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Analysis of TCI Efficiency Based on NCD System

Peng Yao, Caihong Zhang, Rao Yao

Abstract


In order to safeguard the interests of victim in traffic accident, government implements the TCI (Traffic Compulsory Insurance) policy based on the NCD (No Claim Discount) system in China, avoiding the aftereffect of no compensation for hurt person. This article draws out transfer matrix under the conditions of TCI in China, and calculates stability equation. The results show that the adopted TCI policy can not effectively distinguish different types of risks among assurers. Therefore, the policy should increase the levels of compensation and enlarge the difference between the premium grades, so that the TCI policy can realize the fair principle of insurance guarantee.

Keywords


NCD system, TCI policy, policy efficiency, poisson distribution.

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