Research On Bonus-malus System Of Environmental Pollution Liability Insurance

Environmental pollution liability insurance is one of the most important types of green insurance.Since 2008,after nearly 10 years of development and promotion,it already has a certain scale.In 2017,there were more than 16,000 insured enterprises with an insured amount of 30.6 billion yuan.However,the relatively high premium level due to limited empirical data is a big problem that has always existed.In order to alleviate the impact of high rate,some scholars proposed to introduce Bonus-malus System(BMS)into environmental pollution liability insurance 's pricing system.However,the Bonus-malus System of environmental pollution liability insurance mostly takes claim frequency or claim rate as the standard of premium grade transfer,which is not reasonable in design.Due to the extremely low probability of environmental pollution accidents,the probability that the policy will be at the highest preferential level after the Bonus-malus system reaches a stable state is 0.99,which proves that the existing the Bonus-malus System is not strict enough,and the effect of punishment on the insured is negligible,so it can only be regarded as a "premium reward mechanism".In order to improve Bonus-malus System of environmental pollution liability insurance,this paper introduces the environmental credit evaluation mechanism,Compared with compensation information,its advantages lie in:(1)the indicator system of environmental credit evaluation fully reflects the real environmental risk of the insured.(2)The "upgrade and downgrade" mechanism of environmental credit assessment takes both the frequency and intensity of claims into account.(3)Encourage the insured to take the initiative to adopt pollution treatment and purification measures,reduce sewage discharge,and carry out effective "preprevention" and "in-process management" of environmental risks,so as to minimize the occurrence of sudden environmental accidents.A complete Bonus-malus System consists of four elements: hypothesis,initial level,transfer rule and relativities.In the construction of Bonus-malus System,we first formulated the design principles from the actual situation,then select the appropriate basic assumptions,initial grades,and design relativities according to the proportion distribution of each grade of environmental credit evaluation and the trend of state transition.The change of the level of environmental credit evaluation is taken as the standard for the transfer of premium level.At the same time,considering the influence of the premium level in the current year,two different Bonus-malus System schemes under the static transfer rule and the dynamic transfer rule are designed respectively,and the Bonus-malus System is constructed.After that,the stability and severity of the designed Bonus-malus System are evaluated.Then,compared with the existing Bonus-malus System,it is found that the stability and severity have been significantly improved,and the optimization effect is obvious.Finally,this paper analyses the expected effect of the Bonus-malus System and finds that it can eliminate the influence of "bonus hunger",and the “chasing bonus” behavior of the insured can bring positive effects,which makes the policy-holder actively adopt pollution treatment and purification measures,reduce sewage discharge.However,the insurance company's net cash flow is more likely to decrease in a short period of time.In order to realize the operability and rationality of the Bonus-malus system based on environmental credit evaluation,this paper proposes that we should promote the compulsory pilot of environmental pollution liability insurance as quickly as possible and establish a nationwide unified environmental credit evaluation system,so as to achieve the policy purpose of promoting environmental pollution liability insurance.Therefore,the study of Bonus-malus system based on environmental credit rating has important practical significance.