How can motor insurance premiums become fairer for safe drivers while protecting insurers against unexpected claims? This is the question addressed by a research team from Kisii University, comprising Elijah Onsomu, Owino Catherine Anyango and Everline Akhwale, whose research introduces a data-driven approach to improving motor insurance pricing.
Traditional No-Claim Discount (NCD) systems often rely on rigid discount and penalty schedules that fail to account for hidden differences in drivers’ risk profiles. This can result in safe drivers paying more than they should, while insurers remain exposed to underpriced risks and unstable claims costs.
The team proposes a premium rating framework that integrates Mixed Poisson models, including Negative Binomial and Poisson-Lindley distributions, with Bayesian risk updating and a customized NCD transition matrix. By accounting for variations in individual claim frequencies, the model updates a policyholder’s risk profile using actual claims experience and adjusts future premiums accordingly. Drivers with favourable claims histories can receive more appropriate discounts, while higher-risk policyholders are priced more accurately.
The framework offers a potential advancement for motor insurers, reinsurers, actuarial consulting firms and insurtech companies seeking more responsive underwriting systems. It also aims to reduce adverse selection, discourage the avoidance of small claims to preserve discounts, improve customer retention and strengthen insurers’ long-term financial stability. Its distinctive contribution is translating advanced actuarial modelling into a practical premium transition framework that balances fairer pricing for policyholders with sustainable risk management for insurers.
The research has already earned the team the Best Research Article Award at the Western Regional Product Development Competition hosted at Maseno University and presented in the 2026 National Product Development Competition, recognising its contribution to actuarial research and innovation. With the research completed, the next opportunity lies in further validation, industry engagement and exploring how the proposed framework could be applied to real-world motor insurance portfolios.
Through initiatives such as the Product Development Competition, the Actuarial Students Society of Kenya (ASSK) continues to showcase emerging actuarial talent and encourage research that moves beyond theory to address real industry challenges. ASSK welcomes collaboration with insurers, reinsurers, researchers, actuarial professionals and other partners interested in advancing this work.
Meet the Researchers
- Elijah Onsomu: elijahonsomu05@gmail.com | LinkedIn
- Owino Catherine Anyango: owinocatherine342@gmail.com | LinkedIn
- Everline Akhwale: everlineakhwale06@gmail.com | LinkedIn
Interested in collaboration or partnership? Contact the Actuarial Students Society of Kenya (ASSK) to explore opportunities to support the development and practical application of innovative actuarial solutions.
This product was presented in this year’s (2026) National PDC held at Daystar University