IDEAS home Printed from https://ideas.repec.org/p/ris/crcrmw/2003_007.html
   My bibliography  Save this paper

The (1992) bonus-malus system in Tunisia: An empirical evaluation

Author

Listed:
  • Dionne, Georges

    (HEC Montreal, Canada Research Chair in Risk Management)

  • Ghali, Olfa

    (Université de Tunis)

Abstract

The objective of this study is to assess empirically what impact introduction of the bonus-malus system has had on road safety in Tunisia. The results of the Tunisian experiment are now of particular importance since, during the last decade, many European countries decided to eliminate their bonus-malus scheme. These results indicate that the bonus-malus system reduced the probability of reported accident for good risks but had no effect on that of bad risks. Moreover, the overall effect of the reform on reported accidents rates is not statistically significant. This finding is explained by the fact that bad risks can switch to another insurer so as to escape the incentive effect imposed by the new rating policy. Many control variables are statistically significant in explaining the number of reported accidents: the vehicle’s horsepower, the policyholder’s place of residence, exits from the insurer portfolio, and the coverages for which policyholders are underwritten. The coefficient of the predicted exit variable is positive in explaining the number of accidents. This indicates that policyholders who switch company are higher risks. The final results were obtained by introducing random individual-specific effects to make joint estimates of the accident and selection equations.

Suggested Citation

  • Dionne, Georges & Ghali, Olfa, 2004. "The (1992) bonus-malus system in Tunisia: An empirical evaluation," Working Papers 03-7, HEC Montreal, Canada Research Chair in Risk Management.
    • Handle: RePEc:ris:crcrmw:2003_007
    as

