Analysis of environmental liability insurance rate system

Abstract: Although environmental liability insurance as a solution to the problem of environmental pollution is one of the most effective way, but the slow development in China has been one of the reasons is not a good way of environmental liability insurance rates for a reasonable determination of the article in this context Next, try to propose a priori consideration of the NCD rates and environmental liability insurance rate setting mechanism.

Keywords: environmental liability insurance, a priori rate, NCD

I. Introduction

To date, the development of environmental liability insurance is still very slow, on environmental liability insurance, basic research is relatively backward, the system of environmental liability insurance rates and even fewer studies. This article is in this context, consider trying to propose a classification and NCD risk of environmental liability insurance rate setting mechanism.


Second, the environmental liability insurance rates determined a priori

For environmental liability insurance, to adopt a "no profit no loss" principle. Gross premiums charged the formula:
Gross premium = net premium + cost + additional profit (1
Pure Premium = expected annual claim costs (2
The following is given purely environmental liability insurance premium rates determined as the insurance company to charge rates determined on the one hand more than enough to cover their insurance premiums, on the other trying to fairly divided between the insured guarantee fee. To this end, the Experience usually approach to determining premium rates, and Experience the rate determined, that is, to determine the insured's premium, to consider individual claims Experience that is first to use some a priori grouping variable group of the insured, the formation of a number of relatively homogeneous set of risks, and determining the premium of each group a priori, then on this basis, according to the insured person's Experience of their annual renewal information to adjust premiums the formation of posterior premiums.

Due to different environmental liability insurance coverage, the nature of risk varies, should be separately determined, and we here to pollution liability insurance, for example now many domestic scholars have reached a consensus that the environmental liability insurance companies owned by different industry charge different premiums. I believe that only a classification variable by their industry to be divided somewhat general, not conducive to the refinement of risk. In addition to industry, the business situation of the areas where environmental damage is determined the size of a very important factor, so first by industry, region to establish a priori the two variables the rate table in the pollution liability insurance, the risk for water pollution industry, general industry and light industry risk classification shown in Table 1.

Region is divided in accordance with State Environmental Protection Administration issued in 2002 <<Construction Project Environmental Protection Classification Management Catalogue>> into environmentally sensitive areas and non-environmentally sensitive area. Environmentally sensitive areas are those areas with the following characteristics: First, require special protected areas: state Laws, regulations, administrative regulations and planning to determine or above the county level people's government needs special protection areas, such as drinking water source protection areas, nature reserves, scenic areas, ecological function protected areas, basic farmland protection areas, soil erosion control areas, forest parks, geological parks, world heritage, national heritage conservation units, historical and cultural protection of places, etc. The second is ecologically sensitive and vulnerable areas: dust source area, the desert oasis, a serious dry areas, rare plant and animal habitat or special ecosystems, natural forests, tropical rain forests, mangroves, coral reefs, fish spawning grounds, important wetlands and natural fisheries, etc. Third, the area of ​​social concern: population centers, cultural and educational area , government agencies focused on office locations, resorts, hospitals, etc., as well as historical, cultural, scientific, national significance to protect the land. non-environmentally sensitive area is defined in the environmentally sensitive areas outside the region.

Sometimes will happen: an industry belong to the same enterprise, due to adopt a different Environmental Protection measures, they are very different from the number of pollutants discharged, the probability of a pollution incident, there are big differences would be so different risks companies charge the same rates, Environmental Protection measures will lose business Loss Prevention initiative, the company did not take Environmental Protection measures can not produce power Loss Prevention, however, Loss Prevention measures the operability is poor and difficult to internalize for the rate measure. Therefore, I believe, in accordance with the corporate division of the number of emissions of pollutants to different standards. Chemical oxygen demand, which can be oxidized in water by oxidation of the material in the amount of oxygen consumed, can be seen as a degree of water pollution measure so on the basis of the industry, can be divided into as shown in Table 2.

As a result, has been on the industry, regional, corporate pollution rate of three a priori variables table, as shown in Table 3.

Shown in Table 3, r representatives in non-environmentally sensitive areas, light pollution is also a risk of light industry enterprises have to pay the prior rate, it is also the lowest rates in the table. Through the table, get the business insurance pollution liability insurance prior rates.

To non-environmentally sensitive areas, light pollution, light industry, for example crisis, we give it the pure premium rate determination process r:
Pure Premium = expected annual claims costs (3
Pure Premium = mean × number of claims in the mean claim amount (4
P = E (S = E (NE (X (5
P represents the pure premium, S is the annual cost of claims, N in number of claims on behalf of, X amount claimed on behalf of a claim.

As the number of claims in the amounts claimed by different factors, we need the following number of claims were obtained with the mean estimate of the amount claimed is worth noting that our burst is determined by the liability risk of water pollution charges rate, progressive risk of contamination is not within the scope of coverage, nor meet the model presented below.

The estimated number of claims: As shown in Table 3, we took three different levels of policy variables on the grading, so basically at the same level of insurance claims with the same frequency, we can assume that they are homogeneous. environmental liability insurance claims number has the following three characteristics:
(1 point in time, claims the number is zero, ie N (0 = 0
(2 in a sufficiently short time interval, can only occur once the claim, and the probability of occurrence of a claim with the length of this time interval is proportional to the occurrence of two or more claims of the probability is infinitesimal length of time the senior volume, which
P (N (t = 1 = λt + o (t (6
P (N (t = 1 = 1-λt-o (t (7
P (N (t ≧ 2 = o (t (8
o (t is the senior infinitesimal.

