Forecasting the maximum compensation offer in the automobile BI claims negotiation proces
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. An alternative approximation based on generalized inference theory is applied to estimate confidence intervals on variance components, since classical interval estimates may be unreliable for datasets with unbalanced structures.
|Date of creation:||May 2008|
|Date of revision:||May 2008|
|Contact details of provider:|| Postal: Diagonal 690-696, 08034 Barcelona|
Phone: +34 93 402 43 13cazza
Web page: http://www.ub.edu/irea/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David S. Loughran, 2005. "Deterring Fraud: The Role of General Damage Awards in Automobile Insurance Settlements," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 72(4), pages 551-575.
- Crocker, Keith J & Tennyson, Sharon, 2002. "Insurance Fraud and Optimal Claims Settlement Strategies," Journal of Law and Economics, University of Chicago Press, vol. 45(2), pages 469-507, October.
- Viaene, Stijn & Ayuso, Mercedes & Guillen, Montserrat & Van Gheel, Dirk & Dedene, Guido, 2007. "Strategies for detecting fraudulent claims in the automobile insurance industry," European Journal of Operational Research, Elsevier, vol. 176(1), pages 565-583, January.
- Nelson, William Jr., 2002. "Equity or intention: it is the thought that counts," Journal of Economic Behavior & Organization, Elsevier, vol. 48(4), pages 423-430, August.
When requesting a correction, please mention this item's handle: RePEc:ira:wpaper:200807. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alicia García)
If references are entirely missing, you can add them using this form.