Estimating the Effect of a Change in Insurance Pricing Regime on Accidents with Endogenous Mobility

21 Pages Posted: 3 Oct 2007

See all articles by Georges Dionne

Georges Dionne

HEC Montreal - Department of Finance

Benoit Dostie

HEC Montreal - Institute of Applied Economics; IZA Institute of Labor Economics

Date Written: September 24, 2007

Abstract

In this paper, we estimate the impact of introducing a bonus-malus system on the probability of having automobile accidents, taking into account contract duration or the client mobility between insurers. We show that the new incentive scheme reduces accident rates of all policyholders when contract duration is taken into account, but does not affect accident rates of movers that shirk the imposed incentive effects of the new insurance pricing scheme.

Keywords: Bonus-malus, contract duration, automobile accident, Poisson distribution, right- and left-censoring, exponential distribution

JEL Classification: J22, J29, C23

Suggested Citation

Dionne, Georges and Dostie, Benoit, Estimating the Effect of a Change in Insurance Pricing Regime on Accidents with Endogenous Mobility (September 24, 2007). Available at SSRN: https://ssrn.com/abstract=1018482 or http://dx.doi.org/10.2139/ssrn.1018482

Georges Dionne (Contact Author)

HEC Montreal - Department of Finance ( email )

3000 Chemin de la Cote-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada
514-340-6596 (Phone)
514-340-5019 (Fax)

HOME PAGE: http://www.hec.ca/gestiondesrisques/

Benoit Dostie

HEC Montreal - Institute of Applied Economics ( email )

3000, ch. de la Côte-Ste-Catherine
Montréal, Quebec H3T 2A7
Canada
514-340-6453 (Phone)
514-340-6469 (Fax)

HOME PAGE: http://www.hec.ca/profs/benoit.dostie.html

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
65
Abstract Views
823
rank
396,443
PlumX Metrics