Next Article in Journal
Bounded Brownian Motion
Previous Article in Journal
An EM Algorithm for Double-Pareto-Lognormal Generalized Linear Model Applied to Heavy-Tailed Insurance Claims
Open AccessFeature PaperArticle

Optimal Claiming Strategies in Bonus Malus Systems and Implied Markov Chains

1
Faculte des Sciences Economiques, Universite Rennes 1, 7 Place Hoche, 35065 Rennes CEDEX, France
2
Batiment Bois de l’Etang, Universite Paris Est, 5 rue Galilee, 77420 Champs sur Marne, France
*
Author to whom correspondence should be addressed.
Risks 2017, 5(4), 58; https://doi.org/10.3390/risks5040058
Received: 28 April 2017 / Revised: 22 September 2017 / Accepted: 23 October 2017 / Published: 8 November 2017
In this paper, we investigate the impact of the accident reporting strategy of drivers, within a Bonus-Malus system. We exhibit the induced modification of the corresponding class level transition matrix and derive the optimal reporting strategy for rational drivers. The hunger for bonuses induces optimal thresholds under which, drivers do not claim their losses. Mathematical properties of the induced level class process are studied. A convergent numerical algorithm is provided for computing such thresholds and realistic numerical applications are discussed. View Full-Text
Keywords: bonus hunger; bonus-malus; control; incentives; Markov Chains; reporting bonus hunger; bonus-malus; control; incentives; Markov Chains; reporting
Show Figures

Figure 1

MDPI and ACS Style

Charpentier, A.; David, A.; Elie, R. Optimal Claiming Strategies in Bonus Malus Systems and Implied Markov Chains. Risks 2017, 5, 58.

Show more citation formats Show less citations formats
Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.

Article Access Map by Country/Region

1
Back to TopTop