THE DETERMINATION OF REINSURANCE RISK PREMIUM IN FIRE INSURANCE BY EXPOSURE RATING METHOD BASED ON EXPONENTIAL & PARETO EXPOSURE CURVES

• Main Author: Kurniawan, Josa
• Format: Final Project
• Language: Indonesia
• Subjects: Matematika
• Online Access: https://digilib.itb.ac.id/gdl/view/34024
• Institution: Institut Teknologi Bandung

Fire insurance is one way in managing the risks of financial loss due to property loss or damage caused by a fire. Fire insurance claims are usually large claims; therefore the insurance company will share it risks to a reinsurance company. In this final project (skripsi), fire exposure rating is used to determine how much of the risk premium which will be retained by the cedent and how much which will be shared to the reinsurer. In order to analyze the risks profile, two types of exposure rating method are used: the standard exposure rating method and the burning cost-adjusted exposure rating method. There are three types of risk profiles which will be discussed in this final project: policy profiles; top location profiles; and location profiles. It will be shown that a better risk profile will lead to a lower fire reinsurance premium. An exposure rating calculation requires exposure curves, which is a distribution function obtained from a large portofolio of homogenous risks. This final project also discussed the Exponential & Pareto (EP) exposure curve and its approximation to the “Maxwell-Boltzman, Bose-Einstein and Fermi-Dirac” or MBBEFD exposure curve