Optimal relativities and transition rules of a bonus-malus system

• Main Authors: Tan, Chong It, Li, Jackie, Li, Johnny Siu-Hang, Balasooriya, Uditha
• Other Authors: Nanyang Business School
• Format: Article
• Language: English
• Published: 2015
• Subjects: DRNTU::Business::Finance::Insurance::Mathematical models
• Online Access: https://hdl.handle.net/10356/93727; http://hdl.handle.net/10220/38368
• Institution: Nanyang Technological University

When a bonus–malus system with a single set of optimal relativities and a set of simple transition rules is implemented, two inadequacy scenarios are induced because all policyholders are subject to the same a posteriori premium relativities (level transitions) independent of their a priori characte...