    Download full text from publisher

    File URL: https://www.risksresearch.com/_files/ugd/a6eed3_deb52de5737046c8bc619b672901f1d7.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Dionne, Georges & Vanasse, Charles, 1989. "A Generalization of Automobile Insurance Rating Models: The Negative Binomial Distribution with a Regression Component," ASTIN Bulletin, Cambridge University Press, vol. 19(2), pages 199-212, November.
    2. Dionne, G & Vanasse, C, 1992. "Automobile Insurance Ratemaking in the Presence of Asymmetrical Information," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 7(2), pages 149-165, April-Jun.
    3. Gourieroux, Christian & Monfort, Alain & Trognon, Alain, 1984. "Pseudo Maximum Likelihood Methods: Applications to Poisson Models," Econometrica, Econometric Society, vol. 52(3), pages 701-720, May.
    4. Dionne, Georges & Gagne, Robert & Vanasse, Charles, 1998. "Inferring technological parameters from incomplete panel data," Journal of Econometrics, Elsevier, vol. 87(2), pages 303-327, September.
    5. Georges Dionne & Olfa Ghali, 2005. "The (1992) Bonus‐Malus System in Tunisia: An Empirical Evaluation," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 72(4), pages 609-633, December.
    6. Verbeek, Marno & Nijman, Theo, 1992. "Testing for Selectivity Bias in Panel Data Models," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(3), pages 681-703, August.
    7. Dionne, G. & Maurice, M. & Pinquet, J. & Vanasse, C., 2001. "The Role of Memory in Long-Term Contracting with Moral Hazard: Empirical Evidence in Automobile Insurance," Ecole des Hautes Etudes Commerciales de Montreal- 01-05, Ecole des Hautes Etudes Commerciales de Montreal-Chaire de gestion des risques..
    8. A. Colin Cameron & Pravin K. Trivedi, 1986. "Econometric models based on count data. Comparisons and applications of some estimators and tests," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 1(1), pages 29-53, January.
    9. Lechner, Michael, 1995. "Some Specification Tests for Probit Models Estimated on Panel Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(4), pages 475-488, October.
    10. Hausman, Jerry & Hall, Bronwyn H & Griliches, Zvi, 1984. "Econometric Models for Count Data with an Application to the Patents-R&D Relationship," Econometrica, Econometric Society, vol. 52(4), pages 909-938, July.
    11. Guilkey, David K. & Murphy, James L., 1993. "Estimation and testing in the random effects probit model," Journal of Econometrics, Elsevier, vol. 59(3), pages 301-317, October.
    12. Amemiya, Takeshi, 1981. "Qualitative Response Models: A Survey," Journal of Economic Literature, American Economic Association, vol. 19(4), pages 1483-1536, December.
    13. J. Pinquet, 1997. "Experience rating through heterogeneous models," THEMA Working Papers 97-25, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    14. Dominique Henriet & Jean-Charles Rochet, 1986. "La logique des systèmes bonus-malus en assurance automobile: une approche théorique," Annals of Economics and Statistics, GENES, issue 1, pages 133-152.
    15. repec:adr:anecst:y:1986:i:1:p:07 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dionne, Georges, 2012. "The empirical measure of information problems with emphasis on insurance fraud and dynamic data," Working Papers 12-10, HEC Montreal, Canada Research Chair in Risk Management.
    2. Georges Dionne & Olfa Ghali, 2005. "The (1992) Bonus‐Malus System in Tunisia: An Empirical Evaluation," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 72(4), pages 609-633, December.
    3. Azaare Jacob & Zhao Wu, 2020. "An Alternative Pricing System through Bayesian Estimates and Method of Moments in a Bonus-Malus Framework for the Ghanaian Auto Insurance Market," JRFM, MDPI, vol. 13(7), pages 1-15, July.
    4. Dionne, Georges & Michaud, Pierre-Carl & Pinquet, Jean, 2013. "A review of recent theoretical and empirical analyses of asymmetric information in road safety and automobile insurance," Research in Transportation Economics, Elsevier, vol. 43(1), pages 85-97.
    5. Sharon Tennyson, 2010. "Incentive Effects of Community Rating in Insurance Markets: Evidence from Massachusetts Automobile Insurance," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 35(1), pages 19-46, June.
    6. Dhiti Osatakul & Xueyuan Wu, 2021. "Discrete-Time Risk Models with Claim Correlated Premiums in a Markovian Environment," Risks, MDPI, vol. 9(1), pages 1-23, January.
    7. Ming-Jyh Wang & Chieh-Hua Wen & Lawrence W Lan, 2010. "Modelling Different Types of Bundled Automobile Insurance Choice Behaviour: The Case of Taiwan*," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 35(2), pages 290-308, April.
    8. Sharon Tennyson, 2010. "Rethinking Consumer Protection Regulation in Insurance Markets," NFI Policy Briefs 2010-PB-07, Indiana State University, Scott College of Business, Networks Financial Institute.
    9. Katja Müller & Hato Schmeiser & Joël Wagner, 2016. "The impact of auditing strategies on insurers’ profitability," Journal of Risk Finance, Emerald Group Publishing, vol. 17(1), pages 46-79, January.

