Bonus-Malus Systems In Automobile Insurance And Empirical Research

Automobile insurance is an important part of modern insurances. Whether in western countries with developed insuance or in our country with relatively developing insurance, automobile insurance play an important role in the whole wealth insurance. Good management of automobile insurance will benefit in the company's commercial profit. After China's entry in WTO, many foreign insurance companies have entered Chinese insurance market. So the insurance market becomes more competitive. How to adapt to the new competition is the main problem that all the insurance companies are concerning about.Almost all insurance companies are using Bonus-Malus system(BMS in short) in automobile insurance. In this system, the insurance company will adjust its renew premium according to the policy-holder's claims of the previous insurance year. The general principle is like this: the more severity there is in the previous insurance year, the higher the renew premium will be in the following insurance year. On the contrary, if there is no claim in the previous insurance year, the insurance company would reduce the policy-holder's renew premium in the following insurance year. As the important component of the pricing competition, BMS is given more and more attention.This paper includes four parts as follows.In Chapter 1, we give the basis knowledge of automobile insurance and pricing. Also we give some important distribution models.Chapter 2, 3 and 4 are main parts of this paper. My main job is included here.In Chapter 2, we first introduce the definition and design of BMS. Then we use the data which are supplied by an insurance company in China to choose an appropriate distribution model and establish an optimal BMS.In Chapter 3, we improve the BMS given in the previous chapter. First we introduce concepts of full fair BMS and relatively fair BMS. Then we improve the BMS taking into account claim amount.In Chapter 4, we do empirical research to BMS of automible insurance of our country. Five parts are included. In part 1 and 2, we give BMS for five typical insurance companies in China. In part 3 and 4, we give the invariable distributions and severity comparison for the above five insurance companies. In part 5 we give some suggestions to domestic insurance companies.