IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2608.09441.html

From Risk Prediction to Risk Mechanisms: A Multi-Resolution Causal Representation for Road Safety and Motor Insurance

Author

Listed:
  • Arthur Charpentier

Abstract

Operational risk models can estimate event frequencies precisely while leaving the underlying mechanisms weakly resolved. We study this resolution mismatch using motor insurance and road safety. A revisable DAG represents trip-level crash generation; a separate predictive layer links annual rating information to latent driving states; and an observation process maps crashes into recorded liability claims. Compatibility sets collect the structural and crash-to-claim laws that reproduce an observed annual contrast under stated restrictions. External studies enter only through explicit bridge assumptions and sensitivity bounds. The framework therefore distinguishes sampling uncertainty from uncertainty about structure, observation, and study-to-target correspondence. Two limited examples illustrate the gap. A sublinear mileage relation constrains an aggregate accident rate per unit distance but not its mechanism. In French motor-liability data, the 18-20 versus 40-49 claim-frequency relativity is 3.388 in a model including vehicle and geographic variables and 1.235 when the same model also conditions on a medium-resolution bonus-malus score. These are different predictive functionals, not successive causal adjustments. A Spanish culpability estimate is used only to show how a strong cross-study bridge would restrict a toy bookkeeping region. The framework does not estimate the full DAG; it makes explicit which assumptions are needed before an annual predictive contrast can support a mechanism-specific risk statement.

Suggested Citation

  • Arthur Charpentier, 2026. "From Risk Prediction to Risk Mechanisms: A Multi-Resolution Causal Representation for Road Safety and Motor Insurance," Papers 2608.09441, arXiv.org, revised Aug 2026.
  • Handle: RePEc:arx:papers:2608.09441
    as

