Changes
→Insurance
The term '''bonus-malus''' ([[Latin]] for good-bad) is used for a number of business arrangements which alternately reward (bonus) or penalize (malus).
It is used, for example, in the call center and insurance industries.
== Call centers ==
In call centers, a '''bonus-malus''' arrangement is a section in the contract between the company buying the call center services (buyer) and the company providing the call center services (call center) allowing for a payment to be made from one company to the other. As part of the contract, both companies agree on a set of Key Performance Indicators (KPIs). These are measurements for how the call center is performing. If the call center is performing poorly, then there would be a malus payment (payment from the call center company to the buyer). If the call center is doing well, then there is a bonus payment from the buyer to the call center company. Bonus-malus payments are in addition to the normal cost of call center services.
== Insurance ==
In [[insurance]], a '''bonus-malus system''' (BMS) is a system that adjusts the premium paid by a customer according to their individual claim history.
Bonus usually is a discount in the premium which is given on the renewal of the [[policy]] if no [[Cause of action|claim]] is made in the previous year. Malus is an increase in the premium if there is a claim in the previous year. Bonus-malus systems are very common in vehicle insurance. This system is also called a '''no-claim discount''' (NCD) or '''no-claims bonus''' in Britain and Australia.
The fundamental principle of BMS is that the higher the claim frequency of a [[policyholder]], the higher the insurance costs that on average are charged to the policyholder. This principle is also valid in an insurance arrangement consisting of a high maximum [[deductible]] which is common to all policyholders.
=== Automobile insurance ===
Most insurers around the world have introduced some form of merit-rating in [[Auto insurance|automobile third party liability insurance]]. Such systems penalize at-fault accidents by premium [[surcharges]] and reward claim-free years by discounts, commonly known as a "no-claims discount".{{citation needed|date=June 2014}}
The most usual BMS divides drivers by classes, where each class has its own discount or surcharge that is applied to the basic premium. A claim-free year implies in a decline of one or more degrees on the Bonus/Malus class table on the anniversary of the contract. A claim entails an increase of a given number of degrees on the Bonus/Malus scale on the anniversary of the contract. Generally, one degree corresponds to a 5% discount or surcharge. The starting class may depend on the driver's age, sex, place of residence, the car's horsepower. Each country has a different legislation, which rules how many degrees an insurer may increase or decrease, the maximum bonus or malus allowed and which statistics insurers can use to evaluate the starting class of a driver.
A BMS usually has an effect on road safety statistics, as it stimulates drivers to be careful and avoid accidents that would lead to the loss of bonus.{{Citation needed|date=November 2009}}
Most insurers have a policy whereby an unused bonus or NCD will expire in within two years. Insurers will discontinue a prior customers no claims bonus if they no longer have an insurance policy.{{citation needed|date=June 2014}}
=== Bonus hunger ===
There is a basic question under Bonus-malus system based on insurance customer’s point of view, that is, “Should an insurance customer carry an incurred loss himself, or should he make a claim to the insurance company?”. Hence, an insurance customer prefers to choose self-financing an occurred loss by carrying a small loss himself in order to avoid an increased future premium, instead of financing the loss by compensation from the insurance company. This strategy is called bonus hunger of the insurance customer. In this strategy, the insurance customer prefers the most profitable financial alternative, after a loss occurrence. A well-designed bonus-malus system must take bonus hunger into consideration.
==Executive compensation==
{{See also|Executive pay}}
In [[executive compensation]], particularly at banks, '''bonus-malus''' refers to schemes where annual bonuses are held in [[escrow]] (do not immediately [[vesting|vest]]), and can be reduced retroactively ([[claw back|clawed back]]) in case of losses in future years.
The intention is to align incentives better and encouraging a long-term view in directors, by discouraging the taking of risks which may yield short-term profits (and hence bonuses in early years) but with long-term losses (which, under a traditional bonus system, would not be penalized).
