Application of Bühlmanns Credibility Theory to an Automobile Insurance Claims
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Date
October 18, 2016
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Abstract
In this thesis, we study auto-mobile insurance claim counts past data for
commercial vehicles having third party liability cover.There are various literature
on how this can be done. But in this study experience rating was used.
Observations of claim events of the past were used to forecast the future claim
counts of the policyholders without considering risk factors that are associated
with them.The main objective of this thesis is to estimate the number of auto
insurance claims occurring under motor accidents using Bühlmans credibility
theory. Speci c objectives were to adopt Bühlmans credibility model and use
the model to calculate credibility weighted estimates for the expected number of
claims per year for each policyholder. Finally, the weighted estimates were used to
estimate the number of claim counts in 2015.The R software was used to compute
the Bühlmans credibility factor and the credibility weighted estimates for each
policyholder for 2015. Conclusively, the ndings of this study revealed that out
of the 600 policy holders about 197 of them are likely to make claims in 2015. It
was recommend that the insurance company should make claims reservation for
197 policyholders in 2015.
Description
A thesis submitted to the Department of Mathematics,
Kwame Nkrumah University of Science and Technology in
partial fulfillment of the requirement for the Degree
of Master of Science in Actuarial Science,