This document discusses using R to price different types of insurance contracts. It provides examples of pricing life insurance, personal lines insurance, and excess of loss reinsurance contracts. For each type of insurance, it shows how to model costs and losses in R, calculate key metrics like expected claims and capital requirements, and determine final premiums. Code used in the examples is provided in an appendix.
This document discusses modeling underwriting premium risk for motor third party liability (MTPL) insurance under Italy's direct compensation (CARD) system. It provides an overview of the CARD system and the challenges it poses for pricing and risk modeling. Specifically, it notes that negative claim amounts are possible under CARD, the frequency and costs of both caused and suffered claims must be modeled, and historical experience is limited. It then describes the CARD forfeit structure and rules in more detail. The goal is to develop an internal model for assessing underwriting premium risk capital charges on an MTPL portfolio under the CARD system.
The document defines key terms related to insurance pricing such as rate, exposure unit, pure premium, and loading. It describes the objectives of insurance pricing from both regulatory and business perspectives. The types of rating discussed include judgment rating, class rating, merit rating, schedule rating, experience rating, and retrospective rating. Class rating and two methods for determining class rates, pure premium and loss ratio, are explained in detail with examples. Merit rating adjusts class rates based on individual risk characteristics and loss experience.
The document discusses various aspects of insurance companies, including their key operations. It begins by describing how insurance companies handled claims from the 2005 Mumbai floods. It then discusses the main operations of insurance companies, including rate making, underwriting, production (sales), claims settlement, reinsurance, and investments. Insurance companies collect premiums, pay claims, and invest premiums to earn income. They distribute policies through agents or direct selling. Reinsurance allows risks to be shared between insurers.
Several hundred of the world's largest and most profitable corporations have set up their own personal insurance companies (captives) engineered to extract hundreds of millions and often billions of dollars in terrorism reinsurance from the Terrorism Risk Insurance Act (TRIA). The cost of this corporate shortcut lands directly on the shoulders of small businesses, nonprofits, local governments and other commercial insurance consumers.
Insurance is different from most products as it is a promise to do something in the future if certain events take place during a specified time period.
Unlike a can of soup, a pair of shoes, or a car, the ultimate cost of an insurance policy is not known at the time of the sale
This document discusses using R to price different types of insurance contracts. It provides examples of pricing life insurance, personal lines insurance, and excess of loss reinsurance contracts. For each type of insurance, it shows how to model costs and losses in R, calculate key metrics like expected claims and capital requirements, and determine final premiums. Code used in the examples is provided in an appendix.
This document discusses modeling underwriting premium risk for motor third party liability (MTPL) insurance under Italy's direct compensation (CARD) system. It provides an overview of the CARD system and the challenges it poses for pricing and risk modeling. Specifically, it notes that negative claim amounts are possible under CARD, the frequency and costs of both caused and suffered claims must be modeled, and historical experience is limited. It then describes the CARD forfeit structure and rules in more detail. The goal is to develop an internal model for assessing underwriting premium risk capital charges on an MTPL portfolio under the CARD system.
The document defines key terms related to insurance pricing such as rate, exposure unit, pure premium, and loading. It describes the objectives of insurance pricing from both regulatory and business perspectives. The types of rating discussed include judgment rating, class rating, merit rating, schedule rating, experience rating, and retrospective rating. Class rating and two methods for determining class rates, pure premium and loss ratio, are explained in detail with examples. Merit rating adjusts class rates based on individual risk characteristics and loss experience.
The document discusses various aspects of insurance companies, including their key operations. It begins by describing how insurance companies handled claims from the 2005 Mumbai floods. It then discusses the main operations of insurance companies, including rate making, underwriting, production (sales), claims settlement, reinsurance, and investments. Insurance companies collect premiums, pay claims, and invest premiums to earn income. They distribute policies through agents or direct selling. Reinsurance allows risks to be shared between insurers.
Several hundred of the world's largest and most profitable corporations have set up their own personal insurance companies (captives) engineered to extract hundreds of millions and often billions of dollars in terrorism reinsurance from the Terrorism Risk Insurance Act (TRIA). The cost of this corporate shortcut lands directly on the shoulders of small businesses, nonprofits, local governments and other commercial insurance consumers.
Insurance is different from most products as it is a promise to do something in the future if certain events take place during a specified time period.
Unlike a can of soup, a pair of shoes, or a car, the ultimate cost of an insurance policy is not known at the time of the sale
This document summarizes a paper on motor premium rating in India. It discusses the current tariff regime for motor insurance that is leading to losses for many companies. With the likely deregulation of motor insurance tariffs, companies will need to use actuarial fundamentals to scientifically price policies. It emphasizes the importance of collecting comprehensive driver, vehicle, and policy data to analyze risk groups and determine appropriate premiums. The document provides an overview of how to calculate an adequate overall premium and determine differential ratings based on risk factors.
Self-Insured Retentions Part 2: An Examination of the Uses and Problems (from...NationalUnderwriter
This second and concluding part of the discussion on self-insured retentions first itemizes the points that should be
considered when either drafting or accepting SIRs. The discussion then addresses some additional problem areas not only with self-insured retentions having to do with primary liability policies, but also with the SIR feature of umbrella policies. It is not unusual, furthermore, for litigants, among others, to confuse deductibles with self-insured retentions, and there are differences, as one case discussed points out. In light of the fact that self-insured retentions also are growing, it also is important that parties to a contract are informed of their existence. To not do so, could end up with the accusation of failure to procure the proper insurance and, of course, such a breach is not covered by liability policies. It is for this reason that perhaps insurance certificates should be amended to insert room to notify (and warn) certificate holders of an SIR existence.
1. Actuaries are professionals who quantify and price financial risks for insurance companies. They determine premiums, reserves, and economic capital.
2. Becoming an actuary requires passing examinations in probability, mathematics, statistics, and finance. The requirements vary by country but it is a regulated profession everywhere.
3. Actuaries work on pricing and reserving for various insurance products including general insurance, life insurance, health insurance, and pensions. They also work in reinsurance, catastrophe modeling, and other non-traditional roles applying statistical skills.
- Small and large businesses are increasingly forming "profit center captives" as a way to profit from risk by selling insurance products like warranties to their customers.
- Large companies like Verizon and Walmart have been successfully selling insurance products to customers for years, realizing new profits. These small insurance programs within larger companies are called "profit center captives".
- Profit center captives allow companies to take on third-party risks from customers or other external parties, converting those premiums paid into new revenue streams and profits for the company. They provide benefits like strengthening customer relationships and diversifying revenue.