(3 in two disjoint time intervals the number of claims occurred independent of each other, but each time interval in the number of claims occurred only with the length of time the starting point has nothing to do with the time, there
P (N (t, t + s = k = P (N (t = k (9
Can be shown to meet these three conditions for the Poisson process of random process, there
P (N (t = k) = (tλke-tλ / k! (10
In summary, environmental liability insurance policy number of claims a Poisson distribution.

The amount claimed is estimated: (1 predict loss estimates and loss claim is closely related to the distribution of the amount claimed is not easy to come to us, so we estimate the loss of the amount claimed is estimated to be of environmental liability insurance losses compared the distribution of complex and can not use one or several random models to profile its distribution, loss of data should be passed through a large number of mathematical statistical methods to bridge the loss distribution, loss distribution function to get FX (x and the loss density function f (x. Share on free download http://www.hi138.com (2 through the loss distribution, we get the distribution of the amount claimed by the foregoing, we set up the environmental liability insurance limits of liability and deductibles u d, the insurance company's actual compensation expense as follows:
R = u, X> u + dX-d, d be the expected payment amount

Third, the NCD

Experience assessment fee system NCD motor vehicle third party liability insurance in the practice has proved its policyholders reduce accidents in the promotion, risk classification, etc. has a significant role of environmental liability insurance and motor vehicles of the three insurance there are many similarities, such as are liability insurance, past claims record can to some extent on behalf of the insured person's claim of the future if the business environment pollution accidents occurred previously, suggesting the existence of corporate environmental vulnerability, And this vulnerability is likely for future potential problems of environmental pollution accidents, so the environmental liability insurance, motor vehicle can also be similar to the three insurance companies of environmental damage to the case of an accident to establish NCD.

The first year of business insurance environmental liability insurance, the various companies to pay premiums in accordance with prior rate tables in the insured's subsequent years, based on the prior rate, according to the insured company over a period of time the accident occurred environmental damage the number of times to adjust the rate of the a priori. Set an adjustment parameters - parameters of environmental damage accident.

Environmental damage, accident argument places the number of accidents over a period of time to evaluate.

If in the past year, environmental pollution accidents occurred, the environmental damage from the accident parameters shown in Table 4.

At the same time, I believe that no claim for a successive number of years of the insured, when he occasionally occur once the claim, the following year should also enjoy a certain degree of premium discount, discount level is based on its previous number of years of continuous no-claims determined So, no damage to the environment pollution accidents accident parameters shown in Table 5.

If the business did not occur within the past year, environmental pollution accident, the second year will be negative environmental damage accident parameters, that is to get a rate discount, up to the maximum discount rate until the contrary, corporate pollution accident occurred within the past year, the corresponding get a positive environmental damage accident parameters to the second year will pay higher premiums by adjusting the parameters to get the company's final rates. formula is expressed as:
Pure premium rates = a priori rate × (1 + environmental damage accident parameters (15)
Other environmental and pollution liability insurance liability insurance rates determined in the same way, just choose a slightly different grading standards. Rates determined using the above method can more effectively refine risk, while also continue to promote their own awareness of risk management . but from the insurance company itself to consider, through this experience rates incentive mechanism to promote better corporate Loss Prevention, you can reduce the insurance company paid.


CONCLUSIONS

In this paper, pollution liability insurance, for example, that it will consider in which different industries, regions and companies such as the degree of pollution factors of three different a priori pure premium rates by the refinement and classification of risk, making companies at the same level of risk have roughly the same risk, so that one can increase the insurance company's insurance initiative, it also controls the occurrence of moral hazard, insurance companies In addition, discharge of chemical oxygen demand by companies to measure the company's pollution, but also help to promote companies to take some anti-pollution measures to reduce pollution accidents. NCD mechanism of the introduction of anti-pollution awareness of insurance companies have a financial motive to help companies find loopholes in Environmental Protection, and improve, to some extent played on the purpose of preventing disasters.

As China's current environmental liability insurance claims data are scarce, so the rate determining process can use the data base is limited, so rates currently available a priori, the distribution of environmental pollution accident loss may not be very accurate, but as the environment liability insurance continues to develop, China's environmental pollution accident data collation mechanism for continuous improvement, there will be more and more reliable data can be used in environmental liability insurance pricing in the existing environmental liability insurance rate setting mechanism based on the continue to enrich the data obtained environmental liability insurance is reasonable, accurate rates.

References:
1 Zhang ink. On building China's environmental liability insurance system of thinking. 2006 National Environmental and Resources Law Seminar (Annual Meeting (2006.8.10-12 * Beijing Proceedings.

2 Li Song environmental damage liability insurance introduction. Insurance Study, 2004, (6.

3 Chen Dongmei Environmental liability insurance feasibility study. Insurance Study, 2004, (8).

4 Chen Demin. China's environmental liability insurance system to build research Chongqing Institute of Technology, 2006,3 (3

Links to free download http://www.hi138.com