Centre d’Etudes et de Recherches en Management du Capital Humain (CERMACH), SUP’RH SCHOOL OF MANAGEMENT and Artificial Intelligence, Casablanca, Morocco
The effectiveness of bonus-malus systems is a critical consideration for automobile insurance companies as these systems directly impact their performance. This article investigates the influence of modifications in transition rules between tariff classes and the increase in their number on the efficiency of bonus-malus systems. Stochastic measures, using Markov chain theory and perfect simulation, are employed for this purpose. The Moroccan bonus-malus system is analyzed as a case study, and a new version of the system is proposed for comparison. This analysis provides insights into how insurance companies can optimize their bonus-malus systems while adapting to financial innovations.
Show abstract
Full Text
