This is a actuarial science
report focusing on Markov Chain, we need to apply Markov property to investigate whether the No-claim discount scheme is appropriate for health insurance and the effect of a proposed frequency-based experience rating No-claim discount scheme in the health insurance industry.
This report is a group work and I am doing part 3 which has been highlighted in the pdf file. Please only do part 3 which is the "Actuary representing retired population in Australia". The target group of people is those with age above 65 in the excel file data tab.
For the Markov Chain, our group has been discussed to have 13 states:
State 1: no claims in the past 2 consecutive years (HH)
State 2: made a M claim last year, but no claim in the year before (HM)
State 3: made a S claim last year, but no claim in the year before (HS)
State 4: made a no claim in the year before and died last year (HD)
State 5: made a M claim in the year before and become healthy last year (MH)
State 6: made a M claim in the past 2 consecutive years (MM)
State 7: made a S claim last year and made a M claim in the year before (MS)
State 8: made a M claim in the year before and died last year (MD)
State 9: made a S claim in the year before and become healthy last year (SH)
State 10: made a M claim last year and made a S claim in the year before (SM)
State 11: made a S claim in the past 2 consecutive years (SS)
State 12: made a S claim in the year before and died last year (SD)
State 13: already died in the year before (DD)
where H=healthy, M=moderate claim, S=severe claim and D=die
Please correct it if you think this is incorrect.
The No-claim discount scheme has 11 level, all new customs start at level 0, where level 0 is the lowest lever and level 10 is the highest. If a customer have no claim in the last year, he will move up one level. Penalty for a moderate claim is to move down one level, and that for severe claim is to move down 3 levels.
There are faxes for this order.
[ Order Custom Essay ]
Boland, P.J. (2006). Statistical Methods in General Insurance. Dublin: National University of Ireland.
Denuit, M., Marechal, X., Pitrebois, S., & Walhin, J.-F. (2007). Actuarial Modeling of Claim Counts: Risk Classification, Credibility and Bonus-Malus Systems. New York: John Wiley & Sons Limited.
MONETOS. (2012). No Claims Discount / NCD. Retrieved September 10, 2012, from www.monetos.co.uk: http://www.monetos.co.uk/insurance/car-insurance/cost/cutting/ncd/
Pinquet, J. (2012). Experience Rating in Non-Life Insurance. Paris: Universite Paris.