A Study on the Time-Dependent Bonus-Malus System in Automobile Insurance

  • Kang, Jung-Chul (Department of Banking and Insurance, Dong-Eui University)
  • Published : 2005.11.30

Abstract

Bonus-Malus system is generally constructed based on claim frequency and Bayesian credibility model is used to represent claim frequency distribution. However, there is a problem with traditionally used credibility model for the purpose of constructing bonus-malus system. In traditional Bonus-Malus system adopted credibility model, individual estimates of premium rates for insureds are determined based solely on the total number of claim frequency without considering when those claims occurred. In this paper, a new model which is a modification of structural time series model applicable to counting time series data are suggested. Based on the suggested model relatively higher premium rates are charged to insured with more claim records.

Keywords

References

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