Such a system was proposed by [[Raghuram Rajan]] in January 2008.<ref>{{citation
|url=http://www.ft.com/cms/s/0/18895dea-be06-11dc-8bc9-0000779fd2ac.html
|title=Bankers’ pay is deeply flawed
|first=Raghuram
|last=Rajan
|authorlink=Raghuram Rajan
|work=[[Financial Times]]
|date=2008-01-08}}</ref>
Author Jim Collins proposed that executives be expected to buy stock with their own money (as was done at IBM in the 1990s) taking on both up-side rewards and down-side risk.<ref>{{cite web|url=https://www.npr.org/2011/11/28/142839186/should-ceos-have-to-buy-company-stock-with-their-own-money|accessdate=2012-01-02|date=2011-11-28|title=Should CEOs No Longer Be Granted Stock Options?}}</ref>
In November 2008, [[UBS AG]] announced a change to its [[executive compensation]] scheme implementing such a system, which it dubbed a "bonus-malus" system.<ref>[http://www.thestreet.com/story/10448258/1/ubs-to-change-way-it-pays-senior-managers.html UBS to Change Way it Pays Senior Managers]</ref>
== French Insurance Price Calculation ==
In France, the prices of insurance are calculated as function of the car type, subscribed insurance options, and also Bonus/Malus value (%), stating how many years the driver used the car without any accident or another event relevant to the insurance. It means, that the bonus/malus is assigned to the insured person and also to family members (e.g. wife), which is allowed to drive the car.
The bonus can be transferred between insurance companies.
{| class="wikitable"
|+ Bonus reduction Coefficient (CRM)'''
| Year of insurance
| Insurance discount coefficient <br /> (Bonus)
| Insurance discount <br /> ("bonus")
| Bonus for <br /> professionals
| Insurance discount <br /> for professionals
|-
| 0
| 1.00
| 0%
| 1.00
| 0%
|-
| 1
| 0.95
| 5%
| 0.93
| 7%
|-
| 2
| 0.90
| 10%
| 0.86
| 14%
|-
| 3
| 0.85
| 15%
| 0.79
| 21%
|-
| 4
| 0.80
| 20%
| 0.73
| 27%
|-
| 5
| 0.76
| 24%
| 0.67
| 33%
|-
| 6
| 0.72
| 28%
| 0.62
| 38%
|-
| 7
| 0.68
| 32%
| 0.57
| 43%
|-
| 8
| 0.64
| 36%
| 0.53
| 47%
|-
| 9
| 0.60
| 40%
| 0.50
| 50%
|-
| 10
| 0.57
| 43%
|-
| 11
| 0.54
| 46%
|-
| 12
| 0.51
| 49%
|-
| 13
| 0.50
| 50%
|}
==French taxation==
In France, cars are taxed (malus) or credited (bonus) if their [[carbon emissions]] are above or below certain targets. The limits (can) change every year.
===French registration document (carte grise)===
The environmental tax is also applied as a malus, to all vehicles registered after 1 January 2008, affecting all passenger cars emitting more than 120g of CO2 per kilometer emissions(as of 2018). This tax is paid when the registration document (called « carte grise » in french language) is done.
<ref>{{cite web|title=Malus écotaxe dans le prix d'une carte grise|url=https://mistercartegrise.fr/calcul-prix-carte-grise/|website=mistercartegrise.fr|accessdate=11 May 2015|language=french}}</ref>
Currently, the certificate holder must pay a penalty to the registration, according to the following rates (2018):<ref>{{Cite web|url=https://www.carte-grise.org/ecotaxe.htm|title=Malus écologique sur les véhicules neufs polluants|last=|first=|date=25 January 2018|website=www.carte-grise.org|archive-url=|archive-date=|dead-url=|access-date=}}</ref>
* up to 119g/km : no malus
* 120g/km : malus of 50 euros
* 121g/km : malus of 53 euros
* 122g/km : malus of 60 euros
* 123g/km : malus of 73 euros
* 124g/km : malus of 90 euros
* 125g/km : malus of 113 euros
* 126g/km : malus of 140 euros
* 127g/km : malus of 173 euros
* 128g/km : malus of 210 euros
* 129g/km : malus of 253 euros
* 130g/km : malus of 300 euros
* ...
* 140g/km : malus of 1 050 euros
* 150g/km : malus of 2 300 euros
* 160g/km : malus of 4 050 euros
* 170g/km : malus of 6 300 euros
* 180g/km : malus of 9 050 euros
* 185g/km and above : malus of 10 500 euros
further taxes may apply according to vehicle classification.
