Rating the Discount for a Motor Insurance Excess

The problem of rating the discount for an excess is considered under the condition where premium rates for excess-free policies are calculated according to a multiplicative (or equivalently, points rating) model. Section 3 obtains some inequalities on the manner in which the discount should vary over the various risk-classes in the portfolio and compares the results with the current practical situation in Australia. Section 4 derives a formula for rating the discount and gives some reasonable and practical approximations. LOB-Auto Physical Damage/Reinsurance