Document Type : Original Research Paper

Author

• A.T. Payandeh Najafabadi

Department of Biometry, Shahid Beheshti University, Tehran, Iran

Abstract

In this article, the mathematical form of Iran's reward-penalty system is presented first. Then, using the hierarchical analysis method and based on 5 criteria, "Simplicity", "Attractiveness", "Correct Classification of Insurers", "Convergence Speed" and "Probability of Bankruptcy", the bonus-penalty system of Iran is compared with the bonus-penalty systems of four countries in Belgium. With 35 levels), Brazil (with 7 levels), Japan (with 16 levels) and Germany (with 29 levels) are compared and it is shown that according to the opinions of third-party insurance experts, the existing system is the most appropriate reward-penalty system for Iran. . In the next step, the insurance premium of Iran's reward-penalty system is calculated with the help of approximate reliability and Bayesian methods. At the end, by presenting a simple proposal, how to improve Iran's reward-penalty system by simultaneously applying the severity and number of damages in the transfer law is examined. Based on the findings, several suggestions are made to improve the existing reward-penalty system in Iran.

Keywords

• Bonus-Malus System
• Analytic Hierarchy Process
• Markov Chain
• Credibility Theory
• Loss Frequency and Loss Severity