Centro de Documentacion de Fundación MAPFRE - An average model approach to experience based premium rates discounts : an application to Spanish agricultural insurance

MAP20220013208

An average model approach to experience based premium rates discounts : an application to Spanish agricultural insurance / José L. Vilar-Zanón, Antonio Heras, Estela de Frutos

Sumario: We address some issues in agricultural insurance, describing drawbacks of the bonus-malus system (BMS) methodology used in Spain and many other EU countries. We develop an alternative experience based premium rate discount system taking into account the adverse years when high losses caused by extreme weather events happen. Our contribution consists of a two-step methodology. Firstly, we use tobit or Tweedie regressions to calculate yearly correction rates. Secondly, we calculate the mean of the correction rates. This average model acts as a buffer against adverse year losses. We compare three alternatives: our two resulting average models and the BMS operating in the Spanish line of business exemplifiedtable grapes.

En: European Actuarial Journal. - Cham, Switzerland : Springer Nature Switzerland AG, 2021-2022. - 07/12/2020 Volúmen 10 - Número 2 - diciembre 2020 , p. 361-375

1. Seguros agrarios . 2. Cálculo actuarial . 3. España . I. Heras, Antonio . II. Frutos, Estela de . III. Título.