How does pay-per-mile car insurance work from an actuarial perspective? – Actuarial Outpost

Tagged: actuarial, car insurance, CAS, funding, insurance, pay per mile, question

This topic has 1 reply, 2 voices, and was last updated 3 years, 9 months ago by Sherwin.

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December 19, 2020 at 4:21 am #1483
loka123
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How does pay-per-mile car insurance work from an actuarial perspective? If the lower risk/lower utilizing members pay less, who subsidizes the cost of the higher utilizers, riskier drivers? Or would the riskier drivers foot the bill?

Or do insurance companies assume that there will be enough behavior change, such that premiums will be lower for everybody (so everybody wins)?
December 29, 2020 at 7:13 am #1626
Sherwin
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The annual claims frequency was divided into the monthly basis, and then the daily basis, and then the per-mile basis. No use, no pay 🙂
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