An Analysis of Automobile Insurance Rating Systems in the Domestic General Insurance Market

The purpose of this paper is to analyse the differences of automobile insurance rating system between the standard class plans and the tier rating model and to provide useful implications for automobile rating systems. For the analysis of differences between these two systems, we analyze the automobile insurance data from 2009 to 2012 by using generalized linear model and ANOVA. The several significant conclusions of this study are summarized as follows. The difference of bonus/malus rating factor between the two systems is statistically significant level. The level of insurance premium based on the standard class plans is significantly higher than premium based on the tier rating model. Also, the difference of drivers’ age rating factor between the two systems is statistically significant level. Furthermore, the difference of drivers’ type rating factor between the two systems is statistically significant level. Therefore, it can be concluded that the big difference of automobile insurance premium between the two system is existed and the domestic insurers will need to consider to use tier systems for determining automobile insurance rates precisely.