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Insolvency Probability In Reinsurance Treaty: A Case Study In Malaysia

Author

Listed:
  • NORISZURA ISMAIL

    (Faculty of Science and Technology Universiti Kebangsaan Malaysia, Malaysia)

  • ANSAR ASNAWI AHMAD ANUAR

    (Faculty of Science and Technology Universiti Kebangsaan Malaysia, Malaysia)

Abstract

In developing countries such as Malaysia, the availability of reinsurance arrangements provides several advantages to the primary insurers such as keeping their risk exposures at prudent levels by having their large risk exposures reinsured by another company, meeting client requests for larger insurance coverage by having their limited financial sources supported by another company, and acquiring underwriting skills, experience and ability of handling complex claims by depending on another company for such services. This paper aims to model insurance claims and assess the insolvency probability of reinsurance treaties. Claims data was obtained from one of the leading insurers in Malaysia and R programming with actuar package is used to compute the probability of insolvency.

Suggested Citation

  • Noriszura Ismail & Ansar Asnawi Ahmad Anuar, 2009. "Insolvency Probability In Reinsurance Treaty: A Case Study In Malaysia," Perspectives of Innovation in Economics and Business (PIEB), Prague Development Center, vol. 3(3), pages 62-64.
    • Handle: RePEc:pdc:jrpieb:v:3:y:2009:i:3:p:62-64
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    More about this item

    Keywords

    Reinsurance; pricing; insolvency probability; excess-of-loss.;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General

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