Relative Premium in Vehicle Insurance
Relative Premium in Vehicle Insurance

Author(s): Silvie Kafková
Subject(s): Business Economy / Management, Evaluation research
Published by: Masarykova univerzita nakladatelství
Keywords: Markov chain; premium; bonus-malus system;
Summary/Abstract: Very important task of the actuary is to create a fair tariff structure. This structure has to fairly divide the burden of claims among policy holders. The subject of this paper is bonus-malus system in vehicle insurance. This system penalizes drivers responsible for accidents and rewards the drivers for claim-free years. First the long term behavior of BM system is examined.

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