A Discussion of the Risk Assessment Methods for the German Automobile Insurance Industry

The aim of this paper is to discuss different methods for risk assessment in theGerman automobile industry. We present the traditional approach for classifyingrisks, which is actually applied in the German market, and discuss one crucial difficulty inherent to this approach for proper risk assessment. Then, we describe the “insurance scoring” approach as used in the U.S. insurance market, which leads us to suggest scoring techniques as a risk assessment method for the German automobile insurance industry. Finally, we discuss the benefits and problems of scoring in the context of automobile insurance.