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Modelling the disability severity score in motor insurance claims: an application to the Spanish case

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Author Info
Miguel Santolino () (Faculty of Economics, University of Barcelona)
Jean-Philippe Boucher () (Département de Mathématiques, Université du Québec à Montréal)
Abstract

Bodily injury claims have the greatest impact on the claim costs of motor insurance companies. The disability severity of motor claims is assessed in numerous European countries by means of score systems. In this paper a zero inflated generalized Poisson regression model is implemented to estimate the disability severity score of victims in-volved in motor accidents on Spanish roads. We show that the injury severity estimates may beautomatically converted into financial terms by insurers at any point of the claim handling process. As such, the methodology described may be used by motor insurers operating in the Spanish market to monitor the size of bodily injury claims. By using insurance data, various applications are presented in which the score estimate of disability severity is of value to insurers, either for computing the claim compensation or for claim reserve purposes.

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File URL: http://www.ub.edu/irea/working_papers/2009/200902.pdf
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Publisher Info
Paper provided by University of Barcelona, Research Institute of Applied Economics in its series IREA Working Papers with number 200902.

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Length: 25 pages
Date of creation: Jan 2009
Date of revision: Jan 2009
Handle: RePEc:ira:wpaper:200902

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Web page: http://www.ub.edu/irea/
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Related research
Keywords: Motor accident; disability severity; zero-inflated generalized Poisson model; disability scoring scale.;

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References listed on IDEAS
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  1. Yip, Karen C.H. & Yau, Kelvin K.W., 2005. "On modeling claim frequency data in general insurance with extra zeros," Insurance: Mathematics and Economics, Elsevier, vol. 36(2), pages 153-163, April. [Downloadable!] (restricted)
  2. Browne, Mark J & Puelz, Robert, 1999. "The Effect of Legal Rules on the Value of Economic and Non-economic Damages and the Decision to File," Journal of Risk and Uncertainty, Springer, vol. 18(2), pages 189-213, August. [Downloadable!] (restricted)
  3. Hoyt, Robert E & Mustard, David B & Powell, Lawrence S, 2006. "The Effectiveness of State Legislation in Mitigating Moral Hazard: Evidence from Automobile Insurance," Journal of Law & Economics, University of Chicago Press, vol. 49(2), pages 427-50, October.
  4. Ayuso, Mercedes & Santolino, Miguel, 2007. "Predicting automobile claims bodily injury severity with sequential ordered logit models," Insurance: Mathematics and Economics, Elsevier, vol. 41(1), pages 71-83, July. [Downloadable!] (restricted)
  5. Helen I. Doerpinghaus & Joan T. Schmit & Jason Jia-Hsing Yeh, 2008. "Age and Gender Effects on Auto Liability Insurance Payouts," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 75(3), pages 527-550. [Downloadable!] (restricted)
  6. Crocker, Keith J & Tennyson, Sharon, 2002. "Insurance Fraud and Optimal Claims Settlement Strategies," Journal of Law & Economics, University of Chicago Press, vol. 45(2), pages 469-507, October.
  7. Boucher, Jean-Philippe & Denuit, Michel, 2008. "Credibility premiums for the zero-inflated Poisson model and new hunger for bonus interpretation," Insurance: Mathematics and Economics, Elsevier, vol. 42(2), pages 727-735, April. [Downloadable!] (restricted)
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This page was last updated on 2009-11-30.


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