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Vehicle and Fleet Random Effects in a Model of Insurance Rating for Fleets of Vehicles

Published online by Cambridge University Press:  17 April 2015

Jean-François Angers ,
Denise Desjardins ,
Georges Dionne  and
François Guertin
Jean-François Angers
Affiliation:
Center for Research on Transportation, Université de Montréal, C.P. 6128, Succ. Centre-Ville, Montreal, Canada, H3C 3J7
Denise Desjardins
Affiliation:
Center for Research on Transportation, Université de Montréal, C.P. 6128, Succ. Centre-Ville, Montreal, Canada, H3C 3J7
Georges Dionne
Affiliation:
Canada Research Chair in Risk Management, HEC Montréal, 3000, Chemin de la Côte-Sainte-Catherine, Montreal (Qc) Canada, H3T 2A7, Tel.: (514)340-6596, Fax: (514)340-5019, E-mail: georges.dionne@hec.ca
François Guertin
Affiliation:
Center for Research on Transportation, Université de Montréal, C.P. 6128, Succ. Centre-Ville, Montreal, Canada, H3C 3J7
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Abstract

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We are proposing a parametric model to rate insurance for vehicles belonging to a fleet. The tables of premiums presented take into account past vehicle accidents, observable characteristics of the vehicles and fleets, and violations of the road-safety code committed by drivers and carriers. The premiums are also adjusted according to accidents accumulated by the fleets over time. The proposed model accounts directly for explicit changes in the various components of the probability of accidents. It represents an extension of bonus malus-type automobile insurance models for individual premiums (Lemaire, 1985; Dionne and Vanasse, 1989 and 1992; Pinquet, 1997 and 1998; Frangos and Vrontos, 2001; Purcaru and Denuit, 2003). The extension adds a fleet effect to the vehicle effect so as to account for the impact that the unobservable characteristics or actions of carriers can have on truck accident rates. This form of rating makes it possible to visualize what impact the behaviors of owners and drivers can have on the predicted rate of accidents and, consequently, on premiums. The results are compared to those of the semiparametric approach.

Keywords

Fleet of vehiclesrandom effectsvehicle effectfleet effectinsurance ratingbehaviors of owners and driversPoisson, gammaDirichletparametric model
Type
Articles
Information
ASTIN Bulletin: The Journal of the IAA , Volume 36 , Issue 1 , May 2006 , pp. 25 - 77
Copyright
Copyright © ASTIN Bulletin 2006

Footnotes

1

Département de mathématiques et de statistique, Université de Montréal and CRT.

2

CRT, Université de Montréal

3

HEC Montréal, CRT, CIRPÉE, and THEMA (France)

4

RQCHP and CRT, Université de Montréal

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