Propitious selection in the vehicle insurance market

Download
Sara Arvidsson

By combining Contract Theory and vehicle positioning techniques, insurance companies can replace some of the proxies for risk by actual traffic behavior when pricing the premium. A mechanism design model is used to illustrate that Usage Based Insurance (UBI) can separate risks in terms of driving behavior. This makes it possible to reward safe driving habits since the pricing scheme better reflects the accident risk. The conclusion is that UBI provides an actuarially fair premium for the insuree. It is further an efficient instrument to separate risks for the insurer since it reduces the information asymmetries highlighted in this paper.

MEET US


19-20
Oct

ERPUG 2017

The five year anniversary of  European Road Profile Users' Group (ERPUG) Forum will take place at Ramboll head quarter, Copenhagen, Denmark October 19-20, 2017. 

LATEST NEWS


2017-07-05

Vehicle Driver Monitoring: sleepiness and cognitive load

To prevent road crashes it is important to understand driver related contributing factors, which have been suggested to be the critical reason in 94 per cent of crashes. The overall aim of the project Vehicle Driver Monitoring has been to advance the...


2017-06-29

Tomas Svensson new director-general

Tomas Svensson was today appointed Director-General of VTI. Tomas has been acting Director-General since January 2017. 


2017-05-30

Crash testing bicycles at VTI

For the first time single bicycle crashes have been simulated at the VTI crash safety laboratory.


2017-05-15

A case study exploring firefighters’ and municipal officials’ preparedness for electrical vehicles

A VTI-study presents a social perspective on new vehicle technology. It explores the self-reported preparedness of the fire departments (i.e., rescue services) in Sweden’s three largest cities regarding rescue operations involving electrical vehicles (EVs).


2017-05-02

Pioneering research on and about bicycles at VTI

Under what circumstances might cyclists lose tyre grip? What actions could then be taken to prevent a crash? VTI is currently developing a theoretical model of the behaviour of bicycle tyres during braking and steering in different situations and on different...


2017-05-02

Virtual pedestrians create efficient stations

If more people are to choose sustainable travel, then the public transport stations of the future must be designed so that pedestrians can get where they are going quickly, without congestion or queues. The Swedish Road and Transport Research Institute (VTI)...