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http://dx.doi.org/10.5351/KJAS.2016.29.5.987

Optimized pricing based on proper estimation of rating factor distribution  

Kim, Yeong-Hwa (Department of Applied Statistics, Chung-Ang University)
Jeon, Chul-Hee (Department of Statistics, Graduate School of Chung-Ang University)
Publication Information
The Korean Journal of Applied Statistics / v.29, no.5, 2016 , pp. 987-998 More about this Journal
Abstract
Auto insurance is an insurance product that requires the proper application of pricing techniques due to intense market competition and the rate regulations of financial authorities. Especially, population change according to aging and rating faction segmentation mainly affect the pricing process. This study suggests a pricing optimization methodology through the proper estimation of age factors. To properly estimate the future distribution of age factor, age change, renewal and conversion of customers are considered as main effects for the optimization of estimation and application. The properness and effectiveness for the suggested method will be proved by a comparison of results applied (one for current distribution and the other for future distribution) at the off-balance process. This study suggests an appropriate risk estimation methodology based on optimization that uses the proper estimation of future distribution to protect from the over or under estimation of risk.
Keywords
auto insurance; future distribution; off-balance;
Citations & Related Records
Times Cited By KSCI : 3  (Citation Analysis)
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