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Document Details : Title: The Development of an Optimal Bonus-Malus System in a Competitive Market Author(s): BAIONE, F. , LEVANTESI, S. , MENZIETTI, M. Journal: ASTIN Bulletin Volume: 32 Issue: 1 Date: May 2002 Pages: 159-170 DOI: 10.2143/AST.32.1.1021 Abstract : BMS in force show a progressive reduction of the observed average premium, which causes a financial imbalance in the system. As a consequence, frequent premium adjustments become necessary and result in a discrepancy between the reduction defined in the policy contract and the effective discount applied to the driver. Most policyholders are not aware of this “lack of transparency”. This paper deals with the problem of designing an optimal tariff structure so that the designed BMS is adequate and satisfies both transparency and financial balance conditions. |