    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. Olfa N. Ghali, 2001. "An Empirical Evaluation of the Implementation of the Bonus-Malus System in the Tunisian Automobile Insurance Ratemaking," Working Papers 0135, Economic Research Forum, revised 11 2001.
    2. Angers, Jean-François & Desjardins, Denise & Dionne, Georges & Guertin, François, 2018. "Modelling And Estimating Individual And Firm Effects With Count Panel Data," ASTIN Bulletin, Cambridge University Press, vol. 48(3), pages 1049-1078, September.
    3. Dionne, Georges, 2012. "The empirical measure of information problems with emphasis on insurance fraud and dynamic data," Working Papers 12-10, HEC Montreal, Canada Research Chair in Risk Management.
    4. Dahen, Hela & Dionne, Georges, 2010. "Scaling models for the severity and frequency of external operational loss data," Journal of Banking & Finance, Elsevier, vol. 34(7), pages 1484-1496, July.
    5. Angers, Jean-François & Desjardins, Denise & Dionne, Georges & Guertin, François, 2006. "Vehicle and Fleet Random Effects in a Model of Insurance Rating for Fleets of Vehicles," ASTIN Bulletin, Cambridge University Press, vol. 36(1), pages 25-77, May.
    6. Gourieroux, C. & Jasiak, J., 2004. "Heterogeneous INAR(1) model with application to car insurance," Insurance: Mathematics and Economics, Elsevier, vol. 34(2), pages 177-192, April.
    7. Dionne, Georges & Michaud, Pierre-Carl & Pinquet, Jean, 2013. "A review of recent theoretical and empirical analyses of asymmetric information in road safety and automobile insurance," Research in Transportation Economics, Elsevier, vol. 43(1), pages 85-97.
    8. Georges Dionne & Benoit Dostie, 2007. "Estimating the Effect of a Change in Insurance Pricing Regime on Accidents with Endogenous Mobility," Cahiers de recherche 0728, CIRPEE.
    9. Desjardins, Denise & Dionne, Georges & Pinquet, Jean, 2001. "Experience Rating Schemes for Fleets of Vehicles," ASTIN Bulletin, Cambridge University Press, vol. 31(1), pages 81-105, May.
    10. Denise Desjardins & Georges Dionne & Yang Lu, 2023. "Hierarchical random‐effects model for the insurance pricing of vehicles belonging to a fleet," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 38(2), pages 242-259, March.
    11. Dionne, G. & Maurice, M. & Pinquet, J. & Vanasse, C., 2001. "The Role of Memory in Long-Term Contracting with Moral Hazard: Empirical Evidence in Automobile Insurance," Ecole des Hautes Etudes Commerciales de Montreal- 01-05, Ecole des Hautes Etudes Commerciales de Montreal-Chaire de gestion des risques..
    12. David Mihaela & Jemna Dănuţ-Vasile, 2015. "Modeling the Frequency of Auto Insurance Claims by Means of Poisson and Negative Binomial Models," Scientific Annals of Economics and Business, Sciendo, vol. 62(2), pages 151-168, July.
    13. Gouriéroux, Christian & Monfort, Alain, 1997. "Modèles de comptage semi-paramétriques," L'Actualité Economique, Société Canadienne de Science Economique, vol. 73(1), pages 525-550, mars-juin.
    14. Dionne, Georges & Vanasse, Charles, 1997. "Une évaluation empirique de la nouvelle tarification de l’assurance automobile (1992) au Québec," L'Actualité Economique, Société Canadienne de Science Economique, vol. 73(1), pages 47-80, mars-juin.
    15. Dionne, Georges & Gagne, Robert & Gagnon, Francois & Vanasse, Charles, 1997. "Debt, moral hazard and airline safety An empirical evidence," Journal of Econometrics, Elsevier, vol. 79(2), pages 379-402, August.
    16. Angers, Jean-François & Desjardins, Denise & Dionne, Georges, 2004. "Modèle Bayésien de tarification de l’assurance des flottes de véhicules," L'Actualité Economique, Société Canadienne de Science Economique, vol. 80(2), pages 253-303, Juin-Sept.
    17. Ginés Guirao Pérez & Victor Javier Cano Fernández & Marta Isabel López Yurda & María Carolina Rodríguez Donate & Margarita Esther Romero Rodríguez, 2004. "Relación entre la frecuencia de consumo de vino y algunas características socioeconómicas de los individuos," Documentos de trabajo conjunto ULL-ULPGC 2004-01, Facultad de Ciencias Económicas de la ULPGC.
    18. Dionne, Georges & Artis, Manuel & Guillen, Montserrat, 1996. "Count data models for a credit scoring system," Journal of Empirical Finance, Elsevier, vol. 3(3), pages 303-325, September.
    19. Dionne, G. & Doherty, N., 1991. "Adverse Selection In Insurance Markets: A Selective Survey," Cahiers de recherche 9105, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    20. T.R.L. Fry & R.D. Brooks & Br. Comley & J. Zhang, 1993. "Economic Motivations for Limited Dependent and Qualitative Variable Models," The Economic Record, The Economic Society of Australia, vol. 69(2), pages 193-205, June.

    More about this item

    Keywords

    Road safety; automobile insurance rating; bonus-malus; Tunisia; road accidents; panel data; probit; negative binomial distribution; Poisson distribution; random effects; selection model;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

    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:ris:crcrmw:2003_007. 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: Claire Boisvert (email available below). General contact details of provider: https://edirc.repec.org/data/hecmtca.html .

    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.