard AASB 1038 Life Insurance Contracts This compiled Standard applies to annual reporting periods beginning on or after 1 January 2011 but before 1 January 2013. Early application is

### About Insurance Europe Insurance Europe is the European insurance and reinsurance federation. Through its 34 member bodies the national insurance

How insurance works About Insurance Europe Insurance Europe is the European insurance and reinsurance federation. Through its 34 member bodies the national insurance associations Insurance Europe represents

### Sri Lanka Accounting Standard-LKAS 26. Accounting and Reporting by Retirement Benefit Plans

Sri Lanka Accounting Standard-LKAS 26 Accounting and Reporting by Retirement Benefit Plans -661- Sri Lanka Accounting Standard-LKAS 26 Accounting and Reporting by Retirement Benefit Plans Sri Lanka Accounting

### AUTOMOBILE INSURANCE IN THE PROVINCE OF ONTARIO

AUTOMOBILE INSURANCE IN THE PROVINCE OF ONTARIO 159 AUTOMOBILE INSURANCE IN THE PROVINCE OF ONTARIO BY JOHN EDWARDS INTRODUCTION During 1936, 138 insurers reported automobile insurance premiums written

### Automobile Insurance in Pennsylvania a supplement to the Automobile Insurance Guide

and answers about Automobile Insurance in Pennsylvania a supplement to the Automobile Insurance Guide My automobile policy was canceled because I did not pay my premium on time. Is this legal? Yes. If

### GN5: The Prudential Supervision outside the UK of Long-Term Insurance Business

GN5: The Prudential Supervision outside the UK of Long-Term Insurance Business Classification Recommended Practice MEMBERS ARE REMINDED THAT THEY MUST ALWAYS COMPLY WITH THE PROFESSIONAL CONDUCT STANDARDS

### Frequently Asked Questions Auto Insurance

STATE OF WISCONSIN Frequently Asked Questions Auto Insurance OFFICE OF THE COMMISSIONER OF INSURANCE PI-233 (C 03/2015) The Automobile Insurance Policy (page 1) Wisconsin's Financial Responsibility Law

### The impact of a ban on the use of gender in insurance on consumers. Launch of report 7 December 2011 Reinder van Dijk, Managing Consultant

The impact of a ban on the use of gender in insurance on consumers Launch of report 7 December 2011 Reinder van Dijk, Managing Consultant I. European study conducted by Oxera 2 1. Objectives of the study

### A three dimensional stochastic Model for Claim Reserving

A three dimensional stochastic Model for Claim Reserving Magda Schiegl Haydnstr. 6, D - 84088 Neufahrn, magda.schiegl@t-online.de and Cologne University of Applied Sciences Claudiusstr. 1, D-50678 Köln

### PRICING MODELS APPLIED IN NON-LIFE INSURANCE

ALEXANDRU IOAN CUZA UNIVERSITY OF IASI FACULTY OF ECONOMICS AND BUSINESS ADMINISTRATION DOCTORAL SCHOOL OF ECONOMICS AND BUSINESS ADMINISTRATION DOCTORAL THESIS PRICING MODELS APPLIED IN NON-LIFE INSURANCE

### NUMBER OF ACCIDENTS OR NUMBER OF CLAIMS? AN APPROACH WITH ZERO-INFLATED POISSON MODELS FOR PANEL DATA

NUMBER OF ACCIDENTS OR NUMBER OF CLAIMS? AN APPROACH WITH ZERO-INFLATED POISSON MODELS FOR PANEL DATA Jean-Philippe Boucher boucher.jean-philippe@uqam.ca Département de Mathématiques Université du Québec

### Journal Vol 37 / Issue No.2

22 / Motor innovation FEATURE Hybrid, electric and driverless cars: innovation driving change in motor vehicle insurance Motor insurers have had to keep up with rapid developments in the car industry for

### Stop Loss Reinsurance

Stop Loss Reinsurance Stop loss is a nonproportional type of reinsurance and works similarly to excess-of-loss reinsurance. While excess-of-loss is related to single loss amounts, either per risk or per

### Comprehensive Guidelines for Supervision of Insurance Companies

December 9, 2014 Financial Services Agency Comprehensive Guidelines for Supervision of Insurance Companies (Provisional Translation of IV Points of Attention regarding Examination of Insurance Products

### Fifth Quantitative Impact Study of Solvency II (QIS5)

Fifth Quantitative Impact Study of Solvency II (QIS5) Guidance on the treatment of German accident insurance with guaranteed premium repayment in the solvency balance sheet of QIS5 Introduction The UBR

### The zero-adjusted Inverse Gaussian distribution as a model for insurance claims

The zero-adjusted Inverse Gaussian distribution as a model for insurance claims Gillian Heller 1, Mikis Stasinopoulos 2 and Bob Rigby 2 1 Dept of Statistics, Macquarie University, Sydney, Australia. email:

### Using Analytics beyond Price Optimisation. Francisco Gómez-Alvado, Towers Perrin Marcus Looft, Earnix

Using Analytics beyond Price Optimisation Francisco Gómez-Alvado, Towers Perrin Marcus Looft, Earnix 1 Agenda Introduction Using PO techniques for improved business analytics Some business cases Discussion

