Evaluation of Distance-Based Auto Insurance Contracts

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Zand, Mohammad | 2014

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Type of Document: M.Sc. Thesis
Language: Farsi
Document No: 45492 (09)
University: Sharif University of Technology
Department: Civil Engineering
Advisor(s): Samimi, Amir
Abstract:
Auto insurance premiums are currently part of car ownership fixed costs in Iran. As driver behavior and driven distance, in spite of their significant impact on driver’s risk, are not considered in these costs. Distance-based models are introduced to enter usage costs to premium calculations and affect drivers’ behavior. Achieving benefits of this plan demands evaluation of profits and implementing costs of it. This research aims to provide guidelines to influence drivers’ behavior alongside with studying the distance-based insurance market in Iran. Required data collected using a field survey in Tehran car technical inspection centers, by representing four different plans to 980 respondents. Using the obtained data a multinomial logit model and a two level nested logit model are developed. Each alternative’s market share regarding various scenarios are also calculated. The market shares of some major insurance companies from implementing the scenarios in monopoly conditions are estimated. The results show 73 percent of respondents will think about appropriate distance-based insurance contracts and 84 percent out of this proportion would shift to a company offering a distance-based plan
Keywords:
Discrete Choice Model ; Stated Preference ; Automobile Insurance ; Distance-Based Insurance