Application of Markov Model in Prediction of Annual Premium of Automobile

DOI

10.2991/jiaet-18.2018.31How to use a DOI?

Keywords

Markov model; Auto insurance; Annual insurance premium; Transfer matrix

Abstract

This paper establishes the Markov model based on a insurance system which ascending or descending the auto insurance premiums according to the former multi-state auto insurance. It assumes that the number of automobile claims is a Poisson random variable with parameter l , then establishes a state transition matrix, finally forecasting the annual Insurance cost of automobiles by the steady distribution of transfer matrix. The results show that when the average number of annual claims of the insured person is1/ 3 , the insurance premium will increase to the second state in the next year, and the annual insurance premium will increase to the first year when the average number of claims is 1, 2, and 3, In 3 states, when the number of claims exceeds 3, it will increase to the 4th state. The prediction results provide data support for the car insurer, pay attention to the number of claims for annual claims, rationally plan funds, and maximize the benefits as much as possible.

Copyright

© 2018, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Yayun Fan
AU  - Jingjing Feng
PY  - 2018/03
DA  - 2018/03
TI  - Application of Markov Model in Prediction of Annual Premium of Automobile
BT  - Proceedings of the 2018 Joint International Advanced Engineering and Technology Research Conference (JIAET 2018)
PB  - Atlantis Press
SP  - 179
EP  - 184
SN  - 2352-5401
UR  - https://doi.org/10.2991/jiaet-18.2018.31
DO  - 10.2991/jiaet-18.2018.31
ID  - Fan2018/03
ER  -