Motor Vehicle Insurance Incentive System

Automobile insurance has always been the biggest property insurance in china as well as other countries. After China's entry into WTO, many foreign insurance companies have entered into China's insurance market. So the market becomes more competitive. How to adapt to the new competition is the main problem all the insurance companies are concerning about. Since the New Year's Day of 2003,the property insurance companies that run automobile insurance began to use a new insurance policy. Being one of the important competitive methods, bonus-malus system (or no claim discount system) has been used widely in automobile insurance industries.The BMS is namely prize and punishment system, it is also called NCD(No-Claim Discount Systems).It is like this a kind of widely adopted system in themotor vehicle insurance: in the next insurance year, the policyholders who have some claim records will be punished by the premium by the insurance company, while those who have no claim record will be rewarded. The insurance practice has proved that, in the motor vehicle insurance, the BMS is very necessary, and the meaning is important.Markov chain, Statistical theory and Optimization method are used to study bonus-malus systems, mainly focusing on revising and designing of the bonus-malus system. The primaty research content and results are obtained as followes:1. Based on the characteristic that the policy will be divided into homogeneous composition and policies of non-homogeneity in a models to fit the claims numbers. Parameters estimated by Moments estimates in the two distributions. Finally, we gave an example and analyzed the results.2. we give an overview of several theoretical BMS models and appliedBMS models on the base of claim frequency.3. we introduce the researches on the BMS considering the portfolio of insurance policyholder, the paper used the different e claim size. First, we discuss some classical distribution: exponential distribution, gamma distribution, logarithmic normal distribution, Pareto distribution .Then, we give an overview of several theoretical BMS models which are all based on claim size. Last, we give an overview of two applied BMS models on the base of claim size.