Improving automobile insurance ratemaking using telematics : incorporating mileage and driver behaviour data
Ayuso, Mercedes
Guillén, Montserrat
Nielsen, Jens Perch
Xarxa de Referència en Economia Aplicada (XREAP)

Imprint: Xarxa de Referència en Economia Aplicada (XREAP) 2016
Description: 31 p.
Abstract: We show how data collected from a GPS device can be incorporated in motor insurance ratemaking. The calculation of premium rates based upon driver behaviour represents an opportunity for the insurance sector. Our approach is based on count data regression models for frequency, where exposure is driven by the distance travelled and additional parameters that capture characteristics of automobile usage and which may affect claiming behaviour. We propose implementing a classical frequency model that is updated with telemetrics information. We illustrate the method using real data from usage-based insurance policies. Results show that not only the distance travelled by the driver, but also driver habits, significantly influence the expected number of accidents and, hence, the cost of insurance coverage. Telemetry should facilitate the inclusion within insurance pricing of those factors that traffic authorities identify as being associated with risky drivers, including, for example, traffic violations.
Rights: L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons: Creative Commons
Language: Anglès.
Series: Xarxa de Referència en Economia Aplicada (XREAP): Documents de treball de la Xarxa de Referència en Economia Aplicada (XREAP)
Series: XREAP ; 2016-08
Document: workingPaper
Subject: Assegurances d'automòbils ; Sistema de posicionament global ; Accidents de circulació ; Automobile insurance ; Global Positioning System ; Traffic accidents

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31 p, 471.9 KB

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Research literature > Studies

 Record created 2017-01-13, last modified 2019-02-02

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