Insuring Transfer Pricing Risks: 2020 Market Report provides an analysis of the insurance market's appetite for insuring transfer pricing risks as of mid-2020. The survey found that while transfer pricing risks were historically excluded from warranty and indemnity policies, insurers have become more open to covering identifiable transfer pricing risks, either within W&I policies for an added premium or through standalone tax insurance policies. Insurers' risk perception of transfer pricing issues does not seem to match the lack of actual claims experience in this area. The emergence of tax insurance as a product line has increased insurers' willingness to consider transfer pricing positions.
Captive insurance programs have grown in popularity as a way for middle-market companies to customize insurance policies to fill gaps left by conventional insurers' exclusions and provide more stable costs. Through examples, the document outlines how captive insurers can be used to insure risks conventional insurers do not cover, such as extended warranties, loss of key employees, and business processes. Captive insurers allow companies to tailor coverage to their specific needs while avoiding the high costs and claim denial issues that sometimes occur with traditional insurance carriers.
Captives Create Income and Growth for Agenciescaptiveman
Captive insurance companies provide an excellent format from which an insurance agency, MGA or other insurance intermediary, can achieve income and enhanced revenue opportunities in both a soft and hard market.
The document discusses the differences between occurrence-based and claims-made medical malpractice insurance. Occurrence-based insurance provides unlimited coverage for any claims that occur during the policy period, even if reported later. Claims-made insurance only covers claims that both occur and are reported during the active policy period, unless tail coverage is purchased. Tail coverage extends reporting timelines but is expensive, with costs increasing each year. Over time, premiums for claims-made insurance typically exceed those of occurrence-based policies due to increasing liability exposure. Proper due diligence is important when evaluating and switching between these policy types.
The use of EU onshore Protected Cells as a capital efficient, cost-effective, flexible and secure alternative to owning a standalone insurer or captive. Presentation by Ian-Edward Stafrace to the UK IRM Global Risk Management Professional Development Forum 2011
Insurance and Risk Management isn’t something that is at the top of most business owners’ and organization administrators’ minds. Unfortunately, ignoring it or incompletely addressing it can spell disaster (or limit how an organization can recover from a disaster). This 30 day vlog series will be dedicated to Insurance and Risk Management 101 for decision makers. You will by no means become an expert. But by the end, you should have the basic language and understanding to make certain you’ll have a good foundation to build your business or organization from.
Topics Covered
• What Types of Insurance are Available?
• What Types Should You Purchase?
• What are Some of the Insurance Alternatives?
• How do you Protect Your Property Before & After a Loss?
• How do you Protect Against Liability Lawsuits?
• How do you Protect Your Employees Before & After and On-the-job Injury?
• How do you Protect Your Business from Cyber Risks?
A Recruiters Guide to Drivers Negligence InsuranceGary Chambers
This document provides an overview of drivers negligence insurance available to recruitment businesses. It covers what the insurance protects against (damage caused by temporary drivers to hirers' vehicles), key policy elements like coverage limits and exclusions, and claims processes. It emphasizes checking drivers' licenses and having signed agreements with hirers to ensure any claims are properly covered. The aim is to help recruitment agencies understand this insurance and maintain good relations with hire companies.
In this risk retention piece, we provide updates to how the final rule under Dodd-Frank applies to CLOs. We cover the permissible forms of risk retention and financing options for the risk retention obligation among other things.
The document provides an overview of captive insurance. It defines a captive as a special purpose insurance company formed by its owners to insure their own risks. Captives allow companies to self-insure risks in a tax-advantaged manner while improving risk management. The document outlines various types of captives and discusses their cash flow, tax, and performance measurement implications.
The document discusses captives, which are special purpose insurance companies that insure the risks of their owners. It provides an overview of what captives are, their history and growth, types of captives, benefits of using a captive compared to commercial insurance, considerations for utilizing a captive such as ownership structure and domicile selection, and functions related to managing a captive.
Changes to California law around independent contractor status may impact freight brokerage operations. Companies with brokerage divisions should review their structures to avoid potential liabilities. A freight broker facilitates freight movement by contracting with carriers on behalf of shippers but does not own assets or transport freight directly. Proper agreements and insurance, including errors & omissions coverage, contingent auto liability, and contingent cargo, can help manage risks for brokerages.
This document provides an overview of important considerations for purchasing auto insurance. It discusses:
- The six main types of auto insurance coverage (bodily injury liability, property damage liability, collision, comprehensive, medical payments, uninsured/underinsured motorist) and options within each.
- Factors that influence pricing, including location, driving record, vehicle usage. No single company offers the lowest rate for all drivers.
- Minimum coverage amounts required by law are typically low and may not adequately protect assets. Higher limits or umbrella policies are recommended for those with significant assets.
- Who is covered by your policy depends on the vehicle's coverage, not the driver, so regular users should be listed. Not
Détection de profils, application en santé et en économétrie geisslerKezhan SHI
(1) Quinten provides data-oriented strategic advisory and has over 100 missions for more than 25 clients in life sciences, healthcare, CRM, insurance, and investment. (2) It uses machine learning techniques like profile detection to analyze large datasets and discover meaningful patterns, with a focus on interpretability and simplicity. (3) Some techniques discussed include clustering, associative rule discovery, and detecting recurrent biases in financial markets to generate investment profiles.
Machine learning pour les données massives algorithmes randomis´es, en ligne ...Kezhan SHI
This document discusses machine learning algorithms for big data applications. It begins by providing context on the rise of big data from various domains and the challenges it poses. It then gives an overview of machine learning and some key algorithms like neural networks, support vector machines, and boosting. The document discusses challenges of scaling machine learning to big data, including dealing with high volume, variety, and velocity of data. It covers areas of research focused on developing algorithms that can handle data distribution, online/real-time learning, and more. Examples of applying machine learning to tasks like classification, regression, and clustering are also provided.
Les enjeux de la dépendance – laure de montesquieu, scorKezhan SHI
This document discusses long-term care (LTC) insurance. It defines LTC as limitations in daily living activities, such as bathing or dressing, due to aging or illness. LTC insurance pays benefits to help cover the costs of care. The document discusses key aspects of LTC insurance products and markets in France and the US. It also outlines technical issues insurers consider, such as pricing premiums based on mortality and disability rates and reserving funds for future claims. Proper statistical analysis and reinsurance are important for managing LTC insurance portfolios.
