Hostname: page-component-848d4c4894-m9kch Total loading time: 0 Render date: 2024-05-01T01:56:18.026Z Has data issue: false hasContentIssue false
  • English
  • Français

High Deductibles instead of Bonus-Malus: Can it Work?

Published online by Cambridge University Press:  29 August 2014

Jean Lemaire  and
Hongmin Zi
Jean Lemaire*
Affiliation:
Wharton School, University of Pennsylvania
Hongmin Zi*
Affiliation:
Wharton School, University of Pennsylvania
*
Department of Insurance, and Risk Management, Wharton School, 3641 Locust Walk, University of Pennsylvania Philadelphia, PA 19104-6218, U.S.A.
Department of Insurance, and Risk Management, Wharton School, 3641 Locust Walk, University of Pennsylvania Philadelphia, PA 19104-6218, U.S.A.
Rights & Permissions [Opens in a new window]

Abstract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

Holtan (1994) suggests to replace traditional bonus-malus systems by a high deductible financed by a short-term loan. Practical consequences of this proposal are investigated here. Simulation is used to evaluate the efficiency of the Taiwanese Bonus-malus system and the variability of premiums of an average policyholder. Holtan's high deductible system is analysed under a compound Poisson assumption, with truncated exponential claims. It is shown that the introduction of a high deductible would increase the variability of payments and the efficiency of the rating system for most policyholders.

Keywords

Motor insurance ratingbonus-malus systemsdeductibles
Type
Workshop
Information
ASTIN Bulletin: The Journal of the IAA , Volume 24 , Issue 1 , May 1994 , pp. 75 - 86
Copyright
Copyright © International Actuarial Association 1994

References

REFERENCES

Bowers, N., Gerber, H., Hickman, J., Jones, D. and Nesbitt, C. (1986) “Actuarial Mathematics.” Society of Actuaries, Schaumburg, Illinois.Google Scholar
Holtan, J. (1994) “Bonus Made Easy.” ASTIN Bulletin 24.CrossRefGoogle Scholar
Lemaire, J. (1985) “Automobile Insurance: Actuarial Models.” Kluwer Nyhoff Publishing Co, Boston, Massachussetts.CrossRefGoogle Scholar
Lemaire, J. (1988) “A Comparative Analysis of Most European and Japanese Bonus-malus Systems.” Journal of Risk and Insurance LV, 660–681.CrossRefGoogle Scholar
Lemaire, J. and Zi, H. (1994) “A Comparative Analysis of 29 Merit-Rating Systems.” Submitted.Google Scholar
Lomaranta, K. (1972) “Some Asymptotic Properties of Bonus Systems.” ASTIN Bulletin 6, 233–245.CrossRefGoogle Scholar