Hostname: page-component-586b7cd67f-tf8b9 Total loading time: 0 Render date: 2024-11-27T01:52:32.187Z Has data issue: false hasContentIssue false

Tariff Theory

Published online by Cambridge University Press:  29 August 2014

Rights & Permissions [Opens in a new window]

Extract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

When an insurance company accepts new insurances or when the premiums of earlier accepted insurances have to be changed on renewal the company has to

— search for the factors that influence the premium and

— calculate the premium according to the values of these factors.

In order to calculate the premiums the company gathers data consisting of factors eventually influencing the amount of claims. On the basis of these data the company calculates the tariff which has to fulfill the following general principles:

1. The tariff has to be as correct as possible in relation to different risk groups.

2. The structure of the tariff has to be such that the calculation of the insurance premium is quite straightforward. With this in mind the factors influencing the tariff have to be few enough and the structure of the tariff has to be the simple (e.g. linear or multiplicative) function of the factors or it should be rather easy to put them into tabular form.

These principles are partly contradictory. If the premium is correct, the structure of the tariff is not usually simple.

Type
Research Article
Copyright
Copyright © International Actuarial Association 1975

References

[1]Almer, : Risk Analysis in theory and practical Statistics. Transactions XV:th International Congress of Actuaries, Vol. II, pp. 314353. New York 1957.Google Scholar
[2]Bailey-Simon, : Two Studies in Automobile Insurance Ratemaking, The ASTIN Bulletin, Vol. I, Part IV, 1960, pp. 192217.CrossRefGoogle Scholar
[3]Beard-Pentikäinen-Pesonen, : Risk Theory, Methuen & Co Ltd, 1969.Google Scholar
[4]Boehm, : Das Faktoren- und das Summande-Modell, Blätter der Deutschen Gesellschaft für Versicherungmathematik, Band X, Heft 1, 1971.Google Scholar
[5]Bühlmann, : Mathematical Methods in Risk Theory, Springer Verlag, 1970.Google Scholar
[6]Cramer, : Mathematical Methods of Statistics, Princeton University Press 1946.Google Scholar
[7]Draper-Smith, : Applied Regression Analysis, John Wiley & Sons, Inc. 1966.Google Scholar
[8]Jung, : On Automobile Insurance Ratemaking, The ASTIN Bulletin, Vol. V, Part I, 1968, pp. 4147.CrossRefGoogle Scholar
[9]Mehring, : Ein mathematisches Hilfsmittel für Statistik- und Tariffragen in der Kraftfahrtversicherung, Blätter der Deutschen Gesellschaft für Versicherungmathematik, Band VII, Heft I, 1964.Google Scholar
[10]Seal, : Stochastic Theory of a Risk Business, John Wiley & Sons, Inc., 1969.Google Scholar