| On February 28,2011, National Bureau of Statistics of China published a Series of data, which show that the number of civilian vehicles (including tricycle and low-speed truck) reached to 908.6 million. The number increases 19.3% more than 2009.Wang Fuchang, which is the director of Ministry of Industry and Information Technology of the People’s Republic of China, predicted the number of car would be over 200 million at the end of 2020. So, the market of auto has great Potential. With the booming of auto market, the insurance will have rapid development. As we all know, in USA, whose insurance markets is very mature, the income of auto insurance is about 80% of personal insurance.Since 2000, the ratio reach to 60% in China. Thus, with the increasing of car, the scale of Chinese vehicle insurance will be expanded. Therefore, how to design a reasonable and attractive rate structure has become the key of development to many insurance companies.Now, most of countries have adopted Bonus-Malus System (BMS in short) to determine the rates of auto insurance. In China, the system is also called No-Claim Discount (NCD in short). In this system, the insurance company will adjust its renewal premium according to the policy-holder’s claims of the previous years. The general principle are as follows:the less of claim’s records will be asked low fee to enable them to continue. Of course the more of claim’s records will be asked higher premiums, which not only reflects the fairness of the price of insurance, but also is an effective means of controlling risk and improving operational efficiency.Because of the time of vehicle insurance is not long in our china, the historical data is not detailed, and the experience rating is insufficient; all these make the auto insurance market getting into the chaos after vehicle insurance rates are flexible, insurance companies began to lower down the price with no care of the cost. They hope they can expand their market shares by discounting and improving application fee, all these result in price war. Now, although the insurance companies begin to focus on efficiency and return to a rational business, but there are many problems in the market. In the auto insurance rates, BMS adjust the renew premium to make it corresponds to the risk of each insured. The object of BMS stimulates the insured to improve his or her awareness of safety and control the risk. In principle, BMS can prevent adverse selection and moral hazard. But, the role of BMS is less than expected. In China, how to design more reasonable BMS is of great significance.In this paper, to find our BMS’s shortcomings, the author wants to introduce and analysis some mature insurance system of others countries. And she proposes some suggestions to improve this system.The main content can be summarized as follows:The first chapter is the introduction. It elaborates the significance, background and research status of this subject, and analyses the current situation and the structure of this article.The second chapter is the overview of vehicle insurance and BMS. At first, the author wants to introduce vehicle insurance:the classification of vehicle insurance, pricing factors, risk. Then the BMS which contain the number of claims records and the number of claims is analyzed.The third chapter introduces and analyses some mature insurance system of others countries and find out their strengths and weaknesses. It elaborates the process of the BMS in China and the BMS of major insurance companies and studies their problems.The forth chapter will make empirical research on China’s automobile insurance. In this chapter the writer will introduce the evaluation criteria of BMS including the four aspects:the stability, the punishment severity, the system flexibility etc. And the writers will evaluate the BMS of PICC, PINGAN. CPIC, Sinosafe Insurance, CUIC.2007 of China.The fifth chapter tries to find out the weaknesses of Chinese BMS and put forwards some suggestions. In this chapter, the writer summarizes the shortcomings which have been pointed out in previous two chapters, and gives some mature methods to solve the shortcomings. In the end, the writer will put forward herself suggestions for the problems.There are some innovations in this paper: (1) In this paper, the writer summarizes the better methods which has be accepted by many scholars and wants to add deductible claim limits to make BMS more reasonable.(2) This article takes the scores of violation of regulation as an important factor in BMS because this factor can measure the risk of driver.(3)Insurance fraud has always been an important factor. In the article, the writer adds the insurance fraud to BMS.Of course, there are still many deficiencies to be improved in this article. The new BMS model is not perfect, and some factors are just taken into account in the BMS, but there is still a long way to go before a reasonable model is be designed... |
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