Keywords: pricing, bonus - malus system, underwriting profit/loss, risk classes, equity, efficiency

In the three Maghreb countries, the motor insurance dominates the insurance market.

This line of business reveals high loss ratios both for material damage and bodily injuries, directly impacting the pricing system, key factor for the sound financial situation of a company.

In order to guarantee the solvency and viability of the industry and also to promote accident prevention, pricing systems like the bonus-malus system were introduced in the Maghreb countries.

In fact, the bonus-malus system or pricing ‘afterwards/a posteriori’ based on the historical loss of each insured will penalize those causing several accidents in increasing their premium and will reward good drivers with a bonus under the form of a premium discount.

The level of bonus or malus achieved by each insured ‘bonus/malus’ class is organized in accordance with established transition rules set beforehand.

In addition to contributing to the prevention of accidents, one of the main objectives assigned to this practice is to create classes of homogeneous risks. Consequently an insured belonging to a particular class will pay a premium commensurate with the risk of this class.

Of course, strict monitoring by the pricing actuary is mandatory to ensure the continued financial stability of the bonus-malus system and its overall effectiveness.

The above mentioned characteristics will be analyzed in a comparative study for the three Magreb countries (Algeria, Morocco, Tunisia).  The results of this comparative study will enable us to determine their efficiency and evaluate each of the bonus-malus systems studied.

The paper will first review briefly the insurance market in each of the three markets, then the motor line of business, then describe the respective bonus-malus systems and proceed finally with a comparative analysis.

We undertake this analysis using data obtained from leading insurance companies in the motor business for the three countries. This will allow us to make an assessment of the practical bonus-malus system in these three countries.

Primary outcomes relevant to this assessment lead us to analyze the effectiveness of the existing systems and its current pricing.

Finally, a summary of the presentation and the main practical results will be presented in the last part.