Segmentation applied to the Bonus-Malus System through the Norberg’s formula

Abstract

The aim of this research is to study the implementation of segmentation in bonus-malus systems that base its analysis in the random variable number of claims. To this end, the theoretical framework proposed by Norberg for the construction of this a posteriori pricing method, for both not segmented and segmented case, is presented. This formulation has allowed the computation of the relative pure premiums and the premiums when unitary claim amount is assumed under different examples and scenarios. Then the different paths of premiums for certain insureds from simulated datasets are assessed. It is also evaluated this framework to surcharge premiums.