Advanced SearchSearch Tips
A Study on the Scoring Method for the Insurance Underwriting Using Generalized Linear Model
facebook(new window)  Pirnt(new window) E-mail(new window) Excel Download
 Title & Authors
A Study on the Scoring Method for the Insurance Underwriting Using Generalized Linear Model
Lee, Chang-Soo; Kwon, Hyuk-Sung; Kim, Dong-Kwang;
  PDF(new window)
Underwriting is the first step for the administration of an insurance contract, which may result in stable profitability or unexpected loss for insurance company. Adequacy of underwriting criteria determines underwriting result. Generally, quantitative scoring system is used for underwriting. Method of evaluating risk for the scoring system is summing up scores for risk factors of a potential policyholder in consideration. Scores for each risk factor is predetermined. Current business environment for insurance companies makes underwriting profit more important, which means that insurance companies need more efficient underwriting method. This study suggests a reasonable approach to estimate risk relativities based on generalized linear model. Real data were used to quantify risk levels of groups of insureds for the design of underwriting model. Finally, effects in business volume and profitability of reflecting estimated underwriting scoring system are explained.
Underwriting;scoring method;generalized linear model;life insurance;
 Cited by
Atkinson, D. B. and Dallas, J. W. (2000). Life Insurance Products and Finance, Society of Actuaries

Bickley, M. C. (2007). Life and Health Insurance Underwriting, LOMA

Haberman, S. and Renshaw, A. E. (1996). Generalized linear models and actuarial science, The Statistician, 45, 407-436 crossref(new window)

Kwon, H. S. and Jones, B. L. (2006). The impact of the determinants of mortality on life insurance and annuities, Insurance: Mathematics and Economics, 38, 271-288 crossref(new window)

Lewis, E. M. (1992). An Introduction to Credit Scoring, Fair, Isaan and Company

McCullagh, P. and Neider, J. A. (1989). Generalized Linear Models, Chapman & Hall/CRC, London

Murphy, K. P., Brockman, M. J. and Lee, P. K. W. (2000). Using Generalized Linear Models to Build Dynamic Pricing Systems, Casualty Actuarial Forum, Winter 2000

Society of Actuaries (2005). Report of the Scociety of Actuaries Preferred Underwriting Survey Subcommittee, March 2005