Faculty Advisor

Abraham, Jon P.

Abstract

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.

Publisher

Worcester Polytechnic Institute

Date Accepted

January 2015

Major

Actuarial Mathematics

Project Type

Major Qualifying Project

Accessibility

Unrestricted

Advisor Department

Mathematical Sciences

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