==References==
<references />
* Lemaire, J. (1995) Bonus-Malus systems in automobile insurance. {{ISBN|0-7923-9545-X}}
[[Category:Insurance]]
It is used, for example, in the call center and insurance industries.
== Call centers ==
In call centers, a '''bonus-malus''' arrangement is a section in the contract between the company buying the call center services (buyer) and the company providing the call center services (call center) allowing for a payment to be made from one company to the other. As part of the contract, both companies agree on a set of Key Performance Indicators (KPIs). These are measurements for how the call center is performing. If the call center is performing poorly, then there would be a malus payment (payment from the call center company to the buyer). If the call center is doing well, then there is a bonus payment from the buyer to the call center company. Bonus-malus payments are in addition to the normal cost of call center services.
== Insurance ==
In [[insurance]], a '''bonus-malus system''' (BMS) is a system that adjusts the premium paid by a customer according to their individual claim history.
Bonus usually is a discount in the premium which is given on the renewal of the [[policy]] if no [[Cause of action|claim]] is made in the previous year. Malus is an increase in the premium if there is a claim in the previous year. Bonus-malus systems are very common in vehicle insurance. This system is also called a '''no-claim discount''' (NCD) or '''no-claims bonus''' in Britain and Australia.
The fundamental principle of BMS is that the higher the claim frequency of a [[policyholder]], the higher the insurance costs that on average are charged to the policyholder. This principle is also valid in an insurance arrangement consisting of a high maximum [[deductible]] which is common to all policyholders.
=== Automobile insurance ===
Most insurers around the world have introduced some form of merit-rating in [[Auto insurance|automobile third party liability insurance]]. Such systems penalize at-fault accidents by premium [[surcharges]] and reward claim-free years by discounts, commonly known as a "no-claims discount".{{citation needed|date=June 2014}}
The most usual BMS divides drivers by classes, where each class has its own discount or surcharge that is applied to the basic premium. A claim-free year implies in a decline of one or more degrees on the Bonus/Malus class table on the anniversary of the contract. A claim entails an increase of a given number of degrees on the Bonus/Malus scale on the anniversary of the contract. Generally, one degree corresponds to a 5% discount or surcharge. The starting class may depend on the driver's age, sex, place of residence, the car's horsepower. Each country has a different legislation, which rules how many degrees an insurer may increase or decrease, the maximum bonus or malus allowed and which statistics insurers can use to evaluate the starting class of a driver.
A BMS usually has an effect on road safety statistics, as it stimulates drivers to be careful and avoid accidents that would lead to the loss of bonus.{{Citation needed|date=November 2009}}
Most insurers have a policy whereby an unused bonus or NCD will expire in within two years. Insurers will discontinue a prior customers no claims bonus if they no longer have an insurance policy.{{citation needed|date=June 2014}}
=== Bonus hunger ===
There is a basic question under Bonus-malus system based on insurance customer’s point of view, that is, “Should an insurance customer carry an incurred loss himself, or should he make a claim to the insurance company?”. Hence, an insurance customer prefers to choose self-financing an occurred loss by carrying a small loss himself in order to avoid an increased future premium, instead of financing the loss by compensation from the insurance company. This strategy is called bonus hunger of the insurance customer. In this strategy, the insurance customer prefers the most profitable financial alternative, after a loss occurrence. A well-designed bonus-malus system must take bonus hunger into consideration.
==Executive compensation==
{{See also|Executive pay}}
In [[executive compensation]], particularly at banks, '''bonus-malus''' refers to schemes where annual bonuses are held in [[escrow]] (do not immediately [[vesting|vest]]), and can be reduced retroactively ([[claw back|clawed back]]) in case of losses in future years.
The intention is to align incentives better and encouraging a long-term view in directors, by discouraging the taking of risks which may yield short-term profits (and hence bonuses in early years) but with long-term losses (which, under a traditional bonus system, would not be penalized).
