Vehicle and Fleet Random Effects in a Model of Insurance Rating for Fleets of Vehicles

Jean-François Angers, Denise Desjardins, Georges Dionne () and François Guertin

Cahiers de recherche from CIRPEE

Abstract: We are proposing a parametric model to rate insurance for vehicles belonging to a fleet. The tables of premiums presented take into account past vehicle accidents, observable characteristics of the vehicles and fleets, and violations of the road-safety code committed by drivers and carriers. The premiums are also adjusted according to accidents accumulated by the fleets over time. The model proposed accounts directly for explicit changes in the various components of the probability of accidents. It represents an extension of bonus-malus-type automobile insurance models for individual premiums (Lemaire, 1985; Dionne and Vannase, 1989 and 1992; Pinquet, 1997 and 1998; Frangos and Vrontos, 2001; Purcaru and Denuit, 2003). The extension adds a fleet effect to the vehicle effect so as to account for the impact that the unobservable characteristics or actions of carriers can have on truck accident rates. This form of rating makes it possible to visualize what impact the behaviors of owners and drivers can have on the predicted rate of accidents and, consequently, on premiums.

Keywords: Fleet of vehicles; random effects; vehicle effect; fleet effect; insurance pricing; behaviors of owners and drivers; Poisson; gamma; Dirichlet (search for similar items in EconPapers)
JEL-codes: D81 G22 (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-bec
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Vehicle and Fleet Random Effects in a Model of Insurance Rating for Fleets of Vehicles (2006)
Working Paper: Vehicle and fleet random effects in a model of insurance rating for fleets of vehicles (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:lvl:lacicr:0423

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