Document Type : Original Research Paper

Authors

• A.T. Payandeh Najafabadi
• M. Sakizadeh

Department of Mathematical Sciences, Shahid Beheshti University, Tehran, Iran

Abstract

Recently, the regulations related to compulsory third party damage insurance due to accidents caused by vehicles, or third party insurance in short, have been changed by the Central Insurance.
Purpose: This article presents the main differences between the new and old regulations and then calculates the relative insurance premiums of both regulations and compares their reward and penalty systems based on actuarial criteria.
Findings of the article: To achieve this goal, first its mathematical form is rewritten in the form of a reward-penalty system, then the stable distribution of the system is calculated and based on that, the relative premium of the new reward-penalty system is calculated using the linear method.
Methodology: In order to compare the proposed insurance premium, the stable distribution of the new and old reward-penalty system, and the insurance premium declared by the Central Insurance Agency, are given below. Finally, two old and new reward-penalty systems are compared with each other using the duration of desire to steady state, Louis-Marenta efficiency criteria and the average level of relative stability.
Conclusion: Based on these comparisons, it can be concluded that in general, in the new third party insurance system, unlike the old system, it has the advantage of reaching a stable state sooner, but the insurance premiums provided by the estimated values of the current research are more efficient and fair than the insurance premiums provided are provided by the Central Insurance.

Keywords

• Third Party Insurance
• Relative Premium
• Bonus-Malus System
• relative stability level average
• Loimaranta efficiency