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Premium Forecasting Of An Insurance Company: Automobile Insurance

Author

Listed:
  • M. EBRAHIM FOULADVAND

    (Department of Physics, Zanjan University, P. O. Box 45196-313, Zanjan, Iran)

  • AMIR H. DAROONEH

    (Department of Physics, Zanjan University, P. O. Box 45196-313, Zanjan, Iran)

Abstract

We present an analytical study of an insurance company. We model the company's performance on a statistical basis and evaluate the predicted annual income of the company in terms of insurance parameters namely the premium, the total number of insured, average loss claims etc. We restrict ourselves to a single insurance class the so-calledautomobile insurance. We show the existence of a crossover premiumpcbelow which the company is operating at a loss. Abovepc, we also give a detailed statistical analysis of the company's financial status and obtain the predicted profit along with the corresponding risk as well as ruin probability in terms of premium. Furthermore we obtain the optimal premiumpoptwhich maximizes the company's profit.

Suggested Citation

  • M. Ebrahim Fouladvand & Amir H. Darooneh, 2005. "Premium Forecasting Of An Insurance Company: Automobile Insurance," International Journal of Modern Physics C (IJMPC), World Scientific Publishing Co. Pte. Ltd., vol. 16(03), pages 377-387.
    • Handle: RePEc:wsi:ijmpcx:v:16:y:2005:i:03:n:s0129183105007170
    DOI: 10.1142/S0129183105007170
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    Keywords

    Insurance; profit; premium; risk;
    All these keywords.

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