Analysis of the Effectiveness of Selected New Types of Bonus-Malus Systems - A Simulation Approach

Ewa Poprawska

Abstract

Bonus-malus systems are used for the classification of the insured in different tariff classes based on the individual history of claims. The aim of such systems is to differentiate premiums for clients with high and low claims ratios to limit the phenomenon of the negative selection of customers and to attract low-claims ratio customers. Thus, bonus-malus systems also fulfil a marketing function and are a tool for gaining competitive advantage. In typical bonus-malus systems, the tariff class to which the client is classified is determined on the basis of the class to which the client was assigned in the previous year and the number of claims made in the last year. In the insurance market in recent years there has been a tendency to modify bonus-malus systems so that the history of losses over the past two or even three years is taken into account. In addition, premiums are differentiated depending on how long the insured has been a client of the insurer. This paper is devoted to the analysis of typical systems and modern modified systems according to the structures available in the Polish market, calculating measures of the effectiveness of the tariff systems.
Author Ewa Poprawska (MISaF / IZF / KU)
Ewa Poprawska,,
- Katedra Ubezpieczeń
Pages472-480
Publication size in sheets0.5
Book Kajurová Veronika, Krajicek Jan (eds.): European Financial Systems 2015. Proceedings of the 12th International Scientific Conference, 2015, Masaryk University, ISBN 9788021079625, 717 p.
Keywords in Englishbonus-malus systems; motor insurance
URL https://is.muni.cz/do/econ/sborniky/2015/EFS_2015_proceedings.pdf
Languageen angielski
Score (nominal)15
ScoreMinisterial score = 15.0, 02-07-2019, BookChapterMatConfByConferenceseries
Ministerial score (2013-2016) = 15.0, 02-07-2019, BookChapterMatConfByConferenceseries
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