Use of Weighted Predictor in Insurance Pricing
Yongbum Jun, Dept. of Statistics, Hankuk University of Foreing Studies
*Heungsun Park, Dept. of Statistics, Hankuk University of Foreign Studies
Keywords: Best Predictor, Ratemaking, Reinsurance, Franchise
The Best Weighted Predictor is defined by minimizing the weithed loss for the future observation (eg. claim amount). A new insurance policy is determined by average claim amount and it's frequency from previous data. Considering the restrictions such as deductible/reinsurance for designing a new insurance product, various weighted predictors are suggested to be used for predicting future claim amounts.