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Competitive Premium Pricing and Cost Savings for Insurance Policy Holders: leveraging Big Data

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  • Zvezdov, Ivelin

Abstract

Examining the intersection of research on the effects of (re)insurance risk diversification and availability of big insurance data components for competitive underwriting and premium pricing is the purpose for this paper. We study the combination of physical diversification by geography and insured natural peril with the complexity of aggregate structured insurance products, and furthermore how big historical and modeled data components impact product underwriting decisions. Under such market conditions, the availability of big data components facilitates accurate measurement of inter-dependencies among risks, and the definition of optimal and competitive insurance premium at the level of the firm and the policy holders. We extend the discourse to a notional micro-economy and examine the impact of diversification and insurance big data components on the potential for developing strategies for sustainable and economical insurance policy underwriting. We review concepts of parallel and distributed algorithmic computing for big data clustering, mapping and resource reducing algorithms.

Suggested Citation

  • Zvezdov, Ivelin, 2017. "Competitive Premium Pricing and Cost Savings for Insurance Policy Holders: leveraging Big Data," MPRA Paper 77502, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:77502
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    More about this item

    Keywords

    Effects of insurance risk diversification on premium definition; contribution of big data components to measuring inter-dependencies; rational for sustainable and economic underwriting practices and cost savings;
    All these keywords.

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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