    Download full text from publisher

    File URL: https://arxiv.org/pdf/2608.09441
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Qiao Jiang & Tianxiang Shi, 2024. "Auto Insurance Pricing Using Telematics Data: Application of a Hidden Markov Model," North American Actuarial Journal, Taylor & Francis Journals, vol. 28(4), pages 822-839, October.
    2. Roel Verbelen & Katrien Antonio & Gerda Claeskens, 2018. "Unravelling the predictive power of telematics data in car insurance pricing," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 67(5), pages 1275-1304, November.
    3. Tamer, Elie, 2010. "Partial Identification in Econometrics," Scholarly Articles 34728615, Harvard University Department of Economics.
    4. Lindholm, M. & Richman, R. & Tsanakas, A. & Wüthrich, M.V., 2022. "Discrimination-Free Insurance Pricing," ASTIN Bulletin, Cambridge University Press, vol. 52(1), pages 55-89, January.
    5. D. Warner North, 2020. "Risk Analysis, Decision Analysis, Causal Analysis, and Economics: A Personal Perspective from More Than 40 years Experience," Risk Analysis, John Wiley & Sons, vol. 40(S1), pages 2178-2190, November.
    6. Mercedes Ayuso & Montserrat Guillen & Ana María Pérez-Marín, 2016. "Telematics and Gender Discrimination: Some Usage-Based Evidence on Whether Men’s Risk of Accidents Differs from Women’s," Risks, MDPI, vol. 4(2), pages 1-10, April.
    7. Denuit, Michel & Guillen, Montserrat & Trufin, Julien, 2019. "Multivariate credibility modelling for usage-based motor insurance pricing with behavioural data," Annals of Actuarial Science, Cambridge University Press, vol. 13(2), pages 378-399, September.
    8. Denuit, Michel & Guillen, Montserrat & Trufin, Julien, 2019. "Multivariate credibility modelling for usage-based motor insurance pricing with behavioural data," LIDAM Reprints ISBA 2019039, Université catholique de Louvain, Institute of Statistics, Biostatistics and Actuarial Sciences (ISBA).
    9. Shi, Peng & Shi, Kun, 2017. "Territorial Risk Classification Using Spatially Dependent Frequency-Severity Models," ASTIN Bulletin, Cambridge University Press, vol. 47(2), pages 437-465, May.
    10. Carlos Cinelli & Chad Hazlett, 2020. "Making sense of sensitivity: extending omitted variable bias," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 82(1), pages 39-67, February.
    11. Jean‐Philippe Boucher & Michel Denuit & Montserrat Guillen, 2009. "Number of Accidents or Number of Claims? An Approach with Zero‐Inflated Poisson Models for Panel Data," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 76(4), pages 821-846, December.
    12. Stanley Kaplan & B. John Garrick, 1981. "On The Quantitative Definition of Risk," Risk Analysis, John Wiley & Sons, vol. 1(1), pages 11-27, March.
    13. Mercedes Ayuso & Montserrat Guillen & Jens Perch Nielsen, 2019. "Improving automobile insurance ratemaking using telematics: incorporating mileage and driver behaviour data," Transportation, Springer, vol. 46(3), pages 735-752, June.
    14. H. Christopher Frey & Sumeet R. Patil, 2002. "Identification and Review of Sensitivity Analysis Methods," Risk Analysis, John Wiley & Sons, vol. 22(3), pages 553-578, June.
    15. Elie Tamer, 2010. "Partial Identification in Econometrics," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 167-195, September.
    16. Montserrat Guillen & Jens Perch Nielsen & Mercedes Ayuso & Ana M. Pérez‐Marín, 2019. "The Use of Telematics Devices to Improve Automobile Insurance Rates," Risk Analysis, John Wiley & Sons, vol. 39(3), pages 662-672, March.
    17. Boucher, Jean-Philippe, 2023. "Bonus-Malus Scale models: creating artificial past claims history," Annals of Actuarial Science, Cambridge University Press, vol. 17(1), pages 36-62, March.
    18. Henckaerts, Roel & Antonio, Katrien, 2022. "The added value of dynamically updating motor insurance prices with telematics collected driving behavior data," Insurance: Mathematics and Economics, Elsevier, vol. 105(C), pages 79-95.
    19. Black, Alan W. & Mote, Thomas L., 2015. "Effects of winter precipitation on automobile collisions, injuries, and fatalities in the United States," Journal of Transport Geography, Elsevier, vol. 48(C), pages 165-175.
    20. Karoline Gomes-Franco & Mario Rivera-Izquierdo & Luis Miguel Martín-delosReyes & Eladio Jiménez-Mejías & Virginia Martínez-Ruiz, 2020. "Explaining the Association between Driver’s Age and the Risk of Causing a Road Crash through Mediation Analysis," IJERPH, MDPI, vol. 17(23), pages 1-12, December.
