Actuarial case explained
How do premium and retention change when the deductible changes?
Purpose
Decision informed
Choose how much risk the insured retains without confusing a lower premium with a lower total cost of risk.
Benefits and cash flows
- 1Annual premium to the insurer.
- 2Deductible paid by the insured on each covered loss.
- 3Indemnity subject to coverage and limits.
Assumptions
| Assumption | Value / unit | Source and status |
|---|---|---|
| Base tariff | Vehicle and zone factors | Illustrative Representative, non-official tables |
| Deductible | Percentage of vehicle value | Convention Example design |
| Currency | Nominal MXN | Convention Declared unit |
Method
Multiplicative rating
Each factor modifies a base rate; the deductible reduces the expected transferred portion.
Prima = Tasa base × Exposición × FactoresResults and interpretation
Premium falls as the deductible rises, but retained loss per event increases.
Applied example
Miguel chooses his deductible
Miguel insures a $420,000 sedan in Mexico City. Choosing the deductible determines which portion of each claim he bears directly and which portion he transfers to the insurer; that decision is reflected in the premium.
Adjust the parameters to observe how the result changes.
5% of the vehicle's value
Annual premium
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Actuarial interpretation
A higher deductible removes small claims from the contract and lowers the insurer's expected cost, so the premium decreases. Protection against large losses is unchanged.
Validation and limits
What is checked
- —Monotonicity and factor-boundary tests.
- —Hand-calculated coverage and bonus-malus cases.
What it does not prove
- —Rating tables are not current official AMIS data.
- —Third-party liability uses a documented pedagogical approximation.