The study sought to demonstrate how credibility claim costs without the
consideration of claim frequency and claim severities underlined by different
risk profiles underestimate claim costs or premiums charged policyholders by
non-life insurance companies. We used secondary data of non-life marine
insurers in Ghana, claim histories that range from the period of 2013 to 2018.
The claim histories included claim sizes, claim counts and policy counts.
Bühlmans-Straub Credibility theory model was used in estimating credibility
weights, credibility claim costs, credibility claim frequencies and credibility
claim severities and subsequently find the credibility frequency-severity claim
cost as the product of credibility claim frequency and severity for the
individual and respective risk classes. We compared the estimates of the claim
costs or premiums and have observed that the credibility claim costs
underestimates claim costs or the average claim costs compared to the
credibility frequency-severity claim costs for most of the risk classes. This is
an indication of how a lack of consideration for variability or unstableness of
claim frequencies and severities with different risk profiles undermine claim
costs estimated through credibility rate makings in insurance. The study
recommends that credibility ratemaking by insurance companies based on
inadequate claim history and or with enough class risk variation should include
credibility risk frequency and severity for the determination of credibility risk
Edu, F (2021). Application of BÜHLMANNS-Straub Credibility Theory to Claim Histories of Non-Life Marine Insurers in Ghana. Afribary.com: Retrieved April 10, 2021, from https://afribary.com/works/application-of-buehlmanns-straub-credibility-theory-to-claim-histories-of-non-life-marine-insurers-in-ghana
Frontiers, Edu. "Application of BÜHLMANNS-Straub Credibility Theory to Claim Histories of Non-Life Marine Insurers in Ghana" Afribary.com. Afribary.com, 06 Apr. 2021, https://afribary.com/works/application-of-buehlmanns-straub-credibility-theory-to-claim-histories-of-non-life-marine-insurers-in-ghana . Accessed 10 Apr. 2021.
Frontiers, Edu. "Application of BÜHLMANNS-Straub Credibility Theory to Claim Histories of Non-Life Marine Insurers in Ghana". Afribary.com, Afribary.com, 06 Apr. 2021. Web. 10 Apr. 2021. < https://afribary.com/works/application-of-buehlmanns-straub-credibility-theory-to-claim-histories-of-non-life-marine-insurers-in-ghana >.
Frontiers, Edu. "Application of BÜHLMANNS-Straub Credibility Theory to Claim Histories of Non-Life Marine Insurers in Ghana" Afribary.com (2021). Accessed April 10, 2021. https://afribary.com/works/application-of-buehlmanns-straub-credibility-theory-to-claim-histories-of-non-life-marine-insurers-in-ghana