Bivariate credibility bonus–malus premiums distinguishing between two types of claims

E. Gómez-Déniz

Insurance: Mathematics and Economics, 2016, vol. 70, issue C, 117-124

Abstract: We propose a modification of the bonus–malus system of tarification that is commonly applied in automobile insurance. Under the standard system, the premium assigned to each policyholder is based only on the number of claims made. Therefore, a policyholder who has had an accident producing a relatively small amount of loss is penalised to the same extent as one who has had a more costly accident. This outcome would seem to be unfair.

Keywords: Bayesian; Bonus–malus system; Claim; Claim size; Conjugate distribution; Relativity (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:insuma:v:70:y:2016:i:c:p:117-124

DOI: 10.1016/j.insmatheco.2016.06.009

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