Bonus–Malus Systems

I
Jean-François Walhin

Jean-François Walhin

Université Catholique de Louvain, Louvain-La-Neuve, Belgium

Forits, Brussels, Belgium

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First published: 15 September 2008

Abstract

This paper describes a particular type of a posteriori rating scheme, namely bonus-malus systems within the general framework of mixed Poisson regression. It is shown that the bonus-malus scale is not independent of the a priori rating applied by the insurer. Considerations about bonus hunger, moral hazard, and signal theory are briefly introduced.

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