AY1516 T2 Team Hew - Prediction
| Exploratory Analysis | Prediction |
Contents
Claim Amount Distribution Fitting
Analyze Distribution
Vaughn (1996) and a number of actuaries have mentioned that ClaimPaid amounts have to factor in inflation for greater accuracy. However, as the highest inflation rate attained by Indonesia for the time period of study is about 7%, this is rather negligible. Using JMP Pro 12, we first excluded rows where ClaimPaid = 0 and derived the distribution statistics of:
| N | Min | Max | Median | Mean | Standard Deviation |
|---|---|---|---|---|---|
| 49,066 | 2,570 | 3,295,056,701 | 4,297,418 | 21,090,896 | 90,927,485 |
From figure above, we can see that there are many instances of small claim amounts, with few instances of extreme values, and the distribution shape is right skewed. Similar distribution shapes for Claim amounts have also been derived from insurance companies based in other regions, as seen in figure below taken from Eling’s research (2011).
Fit Distribution
We then attempt to fit several distributions on the Claim amounts column, using JMP Pro’s Fit Distribution function. The most suitable distribution selected will be the one which minimizes the -2Log(Likelihood), taken to be a measure of variation or uncertainty in the sample.
Linear Regression
Coming Soon
Research & Methodology
Coming Soon
References
