Bivariate Poisson Credibility Model and Bonus–Malus Scale for Claim and Near-Claim Events

Abstract

With the emergence of telematics, huge amounts of data have become available to insurers, raising the question of their integration into motor insurance pricing. Near-claim events are dangerous events that could have triggered a claim. Typically, they correspond to harsh deceleration, acceleration, or cornering. Based on the motor third-party liability insurance portfolio of an insurance company operating in Belgium, we highlight that deceleration events are the best candidates for characterizing near-claim events. Then, we propose to integrate these events in the pricing structure in addition to a policyholder’s claim history with the help of a bivariate Poisson-Lognormal credibility model. Finally, we design an original bonus–malus scale based on both claim and near-claim events.

ACKNOWLEDGEMENTS

The authors thank their colleagues from P&V Assurances, especially Nikias De Feyter and Carolina Aldana, for interesting discussions that greatly contributed to the success of this research project. The authors also thank the anonymous referees and the editor for their constructive comments that helped to improve this article.

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

The authors gratefully acknowledge the financial support of P&V Assurances through the research chair "Telematics and Prevention."