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Bonus Made Easy1

Published online by Cambridge University Press:  29 August 2014

Jon Holtan
Jon Holtan*
Affiliation:
University of Oslo& Samvirke Insurance Company Ltd.
*
Samvirke Insurance Company Ltd., P.O. Box 778 Sentrum, N-0106 Oslo, Norway.
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Abstract

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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.

Keywords

Bonus-malus systemsoptimal deductibles financed by loans
Type
Workshop
Information
ASTIN Bulletin: The Journal of the IAA , Volume 24 , Issue 1 , May 1994 , pp. 61 - 74
Copyright
Copyright © International Actuarial Association 1994

Footnotes

1

An earlier version of this work has been presented at the ASTIN Colloquium, Stockholm 1991.

References

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