No abstract

This paper examines the current No-Claim Discount (NCD) system used in Ghana’s auto insurance market as inefficient and outmoded and, therefore, proposes an alternative optimal Bonus-Malus System (BMS) intended to meet the present market conditions and demand. It appears that the existing BMS fails to acknowledge the frequency and severity of policyholders’ claims in its design. We minimized the auto insurance portfolios’ risk through Bayesian estimation and found that the risk is well fitted by gamma, with the claim distribution modeled by the negative binomial law with the expected number of claims (a priori) as 14%. The models presented in this paper recognize the longevity of accident-free driving and fully reward higher discounts to policyholders from the second year when the true characteristics of the hidden risks posed to the pool have been ascertained. The BMS finally constructed using the net premium principle is very optimal and has reasonable punishment and rewards for both good and bad drivers, which could also be useful in other developing economies.

Considering China's A-share listed enterprises that completed equity incentive from 2010 to 2017 as the research sample, this paper empirically analyses the impact of core employee equity incentive on enterprise performance. Controlling key enterprises' variables such as size, type, financial leverage, book to market ratio in a time series regression, return on equity and earnings per share are explained by incentive of core employees and importance of core employees' ratio. The results suggest that, increasing the intensity of equity incentive of core employees has an incentive effect on corporate performance and also, the higher the enterprise attaches importance to employees in equity incentive, the more obvious the incentive effect on performance. The empirical results of this paper have important implications for the design of equity incentive schemes for listed companies, which will serve as a guide for investors' decisions. Therefore, in order to solve the agency cost problem, the shareholders of listed enterprises should increase the incentive intensity and importance of the core employees who are the cornerstone of the enterprise, in the design of the equity incentive scheme.

Available statistics indicates that about 90% of all claims or accident in Ghana is caused by human behavior. Therefore, policyholders’ errors are categorized depending on the severity and extend of casualties caused as a result of misinterpretation of road traffic control devices based on their education levels. Hence, in order to ascertain all the possible causes within the human element to reduce the increasing trend of yearly claims, this study report on the influence of education levels on accident/claims frequency and severity drawing upon a purposive sample of 203 policyholders who have experienced at least one accident in a year using structural equation modeling (SEM). The findings from our regression weights gave enough evidence to reject most of our hypotheses with few ones being supported. This study provides enough evidence that education generally to perspective policyholders influence accidents/claims occurrence. However, in terms of education levels of policyholders, we did not have enough evidence in support of any of these levels either causing or reducing claims/accident frequency. Besides accident/claim frequency, we extended our regression analysis on claim severity and also included some well know auto insurance rating factors to ascertain their impacts on accident frequency. Consequently, it was revealed that most of the severe claims or accidents that results into deaths and serious injuries on yearly basis are caused by policyholders or drivers with medium level of education in Ghana with its frequency driving mostly by rating factors such as the vehicle’s age, cubic capacity, mileage, etc.

Loss distribution plays an influential role in evaluating risks from policyholders' claims. Nevertheless, the auto insurance market in Ghana pays little attention to policyholders' claims distribution, resulting in the market's inefficiency. This study investigates the type of loss distribution function that best approximates policyholders' claims in Ghana. We applied the Kullback-Leibler divergence, Kolmogorov Smirnov, Anderson-Darling statistical tests and maximum likelihood estimation (MLE) to estimate policyholders' claims. The results suggest that Ghana's auto policyholder's claims are better approximated using the lognormal probability distribution. Through the lognormal distribution, the industry can adequately evaluate policyholders' claims to minimize potential loss. Additionally, this distribution could enable the market reach decisions on premiums and expected profits theoretically.