Use of open data to improve automobile insurance premium rating

Angel Blesa, David Íñiguez, Rubén Moreno and Gonzalo Ruiz

An analysis was performed on millions of quotes by a number of insurance companies, covering a major part of the automobile insurance market in Spain.

Introduction

Setting insurance policy premiums is the touchstone of the insurance industry. Within the area of actuarial science, companies develop complex statistical and mathematical models to estimate risks and determine the pricing policies (Daykin et al., 1993; Embrechts, 2000; Kaas, Goovaerts, Dhaene, & Denuit, 2008; Landsman & Sherris, 2001; Tsanakas & Desli, 2005; Wang, 2002).

The case of automobile insurance is not an exception in this sense, where the development of risk and pricing models for actuaries has also a long history (David, 2015; Grenander, 1957; Lemaire, 1985). The models can include variables more directly associated with the insured risk...

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