Mercedes Ayuso(universitat de Barcelona) Miguel Santolino(Universitat de Barcelona) (Universitat de Barcelona)
Abstract
Most motor bodily injury (BI) claims are settled by negotiation, with fewer than 5% of cases going to court. A well-defined negotiation strategy is thus very useful for insurance companies. In this paper we assume that the monetary compensation awarded in court is the upper amount to be offered by the insurer in the negotiation process. Using a real database, a log-linear model is implemented to estimate the maximal offer. Non-spherical disturbances are detected. Correlation occurs when various claims are settled in the same judicial verdict. Groupwise heteroscedasticity is due to the influence of the forensic valuation on the final compensation amount.
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Paper provided by Universitat de Barcelona. Espai de Recerca en Economia in its series Working Papers in Economics with number
220.
Length: 0 pages Date of creation: 2009 Date of revision: Handle: RePEc:bar:bedcje:2009220
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Find related papers by JEL classification: C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Other Model Applications G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies
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