Bonus–malus systems with different claim types and varying deductibles
Volume 4, Issue 2 (2017), pp. 141–159
Pub. online: 28 June 2017
Type: Research Article
Open Access
Open Access
Received
10 April 2017
10 April 2017
Revised
11 June 2017
11 June 2017
Accepted
13 June 2017
13 June 2017
Published
28 June 2017
28 June 2017
Abstract
The paper deals with bonus–malus systems with different claim types and varying deductibles. The premium relativities are softened for the policyholders who are in the malus zone and these policyholders are subject to per claim deductibles depending on their levels in the bonus–malus scale and the types of the reported claims. We introduce such bonus–malus systems and study their basic properties. In particular, we investigate when it is possible to introduce varying deductibles, what restrictions we have and how we can do this. Moreover, we deal with the special case where varying deductibles are applied to the claims reported by policyholders occupying the highest level in the bonus–malus scale and consider two allocation principles for the deductibles. Finally, numerical illustrations are presented.
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