    21. Mathias Lindholm & Ronald Richman & Andreas Tsanakas & Mario V. Wuthrich, 2022. "A Discussion of Discrimination and Fairness in Insurance Pricing," Papers 2209.00858, arXiv.org.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Catalina Bolancé & Montserrat Guillen & Ana M. Pérez-Marín & Anna-Patrícia Orteu, 2024. "Difference-in-Difference models to estimate causal effects on auto insurers behavior," IREA Working Papers 202411, University of Barcelona, Research Institute of Applied Economics, revised Feb 2024.
    2. Jongtaek Lee & Andrei Badescu & X. Sheldon Lin, 2026. "A Portfolio-Anchored Frequency-Severity Risk Index for Trip and Driver Assessment Using Telematics Signals," Papers 2603.15839, arXiv.org.
    3. Gao, Guangyuan & Wüthrich, Mario V. & Yang, Hanfang, 2019. "Evaluation of driving risk at different speeds," Insurance: Mathematics and Economics, Elsevier, vol. 88(C), pages 108-119.
    4. Omid Ghaffarpasand & Mark Burke & Louisa K. Osei & Helen Ursell & Sam Chapman & Francis D. Pope, 2022. "Vehicle Telematics for Safer, Cleaner and More Sustainable Urban Transport: A Review," Sustainability, MDPI, vol. 14(24), pages 1-20, December.
    5. Calcetero Vanegas, Sebastián & Badescu, Andrei L. & Lin, X. Sheldon, 2024. "Effective experience rating for large insurance portfolios via surrogate modeling," Insurance: Mathematics and Economics, Elsevier, vol. 118(C), pages 25-43.
    6. Banghee So & Jean-Philippe Boucher & Emiliano A. Valdez, 2021. "Synthetic Dataset Generation of Driver Telematics," Risks, MDPI, vol. 9(4), pages 1-19, March.
    7. Jean-Philippe Boucher & Roxane Turcotte, 2020. "A Longitudinal Analysis of the Impact of Distance Driven on the Probability of Car Accidents," Risks, MDPI, vol. 8(3), pages 1-19, September.
    8. Ramon Alemany & Catalina Bolancé & Roberto Rodrigo & Raluca Vernic, 2020. "Bivariate Mixed Poisson and Normal Generalised Linear Models with Sarmanov Dependence—An Application to Model Claim Frequency and Optimal Transformed Average Severity," Mathematics, MDPI, vol. 9(1), pages 1-18, December.
    9. McDonnell, Kevin & Sheehan, Barry & Murphy, Finbarr, 2026. "Bridging transparency in insurance claims prediction: A comparative study of explainable AI and traditional linear models using vehicle telematics data," Technological Forecasting and Social Change, Elsevier, vol. 223(C).
    10. Schuessler, Julian, 2024. "Causal analysis with observational data," OSF Preprints wam94, Center for Open Science.
    11. Vitor Possebom, 2026. "Crime and Mismeasured Punishment: Marginal Treatment Effect with Misclassification," The Review of Economics and Statistics, MIT Press, vol. 108(1), pages 44-56, January.
    12. Sandile Johannes Buthelezi & Taurai Hungwe & Solly Matshonisa Seeletse & Vimbai Mbirimi-Hungwe, 2024. "Non-life insurance: The state of the art of determining the superior method for pricing automobile insurance premiums using archival technique," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 13(2), pages 180-188, March.
    13. Montserrat Guillen & Jens Perch Nielsen & Ana M. Pérez‐Marín, 2021. "Near‐miss telematics in motor insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 88(3), pages 569-589, September.
    14. Marjan Qazvini, 2019. "On the Validation of Claims with Excess Zeros in Liability Insurance: A Comparative Study," Risks, MDPI, vol. 7(3), pages 1-17, June.
    15. Loeys, Stijn & Boute, Robert N. & Antonio, Katrien, 2025. "The use of IoT sensor data to dynamically assess maintenance risk in service contracts," European Journal of Operational Research, Elsevier, vol. 324(2), pages 454-465.
    16. Francis Duval & Jean‐Philippe Boucher & Mathieu Pigeon, 2023. "Enhancing claim classification with feature extraction from anomaly‐detection‐derived routine and peculiarity profiles," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 90(2), pages 421-458, June.
    17. Li, Hong-Jie & Luo, Xing-Gang & Zhang, Zhong-Liang & Huang, Shen-Wei & Jiang, Wei, 2025. "A usage-based insurance (UBI) pricing model considering customer retention," Insurance: Mathematics and Economics, Elsevier, vol. 124(C).
    18. Brenda Prallon, 2026. "How Robust are Robustness Checks?," Papers 2602.19384, arXiv.org.
    19. Montserrat Guillen & Ana M. Pérez-Marín & Mercedes Ayuso & Jens Perch Nielsen, 2018. "“Exposure to risk increases the excess of zero accident claims frequency in automobile insurance”," IREA Working Papers 201810, University of Barcelona, Research Institute of Applied Economics, revised May 2018.
    20. repec:osf:osfxxx:wam94_v1 is not listed on IDEAS
    21. Shengkun Xie, 2024. "Analyzing the Influence of Telematics-Based Pricing Strategies on Traditional Rating Factors in Auto Insurance Rate Regulation," Mathematics, MDPI, vol. 12(19), pages 1-23, October.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2608.09441. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: https://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.