BONUS HUNGER IN ORDER TO AVOID THE INCREASED FUTURE PREMIUMS UNDER BONUS-MALUS CONTRACTS: Abstract

• Main Author: Prayudha Hassan, Bastian
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/5488
• Institution: Institut Teknologi Bandung

<b>Abstract: </b><p align="justify"> Bonus-malus system gives the insurance costumer an increased future premium if a loss occurrence is compensated by the insurance company. On the other hand, a premium will be reduced in the future if a loss occurrence is not compensated by the insurance company.<p align="justify"> From this fact, there is a basic question under Bonus-malus system based on insurance costumer’s point of view, that is, “Should an insurance costumer carry an occurred loss himself, or should he make a claim to the insurance company?” [Holtan, 2001, page 161]. Hence, an insurance costumer prefers to choose self-financing an occurred loss by carrying a small loss himself in order to avoid an increased future premium, instead of financing the loss by a compensation from the insurance company. This strategy is called bonus hunger of the insurance costumer. In this strategy, the insurance costumer prefers the most profitable financial alternative, after a loss occurrence.