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Vehicle and Fleet Random Effects in a Model of Insurance Rating for Fleets of Vehicles

  • Jean-François Angers
  • Denise Desjardins
  • Georges Dionne
  • François Guertin

We are proposing a parametric model to rate insurance for vehicles belonging to a fleet. The tables of premiums presented take into account past vehicle accidents, observable characteristics of the vehicles and fleets, and violations of the road-safety code committed by drivers and carriers. The premiums are also adjusted according to accidents accumulated by the fleets over time. The model proposed accounts directly for explicit changes in the various components of the probability of accidents. It represents an extension of bonus-malus-type automobile insurance models for individual premiums (Lemaire, 1985; Dionne and Vannase, 1989 and 1992; Pinquet, 1997 and 1998; Frangos and Vrontos, 2001; Purcaru and Denuit, 2003). The extension adds a fleet effect to the vehicle effect so as to account for the impact that the unobservable characteristics or actions of carriers can have on truck accident rates. This form of rating makes it possible to visualize what impact the behaviors of owners and drivers can have on the predicted rate of accidents and, consequently, on premiums.

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Paper provided by CIRPEE in its series Cahiers de recherche with number 0423.

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Date of creation: 2004
Date of revision:
Handle: RePEc:lvl:lacicr:0423
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  1. Abowd, J.M. & Kramarz, F. & Margolis, D.N., 1995. "High-Wage Workers and High-Wage Firms," Cahiers de recherche 9503, Universite de Montreal, Departement de sciences economiques.
  2. Dionne, G. & Vanasse, C., 1988. "Automobile Insurance Ratemaking In The Presence Of Asymmetric Information," Cahiers de recherche 8834, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  3. 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.
  4. Pinquet, J., 1998. "Designing Optimal Bonus-Malus Systems from Different Types of Claims," Papers 9819, Paris X - Nanterre, U.F.R. de Sc. Ec. Gest. Maths Infor..
  5. Dionne, G. & Vanasse, C., 1988. "A Generalization of Automobile Insurance Rating Models: the Negative Binomial Distribution with a Regression Component," Cahiers de recherche 8833, Universite de Montreal, Departement de sciences economiques.
  6. Dionne, G. & Desjardins, D. & Ingabire, M.-G. & Aqdim, R., 2001. "La perception du risque d'etre arrete chez les camionneurs et transporteurs routiers," Ecole des Hautes Etudes Commerciales de Montreal- 01-03, Ecole des Hautes Etudes Commerciales de Montreal-Chaire de gestion des risques..
  7. D. Desjardins & G. Dionne & J. Pinquet, 2000. "Experience rating schemes for fleets of vehicles," THEMA Working Papers 2000-08, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  8. J. Pinquet, 1997. "Experience rating through heterogeneous models," THEMA Working Papers 97-25, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  9. Teugels, Jozef L. & Sundt, Bjorn, 1991. "A stop-loss experience rating scheme for fleets of cars," Insurance: Mathematics and Economics, Elsevier, vol. 10(3), pages 173-179, December.
  10. Dionne, G. & Laberge-Nadeau, C. & Desjardins, D. & Messier, S. & Maag, U., 1998. "Analysis of the Economic Impact of Medical and Optometric Driving Standards on Costs Incured by Trucking Firms and on the Social Costs of Traffic Accidents," Ecole des Hautes Etudes Commerciales de Montreal- 98-06, Ecole des Hautes Etudes Commerciales de Montreal-Chaire de gestion des risques..
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