Improving automobile insurance ratemaking using telematics: incorporating mileage and driver behaviour data
Montserrat Guillen () and
Jens Perch Nielsen ()
Additional contact information
Montserrat Guillen: Universitat de Barcelona
Jens Perch Nielsen: City, University of London
Transportation, 2019, vol. 46, issue 3, 735-752
Abstract We show how data collected from a GPS device can be incorporated in motor insurance ratemaking. The calculation of premium rates based upon driver behaviour represents an opportunity for the insurance sector. Our approach is based on count data regression models for frequency, where exposure is driven by the distance travelled and additional parameters that capture characteristics of automobile usage and which may affect claiming behaviour. We propose implementing a classical frequency model that is updated with telemetrics information. We illustrate the method using real data from usage-based insurance policies. Results show that not only the distance travelled by the driver, but also driver habits, significantly influence the expected number of accidents and, hence, the cost of insurance coverage. This paper provides a methodology including a transition pricing transferring knowledge and experience that the company already had before the telematics data arrived to the new world including telematics information.
Keywords: Tariff; Premium calculation; Pay-as-you-drive insurance; Count data models (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s11116-018-9890-7 Abstract (text/html)
Access to full text is restricted to subscribers.
Working Paper: Improving automobile insurance ratemaking using telematics: incorporating mileage and driver behaviour data (2017)
Working Paper: Improving automobile insurance ratemaking using telematics: incorporating mileage and driver behaviour data (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kap:transp:v:46:y:2019:i:3:d:10.1007_s11116-018-9890-7
Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11116/PS2
Access Statistics for this article
Transportation is currently edited by Kay W. Axhausen
More articles in Transportation from Springer
Bibliographic data for series maintained by Sonal Shukla ().