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Estimating the Effect of a Change in Insurance Pricing Regime on Accidents with Endogenous Mobility

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  • Georges Dionne
  • Benoit Dostie

Abstract

In this paper, we estimate the impact of introducing a bonus-malus system on the probability of having automobile accidents, taking into account contract duration or the client mobility between insurers. We show that the new incentive scheme reduces accident rates of all policyholders when contract duration is taken into account, but does not affect accident rates of movers that shirk the imposed incentive effects of the new insurance pricing scheme.

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File URL: http://www.cirpee.org/fileadmin/documents/Cahiers_2007/CIRPEE07-28.pdf
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Bibliographic Info

Paper provided by CIRPEE in its series Cahiers de recherche with number 0728.

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Date of creation: 2007
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Handle: RePEc:lvl:lacicr:0728

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Related research

Keywords: Bonus-malus; contract duration; automobile accident; Poisson distribution; right- and left-censoring; exponential distribution;

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  1. Dionne, G. & Vanasse, C., 1988. "A Generalization Of Automobile Insurance Rating Models: The Negative Binomial Distribution With A Regression Component," Cahiers de recherche 8833, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  2. Shavell, Steven, 1979. "On Moral Hazard and Insurance," The Quarterly Journal of Economics, MIT Press, vol. 93(4), pages 541-62, November.
  3. Gourieroux, Christian & Monfort, Alain & Trognon, Alain, 1984. "Pseudo Maximum Likelihood Methods: Applications to Poisson Models," Econometrica, Econometric Society, vol. 52(3), pages 701-20, May.
  4. Dionne, G. & Gane, R. & Vanasse, C., 1995. "Infessing Technological Parameters from Incomplete Panel Data," Cahiers de recherche 9537, Universite de Montreal, Departement de sciences economiques.
  5. Jerry A. Hausman & Bronwyn H. Hall & Zvi Griliches, 1984. "Econometric Models for Count Data with an Application to the Patents-R&D Relationship," NBER Technical Working Papers 0017, National Bureau of Economic Research, Inc.
  6. Verbeek, M. & Nijman, T., 1990. "Testing For Selectivity Bias In Panel Data Models," Papers 9018, Tilburg - Center for Economic Research.
  7. Nijman, T.E. & Verbeek, M.J.C.M., 1992. "Testing for selectivity in panel data models," Open Access publications from Tilburg University urn:nbn:nl:ui:12-153280, Tilburg University.
  8. Jaap H. Abbring & Pierre-André Chiappori & Jean Pinquet, 2003. "Moral Hazard and Dynamic Insurance Data," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 767-820, 06.
  9. Jean Pinquet & Georges Dionne & Charles Vanasse & Mathieu Maurice, 2007. "Point-record incentives, asymmetric information and dynamic data," Working Papers hal-00243056, HAL.
  10. Anna Christina D'Addio & Michael Rosholm, . "Left-Censoring in Duration Data: Theory and Applications," Economics Working Papers 2002-5, School of Economics and Management, University of Aarhus.
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