Contract strategy design in early stage of implementing pay-how-you-drive policy with traditional commercial vehicle insurance coexisted

摘要

Pay-how-you-drive (PHYD), which is a driving behavior related premium rate setting method in usage based insurance (UBI), has drawn widespread attention in commercial vehicle insurance as well as internet-of-vehicle (IoV) industry nowadays, for it can not only help insurance companies to fully master the driving information of all insured vehicles, but can help to establish a corresponding premium rate setting strategy according to that as well. However, as the implementation of PHYD may undergo a complicated process, a stage with PHYD contract and traditional contract coexisted in vehicle insurance market will surely be went through, therefore, certain contract strategy should be given so as to eliminate the potential risk caused by information asymmetry which might be used to exploit an advantage by the speculative contract holders. In this paper, an “either-or” contract implementing strategy is proposed, and via theoretical analysis, its capabilities of providing the maximum utility for insured vehicles and ensuring reliable profit for insurance companies are demonstrated.