Optimal discretization of hedging strategies rosenbaumKezhan SHI
This document discusses optimal discretization of hedging strategies. It begins by introducing classical hedging using delta hedging, but notes that continuous adjustment is impossible in practice due to microstructure effects and transaction costs. It then examines how to optimally discretize hedging strategies by rebalancing the portfolio at certain time intervals. The document outlines an asymptotic approach to derive asymptotically optimal strategies. It proves a lower bound on discretization error and shows that a strategy of adaptive rebalancing based on changes in the hedging position achieves the lower bound and is thus asymptotically optimal. Finally, it discusses limitations of ignoring microstructure effects and introduces a model to incorporate these effects.
This document summarizes a paper on motor premium rating in India. It discusses the current tariff regime for motor insurance that is leading to losses for many companies. With the likely deregulation of motor insurance tariffs, companies will need to use actuarial fundamentals to scientifically price policies. It emphasizes the importance of collecting comprehensive driver, vehicle, and policy data to analyze risk groups and determine appropriate premiums. The document provides an overview of how to calculate an adequate overall premium and determine differential ratings based on risk factors.
Self-Insured Retentions Part 2: An Examination of the Uses and Problems (from...NationalUnderwriter
This second and concluding part of the discussion on self-insured retentions first itemizes the points that should be
considered when either drafting or accepting SIRs. The discussion then addresses some additional problem areas not only with self-insured retentions having to do with primary liability policies, but also with the SIR feature of umbrella policies. It is not unusual, furthermore, for litigants, among others, to confuse deductibles with self-insured retentions, and there are differences, as one case discussed points out. In light of the fact that self-insured retentions also are growing, it also is important that parties to a contract are informed of their existence. To not do so, could end up with the accusation of failure to procure the proper insurance and, of course, such a breach is not covered by liability policies. It is for this reason that perhaps insurance certificates should be amended to insert room to notify (and warn) certificate holders of an SIR existence.
1. Actuaries are professionals who quantify and price financial risks for insurance companies. They determine premiums, reserves, and economic capital.
2. Becoming an actuary requires passing examinations in probability, mathematics, statistics, and finance. The requirements vary by country but it is a regulated profession everywhere.
3. Actuaries work on pricing and reserving for various insurance products including general insurance, life insurance, health insurance, and pensions. They also work in reinsurance, catastrophe modeling, and other non-traditional roles applying statistical skills.
- Small and large businesses are increasingly forming "profit center captives" as a way to profit from risk by selling insurance products like warranties to their customers.
- Large companies like Verizon and Walmart have been successfully selling insurance products to customers for years, realizing new profits. These small insurance programs within larger companies are called "profit center captives".
- Profit center captives allow companies to take on third-party risks from customers or other external parties, converting those premiums paid into new revenue streams and profits for the company. They provide benefits like strengthening customer relationships and diversifying revenue.
Insuring Transfer Pricing Risks: 2020 Market Report provides an analysis of the insurance market's appetite for insuring transfer pricing risks as of mid-2020. The survey found that while transfer pricing risks were historically excluded from warranty and indemnity policies, insurers have become more open to covering identifiable transfer pricing risks, either within W&I policies for an added premium or through standalone tax insurance policies. Insurers' risk perception of transfer pricing issues does not seem to match the lack of actual claims experience in this area. The emergence of tax insurance as a product line has increased insurers' willingness to consider transfer pricing positions.
Captive insurance programs have grown in popularity as a way for middle-market companies to customize insurance policies to fill gaps left by conventional insurers' exclusions and provide more stable costs. Through examples, the document outlines how captive insurers can be used to insure risks conventional insurers do not cover, such as extended warranties, loss of key employees, and business processes. Captive insurers allow companies to tailor coverage to their specific needs while avoiding the high costs and claim denial issues that sometimes occur with traditional insurance carriers.
Captives Create Income and Growth for Agenciescaptiveman
Captive insurance companies provide an excellent format from which an insurance agency, MGA or other insurance intermediary, can achieve income and enhanced revenue opportunities in both a soft and hard market.
The document discusses the differences between occurrence-based and claims-made medical malpractice insurance. Occurrence-based insurance provides unlimited coverage for any claims that occur during the policy period, even if reported later. Claims-made insurance only covers claims that both occur and are reported during the active policy period, unless tail coverage is purchased. Tail coverage extends reporting timelines but is expensive, with costs increasing each year. Over time, premiums for claims-made insurance typically exceed those of occurrence-based policies due to increasing liability exposure. Proper due diligence is important when evaluating and switching between these policy types.
The use of EU onshore Protected Cells as a capital efficient, cost-effective, flexible and secure alternative to owning a standalone insurer or captive. Presentation by Ian-Edward Stafrace to the UK IRM Global Risk Management Professional Development Forum 2011
Insurance and Risk Management isn’t something that is at the top of most business owners’ and organization administrators’ minds. Unfortunately, ignoring it or incompletely addressing it can spell disaster (or limit how an organization can recover from a disaster). This 30 day vlog series will be dedicated to Insurance and Risk Management 101 for decision makers. You will by no means become an expert. But by the end, you should have the basic language and understanding to make certain you’ll have a good foundation to build your business or organization from.
Topics Covered
• What Types of Insurance are Available?
• What Types Should You Purchase?
• What are Some of the Insurance Alternatives?
• How do you Protect Your Property Before & After a Loss?
• How do you Protect Against Liability Lawsuits?
• How do you Protect Your Employees Before & After and On-the-job Injury?
• How do you Protect Your Business from Cyber Risks?
A Recruiters Guide to Drivers Negligence InsuranceGary Chambers
This document provides an overview of drivers negligence insurance available to recruitment businesses. It covers what the insurance protects against (damage caused by temporary drivers to hirers' vehicles), key policy elements like coverage limits and exclusions, and claims processes. It emphasizes checking drivers' licenses and having signed agreements with hirers to ensure any claims are properly covered. The aim is to help recruitment agencies understand this insurance and maintain good relations with hire companies.
In this risk retention piece, we provide updates to how the final rule under Dodd-Frank applies to CLOs. We cover the permissible forms of risk retention and financing options for the risk retention obligation among other things.
The document provides an overview of captive insurance. It defines a captive as a special purpose insurance company formed by its owners to insure their own risks. Captives allow companies to self-insure risks in a tax-advantaged manner while improving risk management. The document outlines various types of captives and discusses their cash flow, tax, and performance measurement implications.
