Bonus-Malus Systems in Automobile Insurance

  • Jean Lemaire

Table of contents

  1. Front Matter
    Pages i-xxvi
  2. Introduction Models for Claim Number Distributions

    1. Front Matter
      Pages 1-1
    2. Jean Lemaire
      Pages 21-42
    3. Back Matter
      Pages 43-56
  3. Evaluation of Bonus-Malus Systems

    1. Front Matter
      Pages 57-57
    2. Jean Lemaire
      Pages 91-102
    3. Jean Lemaire
      Pages 103-115
    4. Back Matter
      Pages 133-152
  4. The Design of an Optimal Bonus-Malus System

    1. Front Matter
      Pages 153-153
    2. Jean Lemaire
      Pages 197-204
    3. Jean Lemaire
      Pages 205-210
    4. Jean Lemaire
      Pages 211-220

About this book


Most insurers around the world have introduced some form of merit-rating in automobile third party liability insurance. Such systems, penalizing at-fault accidents by premium surcharges and rewarding claim-free years by discounts, are called bonus-malus systems (BMS) in Europe and Asia. With the current deregulation trends that concern most insurance markets around the world, many companies will need to develop their own BMS. The main objective of the book is to provide them models to design BMS that meet their objectives.
Part I of the book contains an overall presentation of the pros and cons of merit-rating, a case study and a review of the different probability distributions that can be used to model the number of claims in an automobile portfolio. In Part II, 30 systems from 22 different countries, are evaluated and ranked according to their `toughness' towards policyholders. Four tools are created to evaluate that toughness and provide a tentative classification of all systems. Then, factor analysis is used to aggregate and summarize the data, and provide a final ranking of all systems. Part III is an up-to-date review of all the probability models that have been proposed for the design of an optimal BMS. The application of these models would enable the reader to devise the system that is ideally suited to the behavior of the policyholders of his own insurance company. Finally, Part IV analyses an alternative to BMS; the introduction of a policy with a deductible.


Distribution deregulation evaluation insurance rating

Authors and affiliations

  • Jean Lemaire
    • 1
  1. 1.The Wharton SchoolUniversity of PennsylvaniaUSA

Bibliographic information

  • DOI
  • Copyright Information Kluwer Academic Publishers 1995
  • Publisher Name Springer, Dordrecht
  • eBook Packages Springer Book Archive
  • Print ISBN 978-94-010-4275-8
  • Online ISBN 978-94-011-0631-3
  • Series Print ISSN 0924-5014
  • About this book