A suitable claim severity model of Comprehensive insurance policy

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April 2016
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This study was base on a claim data collected from a recognized motor insurance companies in Ghana. The data from this non-life insurance company was to find the appropriate statistical distributions that best fit the claims data. In the insurance industry two major problems exist; how to get an appropriate model for a large claim data and how to fit and test the appropriateness of the model identified to make future decision. In this study, a clear methodology was set up to deal with the identified problems. Specific distributions were chosen from a group of family of exponential distribution. The study began with a brief introduction for the modeling process as practice by Actuaries. The purpose of the study was to get the best statistical distribution that best fit the claim amount from the insurance company data and fit the data using Quantile–Quantile plot (Q-Q plots) for all the tested distributions. The modeling process established one of the statistical distributions efficiently fitted the claim data. The study went ahead to test for the goodness of fit test using (AIC) that is Akaike’s Information Criterion and a graphical presentation was done using the Q-Q plot. Finally the findings were discussed and conclusions, was made to the work and recommendations were given to guide for further study on similar or same topic.
A thesis submitted to the Department of Mathematics, Kwame Nkrumah University of Science and Technology in partial fufilment of the requirement for the degree of Msc. Actuarial Science, 2016