Pricing of Premium for Automobile Insurance using Bayesian Method
Agung Prabowo1, Mustafa Mamat2, Sukono3, Afif Amrullah Taufiq4
1Agung Prabowo, Department of Mathematics, Faculty of Mathematics and Natural Sciences, Universitas Jenderal Soedirman, Indonesia.
2Mustafa Mamat, Faculty of Informatics and Computing, Universiti Sultan Zainal Abidin, Kuala Terengganu, Malaysia.
3Sukono, Department of Mathematics, Faculty of Mathematics and Natural Sciences, Universitas Padjadjaran, Indonesia.
4Afif Amrullah Taufiq, Engineering Division, General Insurance of Bumiputera Muda 1967, Indonesia.
Manuscript received on 13 August 2019. | Revised Manuscript received on 17 August 2019. | Manuscript published on 30 September 2019. | PP: 6226-6229 | Volume-8 Issue-3 September 2019 | Retrieval Number: C5740098319/2019©BEIESP | DOI: 10.35940/ijrte.C5740.098319
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© The Authors. Blue Eyes Intelligence Engineering and Sciences Publication (BEIESP). This is an open access article under the CC-BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: The aggregate claim model can be used to determine the amount of premium charged to the insured by the insurance company. This model consists of two mutually independent random variables, namely the number of claims that occur per period and the amount of claim for each event. In this study, the number of claims is Poisson distributed, and the amount of claim is distributed by generalized extreme value (GEV). The Bayes method is used to estimate the parameters of each distribution. Parameter estimation results are used to calculate the expectations and variances of the aggregate claim model which are then used to calculate insurance premiums. Based on the estimation results, the amount of premium charged to the insured ranges from IDR 3,831,480 to IDR 6,443,860.
Index Terms: Bayesian Method, Mobile Insurance, Premium, Pricing.
Scope of the Article: Artificial Intelligent Methods, Models, Techniques