Bonus Made Easy1

Jon Holtan

ASTIN Bulletin, 1994, vol. 24, issue 1, 61-74

Abstract: The paper introduces an alternative approach to the traditional experience rating theory in automobile insurance. The approach is based on a simple theory of how high deductibles financed by loans maintain the risk differentiation in an automobile insurance arrangement. Thus the approach differs totally from the usual bonus-malus classes as well as from the credibility based experience rating ideas. The paper is of a theoretical nature and leads up to a mathematical description of how the approach may be optimalized within the framework of a risk model.

Date: 1994
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