The document discusses captives, which are special purpose insurance companies that insure the risks of their owners. It provides an overview of what captives are, their history and growth, types of captives, benefits of using a captive compared to commercial insurance, considerations for utilizing a captive such as ownership structure and domicile selection, and functions related to managing a captive.
Changes to California law around independent contractor status may impact freight brokerage operations. Companies with brokerage divisions should review their structures to avoid potential liabilities. A freight broker facilitates freight movement by contracting with carriers on behalf of shippers but does not own assets or transport freight directly. Proper agreements and insurance, including errors & omissions coverage, contingent auto liability, and contingent cargo, can help manage risks for brokerages.
This document provides an overview of important considerations for purchasing auto insurance. It discusses:
- The six main types of auto insurance coverage (bodily injury liability, property damage liability, collision, comprehensive, medical payments, uninsured/underinsured motorist) and options within each.
- Factors that influence pricing, including location, driving record, vehicle usage. No single company offers the lowest rate for all drivers.
- Minimum coverage amounts required by law are typically low and may not adequately protect assets. Higher limits or umbrella policies are recommended for those with significant assets.
- Who is covered by your policy depends on the vehicle's coverage, not the driver, so regular users should be listed. Not
Détection de profils, application en santé et en économétrie geisslerKezhan SHI
(1) Quinten provides data-oriented strategic advisory and has over 100 missions for more than 25 clients in life sciences, healthcare, CRM, insurance, and investment. (2) It uses machine learning techniques like profile detection to analyze large datasets and discover meaningful patterns, with a focus on interpretability and simplicity. (3) Some techniques discussed include clustering, associative rule discovery, and detecting recurrent biases in financial markets to generate investment profiles.
Machine learning pour les données massives algorithmes randomis´es, en ligne ...Kezhan SHI
This document discusses machine learning algorithms for big data applications. It begins by providing context on the rise of big data from various domains and the challenges it poses. It then gives an overview of machine learning and some key algorithms like neural networks, support vector machines, and boosting. The document discusses challenges of scaling machine learning to big data, including dealing with high volume, variety, and velocity of data. It covers areas of research focused on developing algorithms that can handle data distribution, online/real-time learning, and more. Examples of applying machine learning to tasks like classification, regression, and clustering are also provided.
Les enjeux de la dépendance – laure de montesquieu, scorKezhan SHI
This document discusses long-term care (LTC) insurance. It defines LTC as limitations in daily living activities, such as bathing or dressing, due to aging or illness. LTC insurance pays benefits to help cover the costs of care. The document discusses key aspects of LTC insurance products and markets in France and the US. It also outlines technical issues insurers consider, such as pricing premiums based on mortality and disability rates and reserving funds for future claims. Proper statistical analysis and reinsurance are important for managing LTC insurance portfolios.
Optimal discretization of hedging strategies rosenbaumKezhan SHI
This document discusses optimal discretization of hedging strategies. It begins by introducing classical hedging using delta hedging, but notes that continuous adjustment is impossible in practice due to microstructure effects and transaction costs. It then examines how to optimally discretize hedging strategies by rebalancing the portfolio at certain time intervals. The document outlines an asymptotic approach to derive asymptotically optimal strategies. It proves a lower bound on discretization error and shows that a strategy of adaptive rebalancing based on changes in the hedging position achieves the lower bound and is thus asymptotically optimal. Finally, it discusses limitations of ignoring microstructure effects and introduces a model to incorporate these effects.
2021 tria small insurer study commentsJasonSchupp1
The Terrorism Risk Insurance Act requires the Federal Insurance Office (FIO) to conduct a study of the program’s impact on small insurers. We have suggested FIO focus its upcoming report on two heighten program risks facing small insurers:
• Compliance with the separate line-item disclosure of terrorism premium; and
• A disproportionate burden of post-event policyholder surcharges.
The document provides an analysis of three key risks facing Caterpillar Inc: products liability, natural disasters, and labor disputes/expiring collective bargaining agreements. For each risk, the author identifies risk treatment techniques including risk financing (insurance, CAT bonds) and risk control (inspections, disaster recovery plans, funded risk retentions). Quantitative analyses like discrete loss distributions, NPV calculations, and event trees are used to evaluate the proposed risk treatments. The analyses conclude the risk treatment techniques would provide a positive financial impact for Caterpillar over the next 10 years by reducing expected losses.
Using Advanced Analytics to Combat P&C Claims FraudCognizant
P&C insurers need to embrace predictive and advanced analytics -- as well as analytics as a service -- to combat the growing complexity and sophistication of claims fraud.
Questions 1. Assume that you have limits of 152515 ($15,000$2.docxcatheryncouper
Questions
1. Assume that you have limits of 15/25/15 ($15,000/$25,000/$15,000), the minimum required in the state where your car is garaged. If you are driving in a state that requires 25/50/20 ($25,000/$50,000/$20,000) and are involved in an accident, your insurer will interpret your policy as if it had the higher limits. Thus, even though you have to meet only the requirements where you live, your policy will provide the limits you need in any state or province in which you may be driving. Identify the provision in your automobile insurance policy that makes this possible.
a. Indemnification
b. Stacking
c. Out-of-state
d. Redlining
e. Gentrification
2. This Act of 1986 directs that employers of more than twenty employees who maintain a group medical plan must allow certain minimum provisions for continuation of benefit coverage. The Act’s continuation provisions require that former employees, their spouses, divorced spouses, and dependent children be allowed to continue coverage at the individual’s own expense upon the occurrence of a qualifying event. Identify this Act.
a. Consolidated Omnibus Budget Reconciliation Act
b. Health Insurance Portability and Accountability Act
c. American Recovery and Reinvestment Act
d. Public Company Accounting Reform and Investor Protection Act
e. Gramm Leach Bliley Act
3. This liability occurs in situations where the firm is liable for an independent contractor’s negligence because the firm did not use reasonable care in selecting someone competent. Identify it.
a. Professional liability
b. Premises liability
c. Operations liability
d. Contingent liability
e. Nonownership liability
4. Which of the following types of annuities guarantees that the annuitant and/or beneficiary will receive, during the liquidation period, minimum payments equal to the single premium in an immediate annuity or the accumulation value in a deferred annuity?
a. Temporary annuity
b. Refund annuity
c. Joint annuity
d. Deferred annuity
e. Structured settlement annuity
5. Which of the following reasons can be attributed to the long-term financing gap faced by the Social Security and Medicare programs?
a. Increasing birth rates and health care costs
b. Pay-as-you-go system and declining birth rates
c. Traditional system and increased longevity
d. Increased birth rates and declining longevity
e. Increased morbidity and birth rates
6. If medical doctors fail to use reasonable care and diligence, and they fail to use their best judgment in exercising their skill and applying their knowledge, they are guilty of:
a. malpractice.
b. defamation.
c. vilification.
d. class-action.
e. nonownership.
