THE ROLE OF UTILITY FUNCTION IN PREMIUM ESTIMATION
Premiums are costs paid by policyholders to insurance companies in return for risk coverage, insurance companies determine reasonable premiums in accordance with insurance products, one of the determination of these premiums can be determined by the utility function. The utility function measures in...
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| Format: | Final Project |
| Language: | Indonesia |
| Online Access: | https://digilib.itb.ac.id/gdl/view/49722 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | Premiums are costs paid by policyholders to insurance companies in return for risk coverage, insurance companies determine reasonable premiums in accordance with insurance products, one of the determination of these premiums can be determined by the utility function. The utility function measures individual preferences in each of the choices available in decision making. In this final project, the premium is determined by maximizing the value of utility expectations involving the function of policy holders and insurance companies by assuming each party is risk averse. The utility functions to be discussed are logarithmic and exponential forms. |
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