0704-883-0675     |      dataprojectng@gmail.com

A RISK-BASED ADJUSTMENT MODEL FOR EXPERIENCE RATING OF MOTOR INSURANCE IN NIGERIA

  • Project Research
  • 1-5 Chapters
  • Abstract : Available
  • Table of Content: Available
  • Reference Style: APA
  • Recommended for : Student Researchers
  • NGN 3000

Abstract

In establishing the burden of costs, the principle underlying the calculation of differentiated premium in the insurance portfolio is characterized by a pricing process that involves the classification of all risks regarding factors of influence. This classification is based on known observable characteristics of the insured. However, there are many other important factors that are unobservable by the insurer which cannot be taken into account a-priori when pricing motor liability insurance products but may represent significant risk factors. Also, it has become extremely difficult recently, for insurance companies to maintain cross subsidies between different risks categories in a competitive market. As competition between insurance companies intensifies, higher efficiency and greater focus on profitability are required. While the potential for cost reductions is limited, improvements in profitability and growth can be achieved through appropriate pricing mechanisms. Experience rating which is popularly referred to as No Claim Discount or Bonus-Malus Systems involves modifying premiums using claims records. Risk-based adjustment pricing is an experience rating technique commonly used in motor insurance to categorize policyholders into relatively homogenous group who pay premium relative to their claims experience. In this study, a risk-based adjustment model that incorporates costs in a fair and equitable manner given the individual characteristics of the insured for experience rating is adopted using generalized linear model. Claim cost and frequency data from motor insurance liability portfolio in Nigeria as well as the insured characteristics were collected and analysed using the generalized negative binomial and gamma regressions. Individual risk weights from the fitted models were used to compute the risk scores. This was subsequently used to determine the relative costs of an insured based on their individual characteristics and claims history. Results show that the claims data from automobile insurance scheme is highly peaked and leptokurtic. The claims data also vary significantly across age groups, gender, occupation, and nature of loss, as well as the place of residence, type of product and customer type. The study established that motor insurance risks are influenced by individual risk characteristics and a risk-based adjustment pricing be introduced to establish fair and equitable costs among the insured. It is recommended that a risk-based adjustment pricing be employed to estimate accurately the average expected loss in order to charge adequate price for motor insurance.




FIND OTHER RELATED TOPICS


Related Project Materials

EVALUATION OF KNOWLEDGE AND ATTITUDE OF NURSES TO INFORMATION TECHNOLOGY ON NURSING CARE DELIVERY IN ENUGU METROPOLIS

SIGNIFICANCE OF THE STUDY

The world has witnessed an information revolution, a combination of massive increase in the wo...

Read more
THE EXTENT OF USE OF INSTRUCTIONAL MATERIAL IN TEACHING AND LEARNING OF BASIC SCIENCE AND COMPUTER SCIENCE IN JUNIOR SECONDARY SCHOOL

BACKGROUND OF THE STUDY

Instructional materials are variety of materials in various formats which influ...

Read more
DEVELOPING COMPUTER-BASED SYSTEM FOR MAINTENANCE PLANNING AND SCHEDULING OF HOSPITAL BUILDINGS IN NNAMDI AZIKIWE UNIVERSITY TEACHING HOSPITAL NNEWI, ANAMBRA STATE, NIGERIA

Statement of the Problem

Hospitals buildings are confronted with unique challenges that threaten their optimal performance, structurally...

Read more
Design and implement a computerized drug information management system drug procurement and distribution tracking system

ABSTRACT

Drug procurement and distribution tracking system is a set of computer programs that obtains the supplies of drugs, distribute t...

Read more
AN ASSESSMENT OF THE PATTERNS OF INSTRUCTIONAL PLANNING AND UTILIZATION OF COMMUNITY RESOURCES AMONG BASIC SCIENCE TEACHERS IN LAGOS STATE

Background Of Study

An instructional plan is a teacher's thorough description of a lesson's pat...

Read more
EFFECT OF TAX EVASION AND AVOIDANCE ON REVENUE GENERATION IN NIGERIA

BACKGROUND OF THE STUDY

Tax is one of the main source of Government Revenue. It is a strong social and...

Read more
APPRAISING USERS’ SATISFACTION LEVEL OF FACILITIES MANAGEMENT SERVICES IN CONDOMINIUM APARTMENTS

ABSTRACT

 Increased urbanisation in Lagos State has brought about the challenges of inadequate hou...

Read more
ATTITUDE AND PERCEPTION OF UNDERGRADUATES TOWARDS FILM ADVERTISEMENT

ABSTRACT

The basic thrust of this research was to examine the attitude and perception of Undergraduates...

Read more
FISH ABUNDANCE AND DISTRIBUTION OF THREE WATER BODIES  

ABSTRACT

Fish abundance and distribution of three water bodies namely Onah lake, Anwai river and River Niger at cable po...

Read more
A COMPARATIVE STUDY OF TRADITIONAL AND CONTEMPORARY NIGERIAN DANCES

Abstract

Dance is a form of art, hence, it is an index of culture. Zulu Sofola in Tragic Themes in Nig...

Read more
Share this page with your friends




whatsapp