RISK PREMIUM PRICING BASED ON DEDUCTIBLE IN GENERAL INSURANCE WITH GROUND UP LOSS ESTIMATION

• Main Author: Titan, Thalia
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/51135
• Institution: Institut Teknologi Bandung

A deductible is part of the claims amount which need to be paid by the policyholder. The deductibles will have an impact on the distributions of the frequency and severity of the claims. Two of the reasons for an insurance company to apply deductibles is to avoid paying small claims; and so that the policyholder will also have some responsibility when claims occurred. A Ground Up Loss Estimation is a way to estimate the distribution of the Ground Up Loss using the Maximum Likelihood Estimation. The Maximum Likelihood Estimation is a method to estimate the parameters of a distribution. The parameter values are obtained by maximizing the Likelihood function. In determining the premium, the relativity of the premium based on the amount of the deductibles chosen, need to be considered. A relativity function used in this final project may be used to measure the effect of deductibles on the expectation of the aggregate claims. Given the importance of deductibles in determining the premium, this final project discusses how to determine risk premium for different deductibles using the Ground Up Loss Estimation approach. The frequency of claims distribution considered in this final project is limited to the distributions from the (a,b,0) class.