Abstract
Insurance consists of a transfer of risk from the policyholder to the carrier. Without experience rating, the transfer is total (perfect solidarity): the variability of insureds’ payments is zero. With experience rating, personalized premiums will vary from year to year, according to claims history; cooperation between drivers is weakened. Solidarity between insureds can be evaluated by a measure of the variability of annual premiums. The coefficient of variation (standard deviation divided by mean) was selected, as it is a dimensionless parameter. There is thus no need for currency conversions.
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© 1995 Springer Science+Business Media New York
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Lemaire, J. (1995). Tool 2: The Coefficient of Variation of the Insured’s Premiums. In: Bonus-Malus Systems in Automobile Insurance. Huebner International Series on Risk, Insurance, and Economic Security, vol 19. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-0631-3_5
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DOI: https://doi.org/10.1007/978-94-011-0631-3_5
Publisher Name: Springer, Dordrecht
Print ISBN: 978-94-010-4275-8
Online ISBN: 978-94-011-0631-3
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