Document Type : Original Research Paper
Authors
1 Depertment of New Technologies Research in Insurance, Insurance Research center, Tehran, Iran
2 Depertment of Indivisual Insurance Research, Insurance Research center, Tehran, Iran
Abstract
Objective: Some Iranian insurance companies issue third-party insurance policies at lower rates to attract more premiums and a larger portfolio, and therefore offer higher discounts. In this article, we are looking for the answer to the question of how the insurance premiums affect the claim rates.
Methodology: The effect of vehicle third party insurance discount rates was examined using the data of an insurance company during 6 years. The discount rate was very scattered in the data. Therefore, it was necessary to use a method to determine in which year the claims rate was higher to study how the discounts affect the claims rate. Hence, we have constructed fuzzy numbers using the discount rate quarters and have ranked these numbers using the appropriate method.
Findings: The results show that the more premium discounts, the riskier risks are gathered. Also, more discounts for auto cars have been less attractive and this type of car has a lower loss ratio.
Conclusions: Overall, the result of this study shows that the premium reduction strategy, in addition to reducing the company's income from insurance premiums, leads to an increase in the loss ratio due to the issuance riskier policies.
JEL Classification: C10, E30, G22
Keywords
Main Subjects
Letters to Editor
Send comment about this article