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An Evaluation of the New Japanese Bonus–Malus System with No-claim and Claimed Subclasses

Author

Listed:
  • Okura Mahito

    (Department of Social System Studies, Faculty of Contemporary Social Studies, Doshisha Women’s College of Liberal Arts, Kodo, Kyotanabe, Kyoto 610-0395, Japan)

  • Yoshizawa Takuya

    (Faculty of Law, Kyoto Sangyo University, Motoyama, Kamigamo, Kita-ku,Kyoto 603-8555, Japan)

  • Sakaki Motohiro

    (Graduate School of Law, Kobe University, 2-1 Rokkodai-cho, Nada-ku, Kobe 657-8501, Japan)

Abstract

The purpose of this research is to evaluate the new Japanese Bonus–Malus System (BMS 2012) in automobile insurance, which is an unusual system wherein both no-claim and claimed subclasses exist. To evaluate BMS 2012, we conduct a simulation analysis and compare BMS 2012 with the former Japanese BMS (BMS 2009) in terms of the present value of the total insurance premium that is closely related to the frequency of insurance claims. Based on the comparison, our main conclusion is that BMS 2012 offers more effects to lower the frequency of insurance claims than BMS 2009 does when the policyholders’ classes in BMS are high classes that evaluate as safety drivers, time discount and/or renewal rates are relatively low, and the policyholders’ risk averseness is large.

Suggested Citation

  • Okura Mahito & Yoshizawa Takuya & Sakaki Motohiro, 2021. "An Evaluation of the New Japanese Bonus–Malus System with No-claim and Claimed Subclasses," Asia-Pacific Journal of Risk and Insurance, De Gruyter, vol. 15(1), pages 1-12, January.
    • Handle: RePEc:bpj:apjrin:v:15:y:2021:i:1:p:12:n:1
    DOI: 10.1515/apjri-2019-0004
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Bonus–Malus System (BMS); automobile insurance; simulation analysis; Japan;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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