Abstract

Bonus-malus system in motor vehicle insurance can encourage people to drive more carefully by rewarding lowrisk policy-holders and punishing high-risk policy-holders at the time of renewal. China's BMS transfer rule is related to claim numbers in the past periods only, and it is unfair for the insureds whose claim amount is small. By analyzing risk factors in motor vehicle insurance, two other factors, claim amount and responsability in accidents, are added in transfer rule to optimize BMS. In optimized BMS, policy-holders with same claim numbers but with different claim amounts or with different responsaility in accidents will pay different amounts of insurance premium. It is more fair for insureds and is good for insurance companies to identify risks and control risks.

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