In insurance, actuaries need to decide how much they trust each policyholder’s experience rate. Credibility theory is the study of how much merit to give a policyholder’s experience. Using data provided by Unum, the Buhlmann-Straub approach to credibility was found to raise loss ratios overall, while still being under the Tolerable Loss Ratio. Thus, Unum’s customers may be overcharged for their coverage and competitors may price their insurance lower than Unum, while meeting their own Tolerable Loss Ratios.

• This report represents the work of one or more WPI undergraduate students submitted to the faculty as evidence of completion of a degree requirement. WPI routinely publishes these reports on its website without editorial or peer review.

Creator

• Gao, Jiali
• Nottage, Joshua James
• Brigham, Joseph Charles
• Lynch, Will Robert

Publisher

• Worcester Polytechnic Institute

Identifier

• E-project-012815-114827

Advisor

• Abraham, Jon P.

Year

• 2015

Sponsor

• Unum

Date created

• 2015-01-28

Location

• Boston

Resource type

• Major Qualifying Project

Major

• Actuarial Mathematics

Rights statement

• In Copyright