### Spiralling Costs of Insurance in Ireland

Spiralling Costs of Insurance in Ireland Presented to the Society of Actuaries in Ireland Dermot O Hara FSAI David Costello FSAI November 2002 Note The opinions contained in this paper are expressed in

### Modern Actuarial Risk Theory

Modern Actuarial Risk Theory Modern Actuarial Risk Theory by Rob Kaas University of Amsterdam, The Netherlands Marc Goovaerts Catholic University of Leuven, Belgium and University of Amsterdam, The Netherlands

### My name is Steven Lehmann. I am a Principal with Pinnacle Actuarial Resources, Inc., an actuarial consulting

Insurer Use of Education and Occupation Data National Conference of Insurance Legislators Special Property-Casualty Insurance Meeting February 28, 2009 My name is Steven Lehmann. I am a Principal with

### AN INTRODUCTION TO PREMIUM TREND

AN INTRODUCTION TO PREMIUM TREND Burt D. Jones * February, 2002 Acknowledgement I would like to acknowledge the valuable assistance of Catherine Taylor, who was instrumental in the development of this

### Travelers Analytics: U of M Stats 8053 Insurance Modeling Problem

Travelers Analytics: U of M Stats 8053 Insurance Modeling Problem October 30 th, 2013 Nathan Hubbell, FCAS Shengde Liang, Ph.D. Agenda Travelers: Who Are We & How Do We Use Data? Insurance 101 Basic business

### OREGON MUTUAL INSURANCE COMPANY AUTOMOBILE POLICY CLASSIFICATIONS

Each private passenger automobile owned by an individual or owned jointly by two or more relatives who are residents in the same household shall be classified as follows: Each automobile insured according

### MARYLAND LAWS AND REGULATIONS ON INSURANCE PREMIUM

MARYLAND LAWS AND REGULATIONS ON INSURANCE PREMIUM LAWS: 19 114. Deductibles in medical malpractice policies. (a) Each insurer that issues or delivers a medical professional liability insurance policy

### Usage-based Auto Insurance (UBI)

Usage-based Auto Insurance (UBI) A revolution is underway. Is your company ready? A presentation to 2013 CIA Annual Meeting by Pierre G. Laurin June 21, 2013 2013 Towers Watson. All rights reserved. What

### Massachusetts General Law Chapter 152, 25O and 53A. Classification of risks and premiums: distribution of premiums among employers.

1 A. General Massachusetts General Law Chapter 152, 25O and 53A. Classification of risks and premiums: distribution of premiums among employers. 1. Who May Insure Workers Compensation Risks Any insurance

### Marketing Mix Modelling and Big Data P. M Cain

1) Introduction Marketing Mix Modelling and Big Data P. M Cain Big data is generally defined in terms of the volume and variety of structured and unstructured information. Whereas structured data is stored

### Extract from. Études et Dossiers No. 299. 11th Joint Seminar of the European Association of Law and Economics (EALE) and The Geneva Association (GA)

International Association for the Study of Insurance Economics Études et Dossiers Extract from Études et Dossiers No. 299 11th Joint Seminar of the European Association of Law and Economics (EALE) and

### Approximation of Aggregate Losses Using Simulation

Journal of Mathematics and Statistics 6 (3): 233-239, 2010 ISSN 1549-3644 2010 Science Publications Approimation of Aggregate Losses Using Simulation Mohamed Amraja Mohamed, Ahmad Mahir Razali and Noriszura

### Life Insurance Contracts

Compiled Accounting Standard AASB 1038 Life Insurance Contracts This compilation was prepared on 23 September taking into account amendments made up to and including 15 September 2005. Prepared by the

### Wharton School Umverstty of Pennsylvanta

HIGH DEDUCTIBLES INSTEAD OF BONUS-MALUS. CAN IT WORK? BY JEAN LEMAIRE AND HONGMIN ZI Wharton School Umverstty of Pennsylvanta ABSTRACT HOLTAN (1994) suggests to replace tradmonal bonus-malus systems by

INSURANCE FACTS for Pennsylvania Consumers Your Guide to Auto Insurance Premiums 1-877-881-6388 Toll-free Automated Consumer Line www.insurance.state.pa.us Pennsylvnaia Insurance Department Website Required

### GLOSSARY OF ACTUARIAL AND RATEMAKING TERMINOLOGY

GLOSSARY OF ACTUARIAL AND RATEMAKING TERMINOLOGY Term Accident Accident Date Accident Period Accident Year Case- Incurred Losses Accident Year Experience Acquisition Cost Actuary Adverse Selection (Anti-Selection,

### Glossary of insurance terms

Glossary of insurance terms I. Insurance Products Annuity is a life insurance policy where an insurance company pays an income stream to an individual, usually until death, in exchange for the payment

### MEASURING FRAUD IN INSURANCE INDUSTRY: THE CASE OF AUTOMOBILE INSURANCE IN TAIWAN

MEASURING FRAUD IN INSURANCE INDUSTRY: THE CASE OF AUTOMOBILE INSURANCE IN TAIWAN Chu-Shiu Li Department of Economics Feng Chia University, Taichung, Taiwan E-mail: csli@fcu.edu.tw Sheng-Chang Peng 1 Ph.D

### Do the Better Insured Cause More Damage?

Do the Better Insured Cause More Damage? Testing for Asymmetric Information in Car Insurance Tibor Zavadil January 2011 Abstract This paper tests for the presence of asymmetric information in Dutch car