7. Liability stemming from activities of the firm in installing equipment or doing other jobs for hire off its own premises is called:
a. professional liability.
b. premises liability.
c. completed operations liability.
d. contingent liability.
e. nonownership liability.
8. Flood insurance can be purchased through any licensed property or c ...
This document discusses the increasing trend of larger self-insured retentions (SIRs) and deductibles to lower insurance premiums. However, this also increases the responsibility of insureds to pay claims costs. It has led to more focus on properly tracking and exhausting the SIR. Coverage disputes are emerging where the full erosion of the SIR cannot be proven. Some cases have resulted in errors and omissions claims against third party administrators for alleged mishandling of claims files. Technologies exist to track SIRs and deductibles from the start of claims to demonstrate exhaustion and manage litigation costs, protecting insureds and carriers. Transparency in claims handling can be increased through workflow technology to track costs and reduce ambiguity
Cat bonds & Artificial Neural Networks | An example of reinsurance products’ ...GRATeam
Over the last fifty years, numbers and costs of natural disasters have not ceased to multiply. Given this phenomenon, insurers and reinsurers struggle to cover the associated losses. Consequently, they turned to financial markets in order to obtain new hedging capabilities, by using various types of products, suchas excess of loss contracts (named XL) and cat bonds.
This paper presents a mathematic model allowing to predict the number and the cost of incoming catastrophes. Data used include wind catastrophes affecting the southeast area of the United States and whose damages are worth more than a billion dollars. This model helps to price insurance risk transfer products, such as XL contracts or cat bonds. First a regression relying on neural network methodology is implemented in order to predict the global annual cost of future catastrophes. Then, based on the same methodology, a classification is done in order to allocate these costs to the various catastrophes.
Our models are used to price several contracts included in the reinsurance program of “Heritage Insurance,” so our results help estimate the share of premiums received by the reinsurer. Two calculations methods are applied: the exposure curve and the “burning cost” method.
Ours models are also validated on cat bond products, but this time using a financial method. This method allows to estimate the share of the Expected Excess Return (EER) depending of the Probability of First Loss (PFL) and the Conditional Expected Loss (CEL).
The document discusses challenges facing insurance carriers in improving claims operations, including declining revenues, increased competition, and changing customer behaviors. It suggests that carriers can address these challenges by targeting high-volume, low premium policies without compromising claims service through various means, such as using technology to lower costs while improving customer satisfaction and retention. Emerging markets present additional unique challenges for claims processing that some carriers are addressing by automating processes and leveraging new technologies without legacy system constraints.
AGRI-SERVICES AGENCY provides workers' compensation coverage through alternative risk transfer programs due to traditional carriers exiting the market and increasing costs. Coverage is state regulated and benefits differ by state. The key objectives of workers' compensation are to provide reasonable benefits regardless of fault, be the sole remedy for occupational injury, and relieve public institutions of costs while encouraging workplace safety. Injured employees receive medical, disability, rehabilitation and death benefits. Agrisurance and EMPACT are the two programs offered, each with underwriting guidelines and binding/payment options. Claims are managed by PMA Management Corp. through experienced professionals and cost control programs.
This chapter discusses moral hazard and adverse selection in insurance markets. Moral hazard refers to how insurance can change policyholders' behavior by reducing their incentives to prevent or minimize losses. Adverse selection refers to how asymmetric information between insurers and policyholders regarding risk levels can result in high-risk individuals being more likely to purchase insurance. The chapter examines how insurers can design contracts to mitigate these issues and provide appropriate incentives to policyholders.
When market conditions are good insurance companies get low of business and their profits increase but in the adverse market conditions the companies start facing losses or their profitability reaches to rock bottom.
Tax Deductibility of Premiums Paid to Captive Insurers: A Risk Reduction Appr...Michael-Paul James
Presentation by Michael-Paul James on The Tax Deductibility of
Premiums Paid to Captive Insurers: A Risk Reduction Approach
Li-Ming Han, and Gene C. Lai
CBI Comments on Proposed TRIA Regulatory DefinitionsJasonSchupp1
This comment letter focuses on the proposed rule changes for the Terrorism Risk Insurance Act regulations with respect to the definitions of:
• Act of terrorism; and
• Insured loss
in accordance with Treasury’s Notice appearing at 85 FR 71588 (November 10, 2020).
This document provides information about obtaining fully solved assignments from an assignment assistance service. It lists the contact email and phone number and provides details about the available programs, subjects, semesters, and courses that assignments are available for, including MBADS semester 4 and 6, MBAN2, MBAFLEX semester 4, and PGDFMN semester 2. It also includes a sample assignment question and answer for the subject of Insurance and Risk Management.
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Surety Industry Overview: State of the Industry by Cissie ScogginDon Grauel
Cissie Scoggin of Liberty Mutual Insurance presented "Surety Industry Overview: State of the Industry" to the 68th Annual F. Addison Fowler Fall Seminar on October 17, 2014.
How to Achieve Claims Excellence And Not Breach New Complaints LegislationMarian Unera
Insurance claims management has come under the spotlight and poor claims handling is cited as one of the major culprits when it comes to insurance grievances.
Ratemaking involves determining insurance premiums based on statistical analysis of past losses and variables that predict future risk. Actuaries set rates for classes of risk while underwriters apply the appropriate rates to applicants based on their characteristics. The goal is to charge lower rates to lower risk groups to attract more policyholders in a profitable way while complying with regulations. Premiums cover expected losses, expenses, and profit, with the "loading" portion covering costs and allowing for profit. Both accurate ratemaking and proper risk classification through underwriting are needed for an insurance company to earn a profit.
In 3 sentences:
Transportation risks are unpredictable but can have major financial impacts, yet many companies do not utilize insurance as an effective risk mitigation tool. While carriers provide some liability coverage, it is often inadequate to cover high-value goods and does not protect against revenue losses from disruptions. The document recommends that companies understand how cargo insurance can help cover replacement costs and protect cash flows by insuring supply chains against unpredictable but potentially catastrophic losses.
