Abstract
All bonus-malus systems in force throughout the world penalize the number of reported claims without taking the costs of such claims into account—a mere scratch causes the same premium increase as a serious bodily injury. Since we have shown that the variables “number” and “amount” of the claims are not independent, this procedure is unfair to town dwellers, who produce more, but less severe, accidents. A model that would take the cost of claims into account would be fairer.
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© 1985 Springer Science+Business Media New York
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Lemaire, J. (1985). Allowance for Severity of Claims. In: Automobile Insurance. Huebner International Series on Risk, Insurance and Economic Security, vol 4. Springer, Dordrecht. https://doi.org/10.1007/978-94-015-7708-3_16
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DOI: https://doi.org/10.1007/978-94-015-7708-3_16
Publisher Name: Springer, Dordrecht
Print ISBN: 978-90-481-5814-0
Online ISBN: 978-94-015-7708-3
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