Year: 2021
Type: article
Abstract: We present a method to integrate telematics data in a pay‐how‐you‐drive insurance pricing scheme that penalizes some near‐miss events. We illustrate our method with a sample of drivers for whom information on near‐miss events and claims frequency records are available. We discuss the implications for motor insurance ratemaking. Our pricing principle is to combine a baseline insurance premium with added extra charges for near‐miss events indicating risky driving (or discounts) that can be updated on a weekly basis. This procedure provides an incentive for safe driving. In our real‐case study illustration, hard‐braking and acceleration events as well as smartphone use while driving increase the cost of insurance.
Source: Journal of Risk & Insurance
DOI: 10.1111/jori.12340
Institutions: Universitat de Barcelona, University of London
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,000
Awards: G2801219913, G3473158082, G3690828678
OpenAlex ID: W3160754307