The document is a study guide that provides questions and answers to test understanding of insurance concepts. It covers topics like pure risk, types of insurance companies, characteristics of insurance contracts, elements of negligence, parts of an insurance policy, and types of losses. For each question, the guide provides the answer and a short explanation to help remember the concept.
Similar to Insurance fraud through collusion - Pierre Picard (20)
B -technical_specification_for_the_preparatory_phase__part_ii_Kezhan SHI
This document contains part II of the technical specifications for the Solvency II preparatory phase. It provides details on determining the risk-free interest rate term structure, including the volatility adjustment and transitional measures. It also specifies how to derive the matching adjustment. A number of simplifications were made for pragmatic reasons during the preparatory phase. The specifications are based on Solvency II directives and draft delegated acts. Several measures require prior supervisory approval, and their use during the preparatory phase does not imply such approval has been granted.
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This document contains part I of the technical specifications for the preparatory phase of Solvency II. It provides guidance on valuation of assets and liabilities, calculation of technical provisions, and the standard formula for the Solvency Capital Requirement (SCR). A number of simplifications have been included to facilitate the preparatory phase. The specifications are based on Directive 138/2009/EC, Delegated Acts, and Level 3 Guidelines available at the time. It is to be used together with part II of the technical specifications.
20140806 traduction hypotheses_sous-jacentes_formule_standardKezhan SHI
The document outlines the key assumptions underlying the standard formula for calculating the Solvency Capital Requirement (SCR). It covers all risk modules in the standard formula, including the assumptions regarding risks covered by each module and correlations between modules. It provides details on the assumptions for risks like market, underwriting, health, operational and counterparty risk. Organizations are expected to evaluate how their own risk profile deviates from these assumptions as part of the Own Risk and Solvency Assessment (ORSA) process.
C -annexes_to_technical_specification_for_the_preparatory_phase__part_i_Kezhan SHI
This document provides annexes to the technical specification for the preparatory phase. It includes annexes that define terms related to calculating technical provisions, provide examples of techniques for calculating the best estimate of technical provisions such as simulation, analytical, and deterministic techniques, and provide guidance on issues like health insurance, the boundary of insurance contracts, discount factors used in risk margins, simplifications for incurred but not reported claims, allowance of reinsurance, risk mitigation techniques, and ring-fenced funds. It also includes annexes that define lines of business, regions, natural catastrophe risk factors, and the treatment of participations in solvency calculations.
This document provides technical specifications for the QIS5 valuation exercise, including guidance on valuation of assets, liabilities, and technical provisions. Key points include:
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Tableau de comparaison bilan S1 et bilan S2Kezhan SHI
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comptes entre les fonds propres et le bilan.
Le tableau de raccordement présenté ci-dessous est destiné à s’appliquer aux états solo des entités et non aux bilans des groupes.
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le document tel qu’il est actuellement présenté.
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Chapter wise All Notes of First year Basic Civil Engineering.pptxDenish Jangid
Chapter wise All Notes of First year Basic Civil Engineering
Syllabus
Chapter-1
Introduction to objective, scope and outcome the subject
Chapter 2
Introduction: Scope and Specialization of Civil Engineering, Role of civil Engineer in Society, Impact of infrastructural development on economy of country.
Chapter 3
Surveying: Object Principles & Types of Surveying; Site Plans, Plans & Maps; Scales & Unit of different Measurements.
Linear Measurements: Instruments used. Linear Measurement by Tape, Ranging out Survey Lines and overcoming Obstructions; Measurements on sloping ground; Tape corrections, conventional symbols. Angular Measurements: Instruments used; Introduction to Compass Surveying, Bearings and Longitude & Latitude of a Line, Introduction to total station.
Levelling: Instrument used Object of levelling, Methods of levelling in brief, and Contour maps.
Chapter 4
Buildings: Selection of site for Buildings, Layout of Building Plan, Types of buildings, Plinth area, carpet area, floor space index, Introduction to building byelaws, concept of sun light & ventilation. Components of Buildings & their functions, Basic concept of R.C.C., Introduction to types of foundation
Chapter 5
Transportation: Introduction to Transportation Engineering; Traffic and Road Safety: Types and Characteristics of Various Modes of Transportation; Various Road Traffic Signs, Causes of Accidents and Road Safety Measures.
Chapter 6
Environmental Engineering: Environmental Pollution, Environmental Acts and Regulations, Functional Concepts of Ecology, Basics of Species, Biodiversity, Ecosystem, Hydrological Cycle; Chemical Cycles: Carbon, Nitrogen & Phosphorus; Energy Flow in Ecosystems.
Water Pollution: Water Quality standards, Introduction to Treatment & Disposal of Waste Water. Reuse and Saving of Water, Rain Water Harvesting. Solid Waste Management: Classification of Solid Waste, Collection, Transportation and Disposal of Solid. Recycling of Solid Waste: Energy Recovery, Sanitary Landfill, On-Site Sanitation. Air & Noise Pollution: Primary and Secondary air pollutants, Harmful effects of Air Pollution, Control of Air Pollution. . Noise Pollution Harmful Effects of noise pollution, control of noise pollution, Global warming & Climate Change, Ozone depletion, Greenhouse effect
Text Books:
1. Palancharmy, Basic Civil Engineering, McGraw Hill publishers.
2. Satheesh Gopi, Basic Civil Engineering, Pearson Publishers.
3. Ketki Rangwala Dalal, Essentials of Civil Engineering, Charotar Publishing House.
4. BCP, Surveying volume 1
How to Make a Field Mandatory in Odoo 17Celine George
In Odoo, making a field required can be done through both Python code and XML views. When you set the required attribute to True in Python code, it makes the field required across all views where it's used. Conversely, when you set the required attribute in XML views, it makes the field required only in the context of that particular view.
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Iván Bornacelly, Policy Analyst at the OECD Centre for Skills, OECD, presents at the webinar 'Tackling job market gaps with a skills-first approach' on 12 June 2024
Main Java[All of the Base Concepts}.docxadhitya5119
This is part 1 of my Java Learning Journey. This Contains Custom methods, classes, constructors, packages, multithreading , try- catch block, finally block and more.
Walmart Business+ and Spark Good for Nonprofits.pdfTechSoup
"Learn about all the ways Walmart supports nonprofit organizations.
You will hear from Liz Willett, the Head of Nonprofits, and hear about what Walmart is doing to help nonprofits, including Walmart Business and Spark Good. Walmart Business+ is a new offer for nonprofits that offers discounts and also streamlines nonprofits order and expense tracking, saving time and money.
