Bonus-malus Systems in Vehicle Insurance
Open accessAbstract
Abstract Actuaries in insurance companies try to design a tariff structure that will fairly distribute the burden of claims among policyholders. Therefore they try to find the best model for an estimation of the insurance premium. The paper deals with an estimate of a priori annual claim frequency and application of bonus-malus system in the vehicle insurance.In this paper, analysis of the portfolio of vehicle insurance data using generalized linear model (GLM) is performed. Based on large real-world sample of data from 67 857 vehicles, the present study proposes a classification analysis approach addressing the selection of predictor variables. The models with different predictor variables are compared by the analysis of deviance. Based on this comparison, the model for the best estimate of annual claim frequency is chosen. Then the bonus-malus (BM) system is used for each class of drivers and Bayesian relative premium is calculated. Finally a fairer premium for different groups of drivers is proposed.
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There is precedent for efficiency policies in other sectors, including the EU energy label, minimum performance standards for white appliances, bonus-malus systems in vehicle insurance, fuel economy standards, and international shipping.
“there is precedent for such policies in other sectors: the EU energy label and minimum performance standards for white appliances35, bonus-malus systems in vehicle insurance36 or fuel economy standards37, as recently approved by the Marine Environment Protection Committee for international shipping38.”
From Large carbon dioxide emissions avoidance potential in improved commercial air transport efficiency (2026) · cites this paper as [36]
Cites
Non-Life Insurance Pricing with Generalized Linear Models
Ohlsson, E., & Johansson, B. (2010) · EAA Lecture Notes · doi:10.1007/978-3-642-10791-7 · Cited by 260 · see citing works
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Large carbon dioxide emissions avoidance potential in improved commercial air transport efficiency
Gössling, S., Klöwer, M., Leitão, J. C., Hirsch, S., Brockhagen, D., & Humpe, A. (2026) · Communications Earth & Environment · doi:10.1038/s43247-025-03069-4 · Cited by 11 · see citing works
“…there is precedent for such policies in other sectors: the EU energy label and minimum performance standards for white appliances 35 , bonus-malus systems in vehicle insurance 36 orfueleconomystandards 37 ,asrecentlyapprovedbytheMarine EnvironmentProtectionCommitteeforinternationalshipping 38 .”
- Authors
- Kafková, S.
- Affiliations
- Masaryk University (CZ)
- Corresponding author
- Kafková, Silvie
- Venue
- Procedia Economics and Finance
- Publisher
- Elsevier BV
- Published
- 2015
- Volume
- 23
- Pages
- 216-222
- ISSN
- 2212-5671 (ISSN-L)
- OpenAlex
- W878990491
- Cited by
- 6
- References
- 1
- Citations by year
- 2026: 1 · 2022: 1 · 2021: 1 · 2020: 3
- FWCI
- 0.00
- Type
- journal article
- Language
- en
- Open access
- diamond
- doi.org
- Licence
- Locations
- Procedia Economics and Finance (publishedVersion, cc-by-nc-nd)
- Topics
- Social Sciences › Decision Sciences › Management Science and Operations Research › Probability and Risk Models
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Insurance and Financial Risk Management
- Physical Sciences › Engineering › Safety, Risk, Reliability and Quality › Traffic and Road Safety
- Keywords
- bonus-malus system, automobile insurance, insurance premium estimation, generalized linear models, predictor selection, driver classification, tariff design
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