Non-Life Pricing
Introduction
For many years, actuaries and statisticians have used historical claims data to predict future losses. This prediction is then used, among others, to compute the pure premium, which is the amount the insurance company should charge in order to be able to indemnify all the claims, without loss nor profit (in a sufficiently large portfolio).
This module is a very short introduction to Generalized Linear Models (GLM) that can be used in the context of non-life technical pricing construction.
Using a concrete example, it shows how easy it is to compute the pure premium for each policyholder of an insurance portfolio using the multiplicative structure obtained with GLMs. It explains how to interpret all the different coefficients obtained using a GLM.
In this demo, we also present what are the differences with the well-known linear models and how to model the observed total claim amount with GLMs.
Author: Julie Zians | Publisher : Reacfin Academy