Such a system was proposed by [[Raghuram Rajan]] in January 2008.<ref>{{citation
|url=http://www.ft.com/cms/s/0/18895dea-be06-11dc-8bc9-0000779fd2ac.html
|title=Bankers’ pay is deeply flawed
|first=Raghuram
|last=Rajan
|authorlink=Raghuram Rajan
|work=[[Financial Times]]
|date=2008-01-08}}</ref>
Author Jim Collins proposed that executives be expected to buy stock with their own money (as was done at IBM in the 1990s) taking on both up-side rewards and down-side risk.<ref>{{cite web|url=https://www.npr.org/2011/11/28/142839186/should-ceos-have-to-buy-company-stock-with-their-own-money|accessdate=2012-01-02|date=2011-11-28|title=Should CEOs No Longer Be Granted Stock Options?}}</ref>
In November 2008, [[UBS AG]] announced a change to its [[executive compensation]] scheme implementing such a system, which it dubbed a "bonus-malus" system.<ref>[http://www.thestreet.com/story/10448258/1/ubs-to-change-way-it-pays-senior-managers.html UBS to Change Way it Pays Senior Managers]</ref>
== French Insurance Price Calculation ==
In France, the prices of insurance are calculated as function of the car type, subscribed insurance options, and also Bonus/Malus value (%), stating how many years the driver used the car without any accident or another event relevant to the insurance. It means, that the bonus/malus is assigned to the insured person and also to family members (e.g. wife), which is allowed to drive the car.
The bonus can be transferred between insurance companies.
{| class="wikitable"
|+ Bonus reduction Coefficient (CRM)'''
| Year of insurance
| Insurance discount coefficient <br /> (Bonus)
| Insurance discount <br /> ("bonus")
| Bonus for <br /> professionals
| Insurance discount <br /> for professionals
|-
| 0
| 1.00
| 0%
| 1.00
| 0%
|-
| 1
| 0.95
| 5%
| 0.93
| 7%
|-
| 2
| 0.90
| 10%
| 0.86
| 14%
|-
| 3
| 0.85
| 15%
| 0.79
| 21%
|-
| 4
| 0.80
| 20%
| 0.73
| 27%
|-
| 5
| 0.76
| 24%
| 0.67
| 33%
|-
| 6
| 0.72
| 28%
| 0.62
| 38%
|-
| 7
| 0.68
| 32%
| 0.57
| 43%
|-
| 8
| 0.64
| 36%
| 0.53
| 47%
|-
| 9
| 0.60
| 40%
| 0.50
| 50%
|-
| 10
| 0.57
| 43%
|-
| 11
| 0.54
| 46%
|-
| 12
| 0.51
| 49%
|-
| 13
| 0.50
| 50%
|}
==French taxation==
In France, cars are taxed (malus) or credited (bonus) if their [[carbon emissions]] are above or below certain targets. The limits (can) change every year.
===French registration document (carte grise)===
The environmental tax is also applied as a malus, to all vehicles registered after 1 January 2008, affecting all passenger cars emitting more than 120g of CO2 per kilometer emissions(as of 2018). This tax is paid when the registration document (called « carte grise » in french language) is done.
<ref>{{cite web|title=Malus écotaxe dans le prix d'une carte grise|url=https://mistercartegrise.fr/calcul-prix-carte-grise/|website=mistercartegrise.fr|accessdate=11 May 2015|language=french}}</ref>
Currently, the certificate holder must pay a penalty to the registration, according to the following rates (2018):<ref>{{Cite web|url=https://www.carte-grise.org/ecotaxe.htm|title=Malus écologique sur les véhicules neufs polluants|last=|first=|date=25 January 2018|website=www.carte-grise.org|archive-url=|archive-date=|dead-url=|access-date=}}</ref>
* up to 119g/km : no malus
* 120g/km : malus of 50 euros
* 121g/km : malus of 53 euros
* 122g/km : malus of 60 euros
* 123g/km : malus of 73 euros
* 124g/km : malus of 90 euros
* 125g/km : malus of 113 euros
* 126g/km : malus of 140 euros
* 127g/km : malus of 173 euros
* 128g/km : malus of 210 euros
* 129g/km : malus of 253 euros
* 130g/km : malus of 300 euros
* ...
* 140g/km : malus of 1 050 euros
* 150g/km : malus of 2 300 euros
* 160g/km : malus of 4 050 euros
* 170g/km : malus of 6 300 euros
* 180g/km : malus of 9 050 euros
* 185g/km and above : malus of 10 500 euros
further taxes may apply according to vehicle classification.
==References==
<references />
* Lemaire, J. (1995) Bonus-Malus systems in automobile insurance. {{ISBN|0-7923-9545-X}}
[[Category:Insurance]]
