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Title: Improving automobile insurance ratemaking using telematics: incorporating mileage and driver behaviour data [WP]
Author: Ayuso, Mercedes
Guillén, Montserrat
Nielsen, Jens Perch
Keywords: Primes (Assegurances)
Sistema de posicionament global
Assegurances d'automòbils
Models economètrics
Insurance premiums
Automobile Insurance
Global Positioning System
Econometric models
Issue Date: 2017
Publisher: Universitat de Barcelona. Riskcenter
Series/Report no: [WP E-RC17/01]
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. This paper provides a methodology including a transition pricing transferring knowledge and experience that the company already had before the telematics data arrived to the new world including telematics information.
Note: Reproducció del document publicat a:
It is part of: UB Riskcenter Working Paper Series, 2017/01
Appears in Collections:UB RISKCENTER – Working Papers Series

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