The webinar may also give some examples on how nonprofits can best leverage Walmart Business+.
The event will cover the following::
Walmart Business + (https://business.walmart.com/plus) is a new shopping experience for nonprofits, schools, and local business customers that connects an exclusive online shopping experience to stores. Benefits include free delivery and shipping, a 'Spend Analytics” feature, special discounts, deals and tax-exempt shopping.
Special TechSoup offer for a free 180 days membership, and up to $150 in discounts on eligible orders.
Spark Good (walmart.com/sparkgood) is a charitable platform that enables nonprofits to receive donations directly from customers and associates.
Answers about how you can do more with Walmart!"
2. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
Insurance fraud and collusion
Claims fraud is an important source of inefficiency in
insurance markets.
Collusion between policyholders and service providers
(car repairers, health care providers...) make fraud
easier.
Focus on the Taiwan automobile insurance market and
on the role of car dealer-owned agents (DOAs).
3. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
On the role of DOAs
In Taiwan, a large percentage of automobile insurance
contracts are sold through DOAs : 51.4% in our data
base.
Most DOAs own a repair shop : they have an
informational advantage (difficult to establish that a
claim has been falsified).
DOAs own the list of their clients : they have a large
bargaining power.
Repairing or maintaining vehicles, handling claims and
renewing insurance contracts enable DOAs to maintain
constant contact with their clients.
4. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
The curious timing of
automobile claims in Taiwan
Li et al. (2013) observe that a large proportion of claims
are filed during the last month of the policy year.
This is confirmed by our own data base.
They interpret this phenomenon as a recouping
premium effect.
6. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
Three types of damage
insurance contracts in Taiwan
Type A contracts : widest scope of coverage (all kinds
of collision and non-collision losses) + deductible.
Type B contracts : the same area of coverage as type A
contracts with some exclusions in the case of
non-collision losses + either deductible or no
deductible.
Type C contracts : covers only collision losses without
deductible.
Claims are per accident : one claim for each accident.
8. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
Manipulating claims
Opportunist policyholders may take advantage of
manipulating claims.
Li et al. (2013) : the policyholders who didn’t file any
claim before the policy going to an end may feel
legitimate to recoup some money back from the
insurance company by filing small false claims near the
end of the year.
Policyholders may file one unique claim with the
cumulated losses of two events in order to bear the
deductible burden only one time =) postponing the
claim of an accident in case another accident follows.
9. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
Type A and B contracts are particularly subject to this
kind of manipulation (they include coverage for other
losses than collision between two cars).
The Taiwanese bonus-malus system reinforce the gain
of this manipulation for policyholders who plan to
renew their contract : claims filed in the last month of
the policy year t will be taken into account in the
premium paid in t + 2 + first accident is forgiven.
Thus, postponing claims and filing a unique claim for
two events is at the same time a way to defraud the
deductible contractual mechanism and an abuse of the
Taiwanese bonus-malus system
10. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
Interpreting the concentration
of claims during the last month
Premium recouping interpretation =) defrauders are
more likely to be policyholders who plan not to renew
their contract with the same insurance company (they
have lower moral cost of defrauding) : a "recoup
group".
Claims manipulation interpretation =) defrauders are
more likely to be policyholders who have taken out
deductible contracts and who renew their contract : a
"suspicious group".
Type C contracts are difficult to manipulate =) may be
used as a comparison base in the analysis of fraudulent
behaviors generated by the other contracts.
11. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
Let the First Claim Cost Ratio be
FCCR =
average cost of first claims
average cost of all claims
.
Postponing and cumulating claims =) FCCR % in the
last policy month.
That could also result from moral hazard (if a first
accident makes drivers more cautious).
Type C contracts may be used to isolate the moral
hazard effect (the manipulation of claims is unlikely for
such contracts).
14. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
The Model
An economy with a competitive insurance market, in
which automobile insurance can be purchased either
through car dealers who act as insurance agents
(DOAS) and own car repair shops or through standard
insurance agents.
Insurance policies : Premium P with loading factor σ
and deductible d for each accident.
Each individual suffers 1 accident with probability π1
and 2 accidents with probability π2, with
0 < π1 + π2 < 1.
Accidents are minor or serious, with repair cost ` and
2` and probability qm and qs respectively (qm + qs = 1).
15. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
There is a unit mass of risk averse individuals, with
initial wealth w and final wealth wf , and vN-M utility
function u(.), with u0 > 0, u00 < 0. They may be more or
less risk averse : types 1 have a smaller degree of
absolute risk aversion that types 2 :
u00
1 (wf )
u0
1(wf )
<
u00
2 (wf )
u0
2(wf )
,
and they correspond to proportions λ1 and λ2 of the
population, with λ1 + λ2 = 1.
Type 2 individuals purchase a larger coverage (lower
deductible) than type 1 because they are more risk
averse.
Car repairers are risk neutral.
16. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
Individuals have differentiated preferences between
purchasing insurance through a car dealer (DOA) or
through a standard insurance agent.
Hotelling model : both types of individuals are
uniformly located on interval [0, 1] : a representative
DOA is at x = xD = 0 and a representative standard
agent is at x = xA = 1. The expected utility is written as
uh(P, d) t jx xij ,
where
uh(P, d) (1 π1 π2)uh(w P)
+π1uh(w P d) + π2uh(w P 2d),
with h = 1 or 2 and i = D if the customer purchases
insurance through the representative DOA and i = A if
he goes through the standard agent.
17. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
The fraud mechanism
Fraud = putting back claims to the suspicious period
and filing one large claim for two small losses, with
the complicity of a car repairer.
Collusive gain : d + v where v is is the gain from
bonus-malus fraud.
The policyholder makes a take-or-leave it offer G to the
car repairer:
gain of the policyholder: d + v G,
gain of the car repairer: G.
18. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
Collusion and audit
Collusion can be detected by audit, which costs ci,
with i = D or A. If fraud is detected, no indemnity is
paid and the policyholder, and the repairer have to pay
fines, B and B0, respectively.
Policyholder-repairer coalition bargaining power:
defrauders are not punished with probability ξi, with
i = D or A.
Assumption:
cD > cA and ξD ξA,
or
cD cA and ξD > ξA.
19. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
Fraud and audit strategy
Strategies: fraud rate αih 2 [0, 1] and audit rate
βih 2 [0, 1].
Individuals defraud if the audit rate is not too large.
Insurers audit claims if the fraud rate is large enough.
Nash equilibrium: the fraud rate αih and the audit rate
βih should be mutually best-response.
The equilibrium is in mixed strategies: βih is the audit
rate that makes individuals indifferent between
defrauding and not defrauding and αih is the audit rate
that makes insurers indifferent between auditing and
not auditing.
20. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
Equilibrium contracts (case of
no bargaining power)
The expected cost of an insurance contract is written as
Cih(dih, ci) = L (π1 + 2π2)dih + FCih(dih, ci),
where L is the expected repair cost and FCih is the cost
of fraud (audit cost + cost of undetected fraud), with
∂FCih/∂dih > 0 and ∂FCih/∂ci > 0.
dih, Pih maximizes uh(P, d) w.r.t. P, d, s.t.
P = (1 + σ) Cih(d, ci),
for h = 1, 2 and i = D, A.
21. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
Proposition 1: The equilibrium deductibles and fraud rates
are such that di1 > di2 0, and αi1 > αi2 for i = A or D.
Intuition: Type 2 individuals choose smaller
deductibles than type 1 because they are more risk
averse. This reduces the incentives to audit claims,
hence a larger equilibrium fraud rate.
22. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
Proposition 2: The equilibrium fraud rates are such that
αD1 > αA1 and αD2 > αA2, that is, for both types of
individuals the fraud rate is larger among insurance policies
purchased through D than through A.
Intuition: insurers need additional incentives to audit
claims when insurance policies have been purchased
through D than through A, because audit is more costly
(or because DOAs have a larger probability to escape
the penalties) for D than for A. This is reached when
the fraud rate is larger. The proof shows that this
intuition remains valid if dDh 6= dAh for h = 1, 2.
23. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
There is a threshold xh such that type h individuals
purchase insurance through D if x < xh and through A
if x < xh. The proportion of full coverage contracts θD
and θA respectively for D and A is
θD =
λ2x2
λ1x1 + λ2x2
,
θA =
λ2(1 x2)
λ1(1 x1) + λ2(1 x2)
.
Proposition 3: θD > θA, i.e., the proportion of full coverage
contracts is larger among insurance policies purchased
through D than through A.
24. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
Data
Data source: a large insurance company in Taiwan. Its
market share in automobile insurance market is over
20%.
The policyholders : the owners of private usage small
sedans and small trucks.
Data periods: from year 2003 to year 2006.
Research period: from year 2003 to year 2005.
296,940 policyholders in the sample.
We isolate a subsample with the policyholders who
have filed at least one claim during the three years
(33.26% of the full sample.)
25. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
Explained variables :
susp : dummy indicating that the insured belongs to the
suspicious group,
nodedt : dummy indicating a policy without deductible,
claimsusp : dummy indicating that the first claim of the
policy year has been filed during the suspicious period.
Explanatory variables :
D : dummy indicating that the insurance policy has
been purchased through the DOA channel,
A, B : dummy variables indicating a type A or B
contract,
recoup : dummy indicating that the insured belongs to
the recoup group.
and observable variables about the insured (sex, marital
status, age, location in Taiwan, type of car...).
26. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
Estimation
Hypothesis 1: The fraud rate is higher in the suspicious
group than in the non-suspicious group.
Methodology:Test the correlation between "belonging
to the suspicious group" and "filing a claim in the
suspicious period". We use two stage probit regressions
to control for the endogeneity of the contract choice
and of the renewal decision:
Stage 1 :
Pr(suspit = 1jXit) = Φ(αXit)
Stage 2 :
Pr(claimsuspit = 1j dsuspit, suspit, recoupit, Xit)
= Φ(βes dsuspit + βssuspit + βrrecoupit + βXit).
Prediction: bβs should be positive and significantly
different from 0.
27. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
Remarks on adverse selection
and moral hazard
Not mixing up with adverse selection :
adverse selection : the relationship between contract
coverage and the probability of filing a claim,
our fraud hypothesis: the relationship between the
nature of contract and the timing of the claims.
Not mixing up with moral hazard :
moral hazard : larger coverage =) less cautious driver,
particularly near the end of the contract period,
our fraud hypothesis: lower coverage (higher
deductible) =) higher claim probability in the last
policy month,
concern about the scope of coverage =) robustness test
by limiting our research sample to type-B contracts.
28. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
Hypothesis 2 : The fraud rate in the suspicious group is
even larger when insurance has been purchased through the
DOA channel than through other distribution channels.
Methodology:We further add Dit, and interaction
variables susp_Dit = suspit Dit and recoup_Dit =
recoupit Dit in the second stage regression:
Pr(claimsuspit = 1j dsuspit, suspit, Dit, susp_Dit,
recoupit, recoup_Dit, Xit)
= Φ(βes dsuspit + βssuspit + βDDit, βsDsusp_Dit,
+βrrecoupit + βrDrecoup_Dit + βXit).
Prediction : bβsD should be positive and significantly
different from 0.
30. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
Results for Hypothesis 1
In Table 4 : bβs is positive, and significantly different
from 0 at the 5% significance level
There is a significantly positive conditional correlation
between belonging to the suspicious group and filing a
claim in the suspicious period.
The insured whose contract choice is in the suspicious group
are more likely than other policyholders to file their first
claim during the suspicious period.
31. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
Robustness test
In Table 5 (restriction to B contracts) : bβs is positive, and
significantly different from 0 at the 1% significance
level
Within the sub-group of type-B contracts, the
conditional correlation between the suspicious
contracts and the claims in the last policy month is
significantly positive.
This is not only the evidence of fraud which can be
distinguished from adverse selection, but it is also an
evidence that can be distinguished from ex ante moral
hazard.
33. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
Results for Hypothesis 2
In Table 4 : bβs is positive, but not significantly different
from 0 anymore. However, the bβsDis positive and
significantly different from 0 at 1% significant level.
After we control for the interaction between the DOA
channel dummy variable and the suspicious group
dummy variable, the conditional correlation between
choosing the suspicious contract and filing claim in
suspicious period disappears.
This confirms the conjecture that the DOAs are the
main channel of fraud.
34. Insurance
fraud in
Taiwan
Picard and
Wang
Motivation
Model
Data
Estimation
Robustness test
In Table 5 (restriction to B contracts) :bβs is positive, but
not significantly different from 0 anymore. However,
the bβsDis positive and significantly different from 0 at
1% significant level.
The policies of type-B contracts purchased through the
DOA channel also provide significant evidence of
fraud.
The whole fraud in the market comes from the DOA channel.