Bayesian Estimation of Event Probability in Accident Insurance
Bayesian Estimation of Event Probability in Accident Insurance

Author(s): Eva Kotlebová, Viera Pacáková
Subject(s): Methodology and research technology
Published by: Masarykova univerzita nakladatelství
Keywords: event probability; Bayesian estimation; prior distribution; posterior distribution; binomial/beta model;
Summary/Abstract: Knowledge of the probability of an insured event is the basis for the valuation of the products in life and non-life insurance companies. For estimation of event probability in insurance practice the most often use the historical data from a large portfolio of insurance policies. The classical approach to point estimation of the event probability is by proportion of occurrence of the event in large portfolio of policies. The objective of this paper is to present Bayesian estimation of selected binomial proportions in accident insurance. The classical approach to point estimation treats parameters as something fixed but unknown